AST SpaceMobile Stock Sinks as SpaceX Fallout Rattles Space Sector

Key Points

• AST SpaceMobile shares have fallen more than 18% in a week and nearly 60% since their May 28 all-time high amid a broader space stock selloff.
• The decline follows a poorly received $1 billion convertible notes offering and concerns over heavy capital spending, with free cash flow not expected until at least 2028.
• Wall Street holds a consensus Reduce rating on ASTS, with high short interest of 21%, despite an $87 price target implying significant upside.

Space stocks are being battered this week, and AST SpaceMobile NASDAQ: ASTS is no exception. Shares of the Midland, Texas-based company have plummeted more than 18% since the market closed on Wednesday, July 15, and the principal culprit seems to be souring investor sentiment in that corner of the market.

With SpaceX NASDAQ: SPCX now trading below its IPO price, the Elon Musk-led firm’s poor performance has reverberated through the industry. Key rivals—including space-based direct-to-device (D2D) cellular broadband provider AST SpaceMobile, launch services provider Rocket Lab NASDAQ: RKLB, and commercial lunar exploration services provider Intuitive Machines NASDAQ: LUNR—have posted losses ranging from 18% to 26% over the past five days.

For ASTS shareholders, elevated volatility has become the expectation. But this recent development builds upon a more concerning, lengthier downtrend that has seen the stock slide nearly 60% since hitting its all-time high (ATH) on May 28.

AST SpaceMobile Is a Secondhand Victim of Both SpaceX’s Fallout and Success

On Thursday, July 16, shares of SPCX traded around 42% below their post-IPO high. That performance reflects the broader, ongoing pullback for CapEx-intensive tech stocks, which has had an outsized impact on the AI infrastructure trade.

But for space stocks, it has taken the form of an outright correction. As a D2D competitor to SpaceX, AST SpaceMobile has seen some of the worst losses as negatively shifting sentiment has coincided with the company’s poorly received offering of $1 billion in convertible senior notes, which come due in 2034. That has led to speculation that the capital-intensive nature of its fundamental business is cause for concern moving forward.

With SpaceX faltering, the spotlight has also turned to AST SpaceMobile’s balance sheet.

The company is forecast to spend roughly $3 billion this year and next, with positive free cash flow not expected until at least 2028.

Scaling to the extent that AST SpaceMobile is capital-intensive. In Q1, that contributed to year-over-year (YOY) net income contraction of more than 292% despite YOY revenue growth of more than 1,952%.

Subsequently, earnings per share (EPS) have suffered. In Q1, diluted EPS came in at negative 66 cents, missing the negative 23-cent consensus and marking the worst performance since the company went public in April 2021.

Meanwhile, SpaceX’s Starlink D2D dominance is fueling concerns that AST SpaceMobile’s BlueBird deployments are failing to keep up with the company’s 2026 launch target of putting 45 satellites into low Earth orbit by early next year.

A New AST SpaceMobile 2x Leveraged ETF Fails to Attract Inflows

While there are plenty of fundamental reasons for investors to be concerned, another comes in the form of a poorly timed leveraged exchange-traded fund (ETF) debut.

On June 23, Leverage Shares launched nine new 2x single-stock leveraged ETFs, one of which was the Leverage Shares 2X Long ASTG Daily ETF NASDAQ: ASTG. According to a press release, “the new Cboe-listed ETFs are tailored to target 200% exposure to the daily performance of their underlying stocks.”

As a result, since its post-debut peak on July 2, the ETF has doubled ASTS’ losses and is down around 63%. The poor timing of its issuance has disincentivized inflows for the fund and added another sell-the-news headwind for AST SpaceMobile, much to the benefit of short sellers (more on that below).

Wall Street’s Outlook Remains Rightfully Reserved

Apart from being the foremost competitor to SpaceX, AST SpaceMobile’s most distinguishing hallmark is perhaps its exceptionally high volatility, which is demonstrated by its current beta of 2.69.

For speculative investors who are comfortable with the company operating at a sizable loss—both presently and into the foreseeable future—ASTS’ crash from its ATH may be an ideal setup for entry. The stock’s $87 consensus price target implies nearly around 58% upside from current prices.

That may in part explain bullish buying among institutional investors. In Q2, inflows of $110 million easily surpassed outflows of $1.77 million, building upon the momentum seen in Q1 with $329 million in inflows versus $19 million in outflows.

But for Wall Street’s pundits, AST SpaceMobile’s heightened volatility is a red flag.

Overall, ASTS receives a consensus Reduce rating. Of the 11 analysts currently covering the stock, three assign it a Sell rating, six assign it a Hold rating, and just two assign it a Buy rating. Current short interest remains concerningly high at more than 21%, or 64.7 million shares of the approximately 388 million shares outstanding.