Is Buying a Launch Company AST SpaceMobile’s Next Vertical Integration Move?

Key Points

• AST SpaceMobile raised $1 billion in convertible senior notes, partly to potentially acquire or invest in a launch services provider.
• The company pushed its roughly 45-satellite deployment target from late 2026 to early 2027 due to current launch availability, and ASTS shares fell about 17% after the announcement.
• Greater control over launch capacity could reduce long-term costs and improve earnings per share, which has missed analyst expectations for five consecutive quarters.

While investors may know AST SpaceMobile NASDAQ: ASTS for its inherent volatility, the company has also developed a reputation for its vertical integration.

AST SpaceMobile continues to pursue a space-based cellular broadband network, boasting 95% vertical integration across its satellite assembly, integration, and testing facilities at its headquarters in Midland, Texas.

Now, the SpaceX NASDAQ: SPCX competitor may be taking its supply chain control strategy a step further. The clues lie in its recent private offering, and the implications could provide cost-savings for decades to come.

Is AST SpaceMobile Positioning for a Launch-Provider Deal?

Space stocks run the gamut. Some companies, like Iridium Communications NASDAQ: IRDM, provide global satellite communication networks while others, like Rocket Lab NASDAQ: RKLB, provide launch services for commercial and government customers.

But AST SpaceMobile, best known for its low Earth orbit (LEO) BlueBird constellation, may be preparing to take a page out of recently IPO’ed SpaceX’s playbook by gaining greater control over the launch services needed to expand.

On July 15, the company announced a private offering of $1 billion in convertible senior notes that come due in 2034.

AST SpaceMobile plans to use part of the proceeds for broader growth initiatives, including securing additional launch capacity through potential partnerships or acquisitions that could further vertically integrate the business and reduce its reliance on third-party launch providers.

In a separate Form 8-K filed on July 15, AST SpaceMobile disclosed that it has pushed its roughly 45-satellite deployment target from the end of 2026 to early 2027, based on current launch availability.

According to Tim Farrar, a consultant in satellite communications and wireless spectrum and founder of TMF Associates, AST SpaceMobile intends to either acquire or invest in a launch services provider.

On X (formerly Twitter), Farrar pointed to language in the company’s press release and its Form 8-K filing that he says is indicative of a “fascinating pivot” in strategy.

“The ASTS press release makes it pretty clear they now intend to buy/invest in a launch provider,” Farrar said. “Who is trying to sell out for less than $1 billion?”

However, Farrar also questioned whether the $1 billion offering could sufficiently fund an acquisition, positing that there may not be a launch provider currently for sale that is capable of launching 4,500 kg satellites in the near term.

The market's immediate reaction was bearish: ASTS fell approximately 17% on July 16 following the offering announcement and revised launch schedule. Although shares subsequently rebounded more than 10% on July 21 as investors weighed the financing’s dilution risk against its potential to help AST SpaceMobile secure additional launch capacity.

But the bigger story may be the long-term cost savings that a vertically integrated launch services business would provide.

Why Greater Launch Control Could Lower AST SpaceMobile’s Long-Term Costs

Currently, the company relies on third-party launch providers, including SpaceX and Jeff Bezos-founded Blue Origin. Those services come at a steep price.

Although AST SpaceMobile’s contracted Falcon 9 pricing is not publicly disclosed, assuming a negotiated rate of roughly $55 million to $65 million per launch, cumulative costs would exceed the $1 billion size of the private offering after approximately 16 to 19 launches.

Farrar argues that while “AST intends to buy a launch company,” the move is “likely foolish” but necessary in order to keep up with its D2D network timeline.

If greater control over launch capacity lowers AST SpaceMobile’s costs, it could have a positive effect on AST SpaceMobile’s income statement, serving as an eventual catalyst for bottom-line growth. This would, in turn, improve the company’s earnings per share (EPS)—a much-needed tailwind after five consecutive earnings misses punctuated by a big Q1 miss of negative 66 cents against analyst expectations of a 23-cent loss.

What a Launch-Provider Investment Could Mean for AST SpaceMobile

By moving beyond BlueBird manufacturing and D2D network management, integrating launch services would allow AST SpaceMobile to bring launch logistics, ground infrastructure, and payload delivery into the fold—not only for its own LEO satellites but for strategic partners, of which it has more than 50, and various commercial and government clients.

An additional benefit would be avoiding launch delays and third-party mishaps that could further jeopardize its fleet expansion goal. On April 19, for example, Blue Origin’s New Glenn rocket deposited BlueBird 7 into lower-than-planned orbit. The satellite ultimately needed to be de-orbited, and to add insult to injury, shares of ASTS were down about 15% in premarket trading on April 20.

Integrating a launch provider would accelerate AST SpaceMobile’s already-significant burn rate, which is currently between $1.4 billion and $1.45 billion. Some of that could be offset by eliminating reliance on third-party providers, but as ASTS’s 2.69 beta suggests, owning the stock is anything but a smooth ride.