Why AST SpaceMobile Stock Shot Higher Today

AST SpaceMobile (NASDAQ:ASTS) stock has continued to soar since it announced its latest business update and second-quarter results last week. The march higher began after the company reaffirmed that plans for its most critical satellite launch ever are on track.

On Friday, Bank of Nova Scotia, or Scotiabank, analyst Andres Coello raised his firm's price target on the space communications company by a whopping 33% to $28 per share. Coello maintained the equivalent of a buy rating, even though AST shares closed Friday at $31. The rise in AST shares continued today, with the stock higher by 15.6% as of 12:55 p.m. ET.

Satellite launch lottery

But Coello's price target increase isn't the real reason AST shares have been going parabolic recently. It's the excitement investors are feeling for the company's upcoming launch of its first commercial satellites. AST has also heightened that excitement with an offer for retail shareholders to potentially attend the five-satellite BlueBird launch next month.

The launch is a critical step for the company as it seeks to deploy the five satellites in low-earth orbit to enhance space-based cellular broadband connectivity.

AST SpaceMobile president Scott Wisniewski stated, "As we transition toward the anticipated launch, we want to include as many of our shareholders as we can who have supported us along the way in our journey."

AST counts several global communications firms as both financial backers and customers. A successful launch should accelerate subscriber growth using AST's satellites, according to the Scotiabank analyst. That could result in an increase in average revenue per user (ARPU), and interest from more mobile network operators.

AST's BlueBird satellites have already moved to the launch facility in Cape Canaveral, Florida. The launch window is expected to start on Sept. 11. Investors are driving up shares as they buy into the excitement generated by the company. But that should also bring a note of caution. It's possible that the launch has become a "sell the news" event with the stock gains already priced in.

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Howard Smith has no position in any of the stocks mentioned. The Motley Fool recommends Bank Of Nova Scotia. The Motley Fool has a disclosure policy.