Watch out, Starlink. ASTS stock may be the future of space broadband

AST SpaceMobile (ASTS) has been on a roller coaster in recent months, but it remains one of the aerospace industry's best-performing stocks for 2024.

After years of R&D, the space-based cellular broadband developer is finally moving toward commercialization, opening the door to optimistic forecasts about revenue and growth.

Meme stock or up-and-coming space broadband king?

ASTS stock has rallied nearly 300% in 2024, reaching an all-time high closing price of $38.60 on Aug. 19. By that point in the rally, ASTS stock was up 700% for the year.

ASTS shares have since corrected roughly 37%. On Nov. 29, the stock closed up 3.1% at $24.00.

Although a big Q3 earnings miss largely drove the recent volatility in AST stock, analysts have also attributed the wild swings to a speculative investor base.

AST stock "has become, for better or worse, a meme stock," said Chris Quilty, a securities expert and co-CEO of Quilty Space.

"We've seen it go from $2 to $30 overnight, which is evidence of a volatile investor," he said.

Amid the recent correction, there's evidence that ASTS' volatile investor base has lost interest in the stock. ASTS trading volume is only 15% of its 65-day average, according to industry data.

Nevertheless, industry analysts believe there's more substance to AST SpaceMobile than its appeal to individual investors.

What's driving ASTS stock in 2024?

Despite the recent sell-off, AST stock has attracted heavy institutional interest as the company pushes toward commercializing its satellite technology.

In September, AST SpaceMobile launched its first batch of commercial satellites that will beam service directly to smartphones.

The company's goal is to eliminate cellular connectivity gaps in the United States and provide nearly 100% nationwide coverage through its low-orbit satellites.

AST is backed by telecom giants AT&T and Verizon, which have invested in the company and offered a portion of their low-band spectrum to enable nationwide satellite coverage.

Because AST's business model is building broadband cellular networks that complement existing cell phone carriers, it's not competing with telecommunications companies.

Instead, its biggest direct competitor is Elon Musk's Starlink.

While Starlink has a first-mover advantage, AST's industry backing shows there's enough untapped market potential for another big player in the space broadband industry.

Although AST has future earning potential, it's not out of the woods. Quarterly financial statements show negative cash flow, operating losses, and large capital expenditures for the company.

Nevertheless, analysts at Deutsche Bank forecast that AST could turn cash-flow positive by 2027 as it sends more satellites into orbit.

The bank expects AST revenues to grow to $1.4 billion by the end of 2027 before jumping to $5.1 billion by 2030.

Maxim Manturov, who heads investment research at Freedom24, generally agrees with this assessment and thinks AST could really hit its stride in the 2030s.

"The company is on track to reach profitability by 2027, with annual revenue projected to grow to $35 billion by 2032," said Manturov.