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On paper, you'll be hard-pressed to find a more impressive and relevant company to buy than AST SpaceMobile (NASDAQ:ASTS) stock.

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Enabling a potential paradigm shift in global connectivity, it's almost a guarantee that ASTS stock will skyrocket higher if the underlying technology firm succeeds in its mission.

However, that's a big if, compounded by the manner in which the organization went public.

But before we get into all the nitty gritty, let's discuss what makes ASTS stock so intriguing. As someone who writes the equivalent of 135 single-company stories for various publications, I've learned the value of relying on my professional colleagues regarding the avoidance of double work.

While I could explain AST's business, since InvestorPlace contributor Tom Kerr did an excellent job, I'll just defer to him:

The company is working to provide a global broadband solution that integrates satellite communications with an existing carrier's basic cellular service. In theory, users won't know if they're using a tower connection or a satellite.

The opportunity set is very large. More than five billion people have cell phones, which is two-thirds of the world's population. And while about the same number of people have internet access, four out of every ten people do not.

Further, as a result of its various innovations, Kerr writes that AST could potentially close connectivity gaps, facilitating greater access to mobile internet solutions. Hence, I'm not surprised that ASTS stock garnered intense interest while the underlying firm was a private enterprise.

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This segues into a curious point about the tech firm. Backed by powerful players in the telecommunications sector such as Vodafone (NASDAQ:VOD), Rakuten (OTCMKTS:RKUNY), American Tower (NYSE:AMT) and Samsung, ASTS stock nevertheless arrived on the public scene via a business combination with a special purpose acquisition company (SPAC).

It's curious because SPACs haven't quite lived up to the hype.

ASTS Stock Could Be a Coin Toss Speculation

In the year-to-date, SPACs have underperformed benchmark indices. In particular, these blank-check firms reached a fever pitch in mid-February before deflating, quickly at first and gradually later on. In hindsight, it's not the euphoria you wanted to be involved in.

Still, I can appreciate why AST SpaceMobile chose to go public via a reverse merger. As KPMG Advisory notes, SPAC-based business combinations offer myriad advantages, primarily faster execution than a traditional IPO and lower costs of marketing.

Further, by going the SPAC route, regular retail investors can speculate on the ground floor with the investment that would eventually become ASTS stock.

However, KMPG also warns about several disadvantages of this approach. The big one of course is shareholding dilution. The lack of underwriting — pre-merger SPACs are still publicly traded companies — means that in many cases, the deck is stacked well against the retail investor, as well. It's similar to the house advantage in a casino but much worse.

In fact, Harvard Law warned that the "primary source of SPACs' high cost and poor post-merger performance is dilution built into the circuitous two-year route they take to bringing a company public. Along the way, SPACs give shares, warrants, and rights to parties that do not contribute cash to the eventual merger."

Hold the flipping phone, my friends. If ASTS stock is so dilutive — keep in mind shares were priced at $22.50 in early February of this year and trade a little above $10 today — why did the issuing company go the SPAC route?

We can only speculate regarding true motivations. But in my opinion, if AST had the true groundbreaking solution to connectivity issues, it would seem the traditional IPO would have been the better approach.

Because right now, the SPAC association is a distraction.

Heads or Tails

As Kerr also pointed out, AST features a technology that's highly proprietary that cannot be disclosed because of competitive concerns. That's totally understandable but as my colleague said, it puts investors in an ambiguous situation. ASTS stock could jump higher or it could crumble.

For me, I've got to look at the market. Let's face it — fundamentally, not a whole lot has changed about the company. Yet ASTS stock is currently down sharply from its peak closing price.

Don't get me wrong, its recent 11% surge above $10 is nothing to scoff at, but it does make you wonder about the forward viability of this undisclosed technology. This is especially true in an environment when boring funds tied to blue-chip indices are returning better numbers.

If you're a gambler, it's an intriguing enough narrative that you could throw some speculation funds in here. But for anybody else, even the predictable stocks are performing better than ASTS is on a trailing-year basis.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

The post Here's What Makes AST SpaceMobile the Quintessential SPAC appeared first on InvestorPlace.