On Wednesday, the value of AST SpaceMobile's shares plummeted by 9%.
It's a rough day in the satellite communication industry, with major players experiencing significant losses. AST SpaceMobile (-8.80%) and rival Globalstar (-3.31%) saw their stocks plummet, with AST falling a whopping 9.3% and Globalstar suffering a staggering 27% loss in market cap.
Why the sell-off? You might ask. The answer lies in the latest moves by Elon Musk's SpaceX. Bloomberg reported that Apple has been secretly collaborating with SpaceX and T-Mobile to introduce Starlink support to iPhones. An iOS update released on Monday contains the necessary code to enable Starlink communications technology.
This alliance between SpaceX, Apple, and T-Mobile poses a significant threat to both AST and Globalstar. Apple previously announced plans to use Globalstar's satellites for emergency phone text service in cellphone dead zones, but now, it seems, they're considering a switch to SpaceX's more extensive constellation of Starlink direct-to-cell capable satellites, which T-Mobile has already partnered with.
SpaceX kicked off beta services on this partnership on Monday, urging T-Mobile users to update to iOS 18.3 to access the service. Globalstar's partnership with Apple could be in jeopardy as a result.
On the other hand, AST SpaceMobile is still in the process of bringing its own direct-to-cell satellite service to market. They launched their first five operational BlueBird DTC satellites last summer but haven't announced beta services yet. In contrast, SpaceX announced in December that it has over 300 DTC satellites in orbit and had completed the first orbital shell, which is a precondition for launching beta services.
So, it seems SpaceX is currently leading the space race to turn everyday terrestrial smartphones into functional satellite phones. This competitive edge is causing a drop in AST (and Globalstar) stocks.
Enrichment Insight:SpaceX, T-Mobile, and Apple are testing the integration of Starlink's satellite services for T-Mobile users, starting with text messaging in areas without cellular coverage. This trial is a part of SpaceX's strategy to provide network services to remote areas where traditional networks fail. The collaboration aims to provide uninterrupted coverage without the need for traditional cell towers, benefiting emergency responders, travelers, and people living in underserved regions. This development poses a significant challenge to AST SpaceMobile and Globalstar, as they face increased competition in the satellite broadband market.
The drop in AST SpaceMobile and Globalstar's stocks could be attributed to investors' concerns about their competitiveness in the satellite broadband market, given SpaceX's lead in turning everyday smartphones into functional satellite phones. Moreover, the potential switch of Apple's partnership from Globalstar to SpaceX's Starlink direct-to-cell capable satellites could further impact Globalstar's finance and money flow in the investing world.