A Fresh Look at AST SpaceMobile (ASTS) Valuation Following New Equity Offering and Q3 Progress

AST SpaceMobile (ASTS) has just announced a follow-on equity offering of nearly $24 million. This move tends to grab investor attention due to its fundraising implications and potential impact on existing shares.

See our latest analysis for AST SpaceMobile.

After launching the new equity offering, AST SpaceMobile’s recent revenue jump and reduced net loss in Q3 have kept the spotlight on its growth story, even as volatility has crept in. The stock’s year-to-date share price return is a stellar 137%, building on impressive long-term total shareholder returns that continue to draw in momentum-driven investors despite some short-term swings.

If this level of volatility has you curious about what else is moving, consider broadening your search and uncovering opportunities with fast growing stocks with high insider ownership.

The big question for investors now is whether AST SpaceMobile is undervalued given its recent financial strides, or if the market is already factoring in years of future growth. Is there still a buying opportunity here?

Price-to-Book Ratio of 11.5x: Is it justified?

The current price-to-book (P/B) ratio for AST SpaceMobile stands at 11.5x, well above both the telecom industry and peer group averages. With a last close price of $51.37, the stock appears expensive on this metric compared to its sector.

The price-to-book ratio compares a company's market valuation to its net assets, making it a common benchmark for asset-heavy industries like telecom. A high P/B typically indicates the market expects significant future growth or sees intangible factors at play.

AST SpaceMobile’s ratio not only dwarfs the US Telecom industry average of 1.1x but also exceeds the peer group’s 5.9x average. This substantial premium suggests investors are pricing in considerable growth potential. However, the justification depends on forthcoming execution and future earnings delivery. Without a calculated fair ratio from regression analysis for this stock, it is difficult to anchor expectations on where the valuation could trend.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Book of 11.5x (OVERVALUED)

However, growth optimism faces risks from persistent net losses and recent share price volatility. Both of these factors could challenge the current valuation narrative.

Find out about the key risks to this AST SpaceMobile narrative.

Another View: DCF Suggests a Different Story

While the price-to-book ratio paints AST SpaceMobile as expensive, our SWS DCF model comes to a very different conclusion. Based on projected future cash flows, the DCF estimates fair value at $190.36, which is far above the current share price. This means the stock could actually be undervalued. Does this disconnect mean the market is missing something crucial, or are risks just too high?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out AST SpaceMobile for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 917 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own AST SpaceMobile Narrative

If you see things differently or want to dig deeper into the numbers on your own, you can easily build your own view in just a few minutes. Do it your way

A great starting point for your AST SpaceMobile research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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