Is the Launch-Provider Working on the Next Vertical Integration Movement

While investors do not know AST SpaceMobile NASDAQ: ASTS due to its inherent volatility, the company has also built a reputation for its vertical integration.

AST SpaceMobile continues to pursue a space-based mobile broadband network, boasting 95% direct connectivity across its satellite assembly, integration, and testing facilities at its headquarters in Midland, Texas.

Now, SpaceX NASDAQ: SPCX Our competitors may be taking their supply chain management strategy a step further. The clues lie in its recent private offerings, and the results could provide cost savings for decades to come.

Is AST SpaceMobile a Provider Implementation Agreement Position?

Space stocks run the gamut. Other companies, such as Iridium Communications NASDAQ: IRDMprovide global satellite communications networks while others, such as Rocket Lab NASDAQ: RKLBprovide implementation services to commercial and government clients.

But AST SpaceMobile, best known for its low Earth orbit (LEO) BlueBird constellation, may be preparing to take a page out of the recently IPO’ed SpaceX’s playbook by gaining greater control of the launch services needed to expand.

On July 15, the company announced a private offering of $1 billion of senior convertible notes due 2034.

AST SpaceMobile plans to use a portion of the proceeds for broader growth efforts, including acquiring additional launch capacity through potential partnerships or acquisitions that could directly integrate the business and reduce its reliance on third-party launch providers.

In a separate 8-K form filed on July 15, AST SpaceMobile disclosed that it has pushed back its goal of launching 45 satellites from late 2026 to early 2027, based on current launch availability.

According to Tim Farrar, a satellite communications and wireless spectrum consultant and founder of TMF Associates, AST SpaceMobile intends to acquire or invest in a startup services provider.

At X (formerly Twitter), Farrar pointed to language in the company’s press release and its Form 8-K filing that he said indicated an “interesting pivot” for the strategy.

“ASTS’ press release makes it very clear that they now intend to buy/invest in a startup provider,” Farrar said. “Who’s trying to sell for less than $1 billion?”

However, Farrar also doubted that the $1 billion offering would adequately fund the purchase, stating that there may not be a commercial launch provider capable of launching 4,500 kg satellites in the near future.

The market’s immediate reaction was bearish: ASTS fell nearly 17% on July 16 following the offer announcement and revised launch plan. Although shares rebounded by more than 10% on July 21 as investors weighed the risk of funding cuts against its potential to help AST SpaceMobile secure additional launch capacity.

But the bigger story may be the long-term cost savings that a direct integrated startup services business can provide.

Why Greater Launch Control Can Lower AST SpaceMobile’s Long-Term Costs

Currently, the company relies on third-party launch providers, including SpaceX and Jeff Bezos-founded Blue Origin. Those services come at a steep price.

Although the price of the AST SpaceMobile with the Falcon 9 contract has not been publicly disclosed, it is assumed that the negotiated price is about $55 million to $65 million per launch, the combined cost will exceed the $1 billion size of the secret offering after about 16 to 19 launches.

Farrar asserts that while “AST intends to buy the startup,” the move is “probably a no-brainer” but necessary to keep up with the D2D network’s timeline.

If greater control over launch capacity lowers AST SpaceMobile’s costs, it may have a positive impact on AST SpaceMobile’s income statement, serving as a catalyst for bottom-line growth. This, in turn, will boost the company’s earnings per share (EPS)—a much-needed headwind after five consecutive earnings misses marked by a big Q1 miss of 66 cents versus analyst expectations for a loss of 23 cents.

What Launch-Provider Investment in AST SpaceMobile Could Mean

Going beyond BlueBird production and D2D network management, integrating launch services will allow AST SpaceMobile to bring launch, ground infrastructure, and payload delivery to the fold—not just for its LEO satellites but with its more than 50 strategic partners, as well as a variety of commercial and government customers.

An additional benefit would be to avoid implementation delays and third-party risks that could jeopardize its goal of expanding vehicles. On April 19, for example, Blue Origin’s New Glenn rocket put BlueBird 7 into a lower orbit than planned. The satellite eventually needed to be removed, and to add insult to injury, ASTS shares were down nearly 15% in premarket trading on April 20.

Adding a launch provider will accelerate AST SpaceMobile’s already significant burn rate, currently between $1.4 billion and $1.45 billion. Some of that could be solved by removing reliance on third-party providers, but as ASTS’s 2.69 beta suggests, having stock isn’t easy.

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