I missed the massive rally in ASTS that started on May 15th, so I did a lot of research and patiently waited for the right moment to enter my trade. I currently hold about $75K worth of put options.
Here’s why I think ASTS is headed for a big drop:
1.The Surge Itself is the Biggest Bearish Signal
ASTS has skyrocketed nearly 2000% in just three months. For comparison, NVDA took three years to climb 2000% from its COVID-19 low, and NVDA actually had strong revenue and profit growth backing it up. ASTS, on the other hand, is a company that might not even be profitable until 2028. There's no comparison in terms of valuation or future potential.
A rapid stock price increase often leads to profit-taking pressure and can even cause unforeseen operational issues for the company. According to their Q2 report, "The increase in fair value of warrant liabilities resulted in a loss of $66.1 million for the three months ended June 30, 2024, largely due to a significant increase in our share price." The stock price is now three times higher than it was on June 30th. If it doesn’t drop, I expect warrants to cause an even bigger loss in Q3, possibly between $200 to $300 million. ASTS only has $287.6 million in cash and cash equivalents, so this would be a heavy blow to their balance sheet.
2.Launching Satellites Requires Continuous Funding
They’re launching five satellites in September, and they’ll need to launch 25 or 95 more after that.
According to their Q2 report,"We currently estimate we will need to raise approximately $275.0 million to $325.0 million to fund operating expenses and capital expenditures necessary to design, assemble and launch 20 Block 2 BB satellites and operate a constellation of 25 BB satellites." "We plan to achieve service in the selected, targeted geographical areas with the launch and operation of 25 BB satellites and achieve substantial service in all targeted geographical areas to meet our long-term business goals with the launch and operation of approximately 95 BB satellites."
Their 2024 operating funds are in place, but I believe they’ll need to raise $275 to $325 million in 2025, and if they want to scale up to 95 satellites in 2026, they’ll need at least $1.1 to $1.3 billion. This means they’ll need to issue new stock or debt. Based on past actions, they’ll likely choose convertible debt. They’ve already issued about $310.8 million in convertible debt, and using the $5.75 conversion price from the January 2024 issuance of $110 million in convertible notes (I couldn’t find records for all their convertible debt), that converts to about 53 million shares—roughly one-third of the current shares outstanding.
My view is that the existing convertible debt will inevitably convert to stock, diluting shareholder equity, and they’ll need to keep issuing debt or stock to raise funds. The debt or stock issued will turn into company assets, and for a telecom-like company, the P/B ratio is usually below 2. For instance, VZ’s P/B ratio is 1.8, and AT&T’s is 1.34. However, ASTS has a staggering P/B ratio of 33.66. This means either the current price is way too high, or they’ll need to issue a lot of new shares in the future, either of which would drive the stock price down.
3.History Shows a Sharp Pullback is Inevitable After a Rapid Surge
I believe ASTS has long-term potential and could reach $50 or $100, but that might not happen until 2028 or 2030, not now. We’re currently in the phase where the stock has surged 2000%, and both volume and price are starting to decline. Based on ASTS’s past behavior, sharp rallies are typically followed by 50%-90% corrections. For example, in early February 2021, the stock doubled, hitting a high of $25.370 on February 10th, only to drop to $11.21 by March 4th. Two months later, on April 19, 2021, it was down to $7.12.
Again, in late July 2022, the stock doubled, peaking at $14.270 on August 17th, but by the end of September, it was down to $7, and by December, it was only $3.6.
So, I expect a reasonable pullback of 50%-75% over the next one to three months, with a more extreme drop of 80%-90% possible in the worst-case scenario.
Posted by jackyxul4
32 Comments
Lol they are a monopoly now that Starlink and T-Mobile just got rejected by the FCC on Friday evening. Their current satellites are incompatible with their current rules and basically now at least 12-18 months behind ASTS. T-Mobile may switch to ASTS as they have shown in the filings that their spectrum works on their satellites as well. Also First Net funding was confirmed that same week for ASTS. They also were above $18 for 20 out of 30 trading days unlocking an additional 150 million dollars for them which they may not even need from warrants. They are funded for BB2 satellites and the launch is the unlock for other MNOs to cough up cash if they want to play. They reiterated two times no need for dilution as they most likely have DoD, MNOs, already contracted. They were sitting on Verizon deal for a good 4 months before even saying a peep. Good luck fellow regard lol
35,000 shares ASTS @2.87 cost basis
THIS is why I check WSB 50 times a day! I love the chaos and trying to understand why people do what they do with their money. Good luck brother.
Me: 400 shares and some calls.
Classic it went up a lot therefore it must go down. What’s that saying again? The market can stay irrational longer than you can stay solvent.🤦🏻♂️
Terrible. There was $1M Insider buy on the 19th when it was $30+ a share.
They already have funding secured 
You wrote YOLO all in lower case, why am I therefore not surprised that you’re bearish on ASTS.
You think it will take till 2028 for $50, my man, when the sats get launched by the middle of September 2024 we gonna go straight to $50.
Great. Now if the stock goes up during the launch you will be known forever as ‘ASTS Guy’ 
!remindme 3 months
So reasons one and three is because it went up and you missed the rally.
Stinks of revenge trading which never works out very well for anyone.
Interesting but your logic is flawed
Points 1 & 3 are the same, essentially that what goes up must come down. Will do so sufficiently for you to make money in this case?
We’ll see, which is why I’ll focus on your substantive point 2
Your comparison of price to book of Verizon and AT&T is apples to oranges, where the first two own spectrum and use their invested assets of technologies belonging to others Vs AST Spacemobile with its novel technologies and large number of patents. It’s a tech company, and price-to-book ratios for tech firms can maintain at very high levels (even for huge caps like Microsoft, Google/ Alphabet, and Facebook/ Meta let alone smaller firms)
So the fact that ASTS has a high price-to-book ratio is not prima facie reason that it will fall
If anything, the successful launch and deployment of the next 5 satellites could be a positive catalyst to drive the stock higher. Conversely, any failures or even hiccups thereof could result in a pullback
So you are wagering a YOLO on puts on whether the early Sept launch goes well? It might work out for you, but hardly guaranteed
As someone on the other side, I believe you will be wrong
Position: 10k shares and 20 contracts Jan ’26 LEAPS
You are a moron.
The “loss” of $66.1 million reported in the statement is not an actual outflow of cash but an accounting entry that reflects the increase in the warrant liabilities due to the rising stock price.
Once they call the warrants and sell the shares at 11.50 they will have raised $140M dollars.
Wow that’s a lot of words for bearish sentiment on my calls and 110 shares, just gonna go ahead and inverse all of whatever that is.
Went up. Must come down. That’s some amazing analysis there. And it would have absolutely applied when ASTS was at 20. Obviously there will be fluctuations, but comparing to ONE stock is not analysis. Youa re going to lose a lot of money over time thinking this shallowly.
I don’t know shit about fuck but their mission sounds legit and they’re ahead of their competition. Guess me and my 272 shares are going down with the ship. Good luck.
OP even if your DD was correct, your options expiries are regarded
Drops $75K on puts because warrants are a liability… doesnt realize the warrants being exercised gives them a cash runway to rapid constellation rollout.
Holy shit dude. You belong here.
A similar post was made about [CAVA](https://new.reddit.com/r/wallstreetbets/comments/18d0g1y/cava_december_short_play_potential_crash_andor/). CAVA went from $32 at the time of the post to $122 today. Just food for thought.
i love reading DD posts like these. the cope is so desperate and pleading that it has me edging
Fuck your puts little boy. We going to the moooooon
Oh fuck you’re gonna die LMAO
u gonna end up our generations guh man
A high price to book is a side effect of:
1) being a company with no major assets yet because they are just starting to build them.
2) The whole point of the valuation of ASTS is efficiency compared to terrestrial networks. You can’t compare ASTS to MNOs with billions and billions of dollars of towers.
Funding for block 2 is already in place. The revenue CAGR will be start snowballing second half of 2025. First net funding as well as potential prepayments from MNOs are coming. Funding is not much of a concern. Also, it’s hard to argue about profitability when the only reason ASTS won’t be profitable is because of Capex TO MAKE MORE MONEY lol.
7413 shares, 1 Jan 2026 $10 call
I disagree with you. First, I’d say the stock may drop slightly after the launch, but I wouldn’t be surprised if it reaches $50 by the launch date. It’s a new technology, and Att and Verizon will likely advertise for cell phone service anywhere in the next coming years. Other cell phone services across the world will likely get in on it as well. They may not be profitable just yet, but I doubt it will go down from now until launch
They have $400M in cash once the warrants are redeemed. That’s enough to launch at least 12 more satellites which already places them well into cash flow positive territory.
FCC news release on Friday just ensured that ASTS is now the only game in town and Starlink won’t be able to start service anytime soon.
As usual Elon over promised and under delivered. The next couple of weeks are gonna be interesting.
The only bear signal you might get is the “sell the news” post-launch since this will get a bit boring afterwards for 3-4 months
Your points 1 and 3 is the same argument.
ASTS started at $10. It got punished for delays that are now behind us.
$2 to $10 is just a “normalization” stage.
$10 to $40 is derisking and subsequent re-rating and price discovery.
Markets are forward looking. Models like discounted cashflows allow valuating pre-revenue companies based on their future revenue. And ASTS estimated revenues are extraordinary.
Your argument about this being a funds intensive business is missing all the different ways ASTS can access those funds without dilution via a secondary offering.
Like:
* pre-paid commercial deals with MNOs
* EXIM lending
* federal 5G rural fund grants
* FirstNet and DoD/gov contracts
* warrants redemption
* private debt
* own revenue
* plus $300m cash available
Let me get this right. You said funding for 2024 is in place but not for 2025. So basically they’re good for 2024… so why tf do buy puts that expire in 2024, the year that ASTS will still be financially good and not in 2025 or 26 when they go broke according to you?
You said funding for 2024 is in place and yeah indeed they’re good for 2024… so you buy puts that expire in 2024 and not 2025? 
https://preview.redd.it/03lqojv8iokd1.jpeg?width=1234&format=pjpg&auto=webp&s=af205218f35e1233ddae920e867688bc7f2b2b4f
Dear lord, you’re risking $75k with this “diligence”?
You made some cash off those puts. Sell them get out while you can
>I missed the massive rally in ASTS that started on May 15th
Didn’t read further, that’s a lot of writing to justify revenge trading lol.
As someone who has held ASTS for 4 years I can tell you did absolutely zero DD and I’m sorry to say but you’re going to lose every penny. Remindme! 1 month
Thank you
I was on the fence on buying ASTS because people were talking positively about it on reddit
Any time I have ever bought a stock because of positive reddit feedback, I’ve lost money
Now that youve posted a negative sentiment, if I buy in now to invert you, it’ll go up, thanks bro