Why AST SpaceMobile Stock Popped Today

AST SpaceMobile (NASDAQ: ASTS) stock, a pioneer in the movement to connect ordinary, off-the-shelf cellphones directly through satellite communications, soared 10% through 10:10 a.m. ET Wednesday morning after signing up a new partner.

As AST announced last night after close of trading, major Canadian telecommunications provider Telus Corporation (NYSE: TU), will partner with AST to “bring space-based cellular broadband service to places it’s never reached before across Canada.”

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“TELUS will invest in ground-based satellite infrastructure,” say the companies, with AST providing the BlueBird satellites. Additionally — and perhaps even more exciting for investors — Telus will “become an equity shareholder in AST SpaceMobile, reinforcing the long-term alignment between the two companies.”

There’s no confirmation that Telus will be paying for AST shares, however (potentially bolstering the stock price). Indeed, it’s reasonable to assume AST offered an equity stake in the company as an inducement to get Telus to sign up as a partner. Either way, the equity stake should ensure that Telus gives its direct-to-cell (DTC) business to AST SpaceMobile, and to no one else, going forward.

AST says the partnership will allow Telus customers to “send texts, make calls and use data in Canada’s most remote locations,” but beginning only in “late 2026.”

While this sounds optimistic, perversely, it would appear to imply that AST’s DTC service still isn’t ready to begin, even at a beta level, in the U.S. or in Canada, in the first half of this year, as AST had predicted. If that’s the case, investors who’ve been betting on AST turning profitable next year, as Wall Street analysts had predicted, may be in for a disappointment.

Not all will agree, but AST’s still a sell for me.

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