Since the record-breaking June IPO, SpaceX shares continue to elicit both love and hate on the stock market. Many question if Elon Musk’s rocket and AI business is truly worth the high price.
It reported revenue of $14.6bn in Q3, up 161% year on year, along with $40bn of financing for AI chips. But brokers can’t seem to agree: their targets range from $224 to $800.
Yet while attention stays fixed on SpaceX, some investors are looking at a smaller satellite business that Vodafone‘s betting on.
AST SpaceMobile
AST SpaceMobile (NASDAQ:ASTS) is emerging as a more interesting, albeit riskier, way to play satellite-to-phone connectivity. It isn’t a sure thing, but the recent sell-off has created a contrarian case.
Of course, SpaceX has made life harder for the smaller rival. In October, it agreed to buy a nationwide portfolio of 800MHz low-band spectrum intended to strengthen Starlink Mobile, SpaceX’s direct-to-device service.
That knocked AST shares down to a 52-week low.
Again, analysts are divided. Piper Sandler recently cut its AST rating to Neutral and lowered its target to $54, citing launch and competition risks. Meanwhile, Deutsche Bank moved the other way, upgrading the shares to Buy with a $93 target.
I understand the uncertainty. AST still needs to launch satellites, secure regulatory approvals and keep telecom partners committed. Those are demanding tasks, and delays can be expensive.
Why Vodafone matters
Vodafone’s central to the bull case. Its satellite service relies on AST through Satellite Connect Europe, their joint venture. It’s currently running customer trials, with a beta service targeted for early 2027.
Encouragingly, Ofcom has already cleared VodafoneThree to use 900MHz spectrum for satellite-to-phone services.
There’s another sign that Europe’s carriers want an alternative to SpaceX. Vodafone, Deutsche Telekom, Orange and Telefónica have signed a letter of intent to explore a joint bid for European mobile-satellite spectrum.
I’m in no way suggesting that AST is a ‘SpaceX killer’ – it doesn’t have the capital, rockets or massive satellite fleet. But it could adopt an important role in Europe as the ‘non-Musk’ option.
If Vodafone and other carriers are wary about relying on SpaceX, AST’s technology and spectrum could become strategically valuable.
The big names paying attention
The institutional activity is the part I find most intriguing. This year, Bank of America lifted its stake by 140.3% while Tidal Investments bought an additional 1,038,546 shares.
Another broker, Tema ETFs, raised its position from just 916 shares to 1,003,815 shares.
Deutsche Bank analyst Bryan Kraft wrote: “We are upgrading ASTS to Buy and maintaining our $93 PT.” He argued that the market had misread SpaceX’s spectrum purchase and that AST’s spectrum value now accounts for nearly all of its enterprise value.
That makes it a bet on carrier fear – if SpaceX becomes too powerful, Vodafone and its peers may need AST more, not less.
The next step
It goes without saying that AST’s more risky. SpaceX has massive scale, a stronger spectrum position and a faster launch cadence. To get ahead (or even compete at all), AST must deliver satellites, win approvals and launch Vodafone’s UK service on time.
But competition makes things interesting. With SpaceX already at a sky-high valuation, AST’s a value play with risk/reward potential that’s worth thinking about.
Should you invest £5,000 in AST SpaceMobile right now?
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Mark Hartley does not hold any positions in the companies mentioned.
This story originally appeared on Motley Fool
