Scotiabank again downgrades AST SpaceMobile on execution concerns
Back in October, Scotiabank analyst Andres Coello downgraded AST SpaceMobile’s (ASTS) shares, citing the possibility that the stock faces “painful corrections” due to “significant competitive and operating risks.”
The downgrade happened after AST SpaceMobile's shares had soared 254% for the year. But while investors were bullish on the stock, Coello saw its shares reaching a "valuation bubble" from a rally he called “marketing-driven” due to Bell Canada’s data test using AST SpaceMobile’s network that month.
One of the significant headwinds that Coello saw for AST SpaceMobile was increased competition coming from SpaceX’s Starlink direct-to-cell satellites, especially as AST SpaceMobile had been dealing with delays.
He pointed out that the company “is running six months late in shipping the first BB2 to India,” while “Starlink is already monetizing the service.”
On Wednesday, Coello once again downgraded AST Space Mobile's shares to Underperform from Sector Perform. With the company's stock priced at $97.60 per share at the time of his client note, Coello said that it had "once again overshot to what we see as irrational levels," with a market cap that had also reached about $37 billion.
But AST SpaceMobile's stock plunged 12.1% following the downgrade on Wednesday, sending its share price down to $85.73 and its market cap to just over $31 billion.
Like in October, Coello cited both execution delays and the significant competition the company is facing from Starlink as the reasons behind the downgrade.
He said that Starlink's "brand and scale" presents a "major competitive headwind" to AST SpaceMobile, noting that the former has developed a "massive global lead."
"While it has been an ordeal for ASTS to launch seven satellites since 2017, in 2025 alone Starlink orbited 3,169 units," Coello said.
He noted that AST SpaceMobile does not have "a single retail customer" and is "faced by the challenge of orbiting ~50 satellites to hit continuous service in a handful of markets in late 2026 or early 2027."
Coello added that "Starlink's accelerated fixed growth and global brand recognition means ASTS competes with a leader that already has, in terms of revenue, the equivalent of 340 million global DTC (direct-to-cell) users (~680 million by the time ASTS launches in select markets)."
Both AST SpaceMobile and Starlink are racing to build networks to service the more than two billion people across the globe who lack access to high-speed internet services.
Starlink has been ramping up the pressure on its rival, spending nearly $20 billion last year to buy spectrum licenses from EchoStar, enabling EchoStar's Boost Mobile subscribers to access SpaceX's next-gen Starlink Direct-to-Cell service, while helping Starlink deliver superior service to smartphones.
Although Coello sees a "disconnect between valuation and execution progress," he's not bearish on AST SpaceMobile's potential for future growth.
"We disagree with those seeing ASTS as a 'meme stock,'" he said. "The technology remains highly disruptive and with potential for dual use. But we also disagree with those dismissing ASTS's multi-year delays and Starlink's unstoppable growth."