ASTS Down 3.4% Since Q2 Earnings Miss: How to Play the Stock?

AST SpaceMobile ASTS shares have declined 3.4% since the company reported its second-quarter results on Aug. 11. The company reported lackluster second-quarter 2025 results, with both the top and bottom lines missing the Zacks Consensus Estimate. This is primarily attributed to macroeconomic headwinds and increased competition. However, the company’s revenues improved to $1.2 million from $0.9 million in the prior year quarter. Healthy demand from government and commercial customers supported the top line.Despite the dip in share price post Q2 earnings, ASTS stock has surged 127.9% year to date compared to the industry’s growth of 9.5%. The stock has also outperformed the Zacks Computer & Technology sector and the S&P 500’s growth of 13.8% and 9.6%, respectively. It has outperformed its peer like Globalstar Inc. GSAT but underperformed relative to its competitor like Viasat, Inc. VSAT. Viasat has surged 218.5%, while Globalstar has declined 13.9% during this period.Image Source: Zacks Investment ResearchASTS’s Major ChallengesAST SpaceMobile is affected by unfavorable macroeconomic conditions. Rising inflation, higher interest rates, volatility in the capital markets, geopolitical conflicts, and higher tariffs are leading to fluctuations in satellite material prices. Adverse movements in foreign exchange rates are worrisome.Competitive challenges remain a major concern. Despite expanding the total marketing address of mobile satellite services and growing regulatory support, ASTS is set to witness strong competition from Starlink’s Direct-to-Cell initiative. SpaceX’s dominance in the space industry is a major advantage for Starlink’s satellite network expansion. Globalstar is also steadily expanding its infrastructure. The company has recently announced the commencement of construction to expand its Singapore ground station. It will add two 6-meter antennas at its Singapore site to support its C-3 mobile satellite system. Viasat is also venturing into Direct to Device satellite connectivity with strategic collaboration with major telecom operators worldwide. These factors can impact ASTS’ growth prospects.The company is accelerating satellite manufacturing efforts to speed up the deployment of global network infrastructure. Its business model requires a significantly high investment upfront in satellite manufacturing and launches. The company’s engineering and services costs rose to $28.6 million, up from $21.2 million in the year-ago quarter, up 34% year over year. Its research and development costs also increased 43% year over year to $6.4 million. This is straining the margin.Image Source: Zacks Investment ResearchASTS Rides on Production Innovation, Commercialization EffortsAST Spacemobile has ramped up its satellite manufacturing efforts. It is expanding its manufacturing capacity in its Texas factory, the United States and also in Europe and other locations worldwide. At least 5 orbital launches are expected by 2026, and it remains well on track to achieve its target of launching 45-60 satellites in 2025-2026. Its strategy of vertically integrated manufacturing is giving the company greater control, speed and flexibility on technological advancements. Moreover, the development of microns, a critical component in the satellite communication system, is fully vertically integrated in ASTS’ manufacturing ecosystem. This strategy has bolstered supply chain resiliency and fostered innovation.It is also ramping up its efforts to commercialize its space-based cellular network. The company has formed several strategic partnerships worldwide. It has successfully demonstrated two-way broadband video calls in collaboration with major telecom operators, including AT&T, Verizon, Rakuten Mobile and Vodafone. Moreover, commercial agreements with more than 50 mobile network operators globally, boasting 3 billion customers, are expected to drive adoption of ASTS space-based cellular network post launch. The company has announced that it is prepared to deploy nationwide intermittent service in the United States by the end of 2025. The service is expected to expand in the United Kingdom, Japan and Canada by the first quarter of 2026.ASTS is also granted temporary authority from the FCC to support 7 million public safety and connections of the FirstNet Network. Alongside advancing full cellular broadband capabilities, including voice, text, data and video, it's effort to expand into public safety applications opens up new revenue-generating opportunities for the company in the future. Such initiatives augur well for long-term sustainable growth.Estimate Revision Trend of ASTSOver the past 60 days, the earnings estimate for ASTS for fiscal 2025 has declined 2.02%, but for fiscal 2026, it has improved by 10.98%.Image Source: Zacks Investment ResearchKey Valuation Metric of ASTSFrom a valuation standpoint, ASTS is currently trading at a premium compared to the industry. Going by the price/book ratio, the company’s shares currently trade at 13.14 trailing book value, higher than 4.88 for the industry.Image Source: Zacks Investment ResearchEnd NoteIndustrywide focus on mobile satellite services is growing due to rising demand for consistent connectivity in rural, remote areas, public safety applications, aviation and maritime applications. ASTS, with its industry-leading space-based cellular network, is well-positioned to gain from this trend. Its robust portfolio offerings, collaboration with industry leaders and successful demonstration in key markets of North America, Europe and Asia are major tailwinds. Its vertically integrated manufacturing strategy is a positive factor.However, macroeconomic challenges and growing competition from other prominent players will likely impact growth. Geopolitical factors, tariff-related uncertainty remains a concern. Downtrend in estimate revision for 2025 highlights growing investors’ skepticism about the company’s near-term prospects. With a Zacks Rank #3 (Hold), ASTS appears to be treading in the middle of the road, and investors could be better off if they trade with caution. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Free Report: Profiting from the 2nd Wave of AI ExplosionThe next phase of the AI explosion is poised to create significant wealth for investors, especially those who get in early. It will add literally trillion of dollars to the economy and revolutionize nearly every part of our lives.Investors who bought shares like Nvidia at the right time have had a shot at huge gains.But the rocket ride in the "first wave" of AI stocks may soon come to an end. The sharp upward trajectory of these stocks will begin to level off, leaving exponential growth to a new wave of cutting-edge companies.Zacks' AI Boom 2.0: The Second Wave report reveals 4 under-the-radar companies that may soon be shining stars of AI’s next leap forward.Access AI Boom 2.0 now, absolutely free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Viasat Inc. (VSAT): Free Stock Analysis Report Globalstar, Inc. (GSAT): Free Stock Analysis Report AST SpaceMobile, Inc. (ASTS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks