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AST SpaceMobile (NASDAQ: ASTS) followed a spectacular May with another strong performance in June, with the stock climbing 40% for the month, according to data provided by S&P Global Market Intelligence.

Investors are increasingly getting excited about this space start-up's chances for success, and the stock is rocketing higher as a result.

First customers, now cash

AST is a space telecommunications company hoping to build a space-based broadband wireless network accessible by standard mobile phones. Satellite phones have been available for years, but AST's goal is to connect standard devices to its network, allowing for increased cellular coverage in areas where it is hard to build towers.

The company got a big boost in May when it signed contracts with both AT&T and Verizon Communications to eventually provide access to its network to customers of the two biggest U.S. operators. But there are still major questions about how AST will fund the rollout of its network.

AST expects to launch five satellites this year at a cost of about $115 million. The company needs about 20 satellites to provide full coverage in the U.S. and as many as 168 satellites to span the globe, which would require billions in funding. AST has $210 million in cash on hand.

In June, investors got a partial answer to that question when AST filed to sell as many as 10.4 million additional shares as it sees fit. That won't be nearly enough to fund the complete rollout of global service, but coupled with prepayments from AT&T and Verizon it could help close the gap and get enough satellites into orbit to begin commercial service.

Is AST SpaceMobile a buy?

AST shares jumped more than 400% from the start of May until the end of June, recovering most of what the stock lost in the last two years in just a matter of weeks.

It is fair to say that investor enthusiasm about AST's potential got a big boost from the customer announcement, but those considering buying in now need to understand this is still a risky stock. AST seemingly has proven its technology works but faces massive costs to scale its operations for commercial use.

We don't yet know how reliable the connection will be in a commercial setting, when it is more than just one test phone connecting to the network. Those questions will ultimately factor into usage and revenue, assuming the satellites are put into orbit.

AST also faces difficult choices about where to deploy its initial fleet of satellites. Remote parts of the globe have the greatest need for coverage, but also by their nature fewer potential revenue-producing customers.

In the last few months, AST skeptics have been forced to eat a lot of humble pie. But it is far too soon to call this company a success. Investors buying in today need to understand the risks, and make this stock a small part of a well-diversified portfolio.

Should you invest $1,000 in AST SpaceMobile right now?

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Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.