Many investors may understand the alphabet(NASDAQ: GOOG)(NASDAQ: GOOGL ) As the parent company of Google, YouTube, and the artificial intelligence (AI) model, Gemini. But the company also has an investment arm that invests in high-growth companies in AI, healthcare, infrastructure and even space.
The technology giant has a portfolio of 29 stocks, according to its most recent 13F filing, and the aerospace company AST SpaceMobile(NASDAQ: ASTS ) It tops the list as its largest public stock investment with 8.9 million shares worth $903 million as of this writing. Here’s what investors need to know about the satellite company and Alphabet’s investment in it.
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AST SpaceMobile is an early stage satellite company that has transitioned past research and development and commercial operations. The company is building a global cellular broadband network in low Earth orbit to provide high-speed connectivity to standard mobile devices.
Alphabet first invested in AST SpaceMobile through convertible notes in early 2024. The alphabet, with AT&T and Vodafonewas the first investor in these convertible notes, which were convertible into common stock at $5.75 per share.
As part of the deal, AST SpaceMobile could force the exchange if the stock price traded 130% above the exchange rate for 30 days, which it did by early 2025. As a result, the company told shareholders, including Alphabet, that it would convert the notes into approximately 26 million shares. Alphabet’s stake represents the 8.9 million shares it holds today.
Image source: Getty Images.
In recent years, the company has won major commercial and government contracts with 50 mobile operators serving 3 billion customers worldwide. It has also won contracts with the United States government, including a $43 million contract to support the Space Development Agency (SDA) and a $20 million contract with the Defense Innovation Unit to support land, sea and air communications through a prime contractor.
AST SpaceMobile has done a great job securing major deals with telecommunications providers and the US government. The future for the satellite operator will be to deploy its satellite tower to enable continuous coverage in key markets in the US, Europe and Japan. To do this, the company plans to have 45 to 60 satellites in orbit by the end of this year.
So far, the company has launched six of its Bluebird satellites into space. Five of these are small satellites with a 693 square foot communications array. Late last year, the company launched its sixth satellite, a next-generation 2,400-square-foot model that is currently the largest communications satellite array ever deployed in low-Earth orbit. The seventh satellite is covered by Blue Origin’s new Glenn launch vehicle, which is scheduled to launch this month.
In the long term, AST SpaceMobile aims to build a satellite constellation that provides continuous coverage in key markets, deploying 90 to 100 satellites in low Earth orbit. Getting there will require significant investment, as each Bluebird satellite costs between $21 million and $23 million.
The good news for investors is that AST SpaceMobile has built its war chest. At the end of last year, the company had approximately $2.8 billion in cash and equivalents. It raised $1 billion through convertible senior notes in February and has $80 million of liquidity remaining under its existing cash-equity facility.
Accordingly, analysts who cover the stock expect AST SpaceMobile to generate revenue of $178 million this year, $805 million in 2027, and $2 billion in 2028. Analysts also expect the company to turn a full-year profit in 2028.
AST SpaceMobile has strengthened its balance sheet, and management told investors during its most recent earnings call that it is now fully funded to build and launch a constellation of 100 satellites, which would be enough to provide continuous cell service around the world. The fact that the company is now fully funded is a good sign for investors.
That said, the stock isn’t cheap by any means, and it currently trades at 155 times this year’s estimated sales and about 81 times the company’s estimated 2028 earnings. For this reason, AST SpaceMobile stock remains a favorite for aggressive investors who bet on its growth who can absorb the volatility that comes with it.
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Courtney Carlson has posts in alphabetical order. The Motley Fool owns and recommends positions in AST SpaceMobile and Alphabet. The Motley Fool recommends Vodafone Group Public. Motley Fool has a disclosure policy.
Alphabet owns 8.9 million shares of this hot spot stock. Is it shopping? Originally published by Motley Fool
