Latest / AST SpaceMobile Podcast / Anpanman - AST SpaceMobile's $4 Billion War Chest: AI, Defense, and the Spectrum Land Grab

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Anpanman - AST SpaceMobile's $4 Billion War Chest: AI, Defense, and the Spectrum Land Grab · AST SpaceMobile Podcast

0:06
This. Is the AST Space Mobile podcast
0:11
just basically from your phone be seamless regardless of where
0:14
you are? We don't want the user even to
0:16
know that it's connected by satellite.
0:21
Listen, the opportunity that we have is very, very, very large.
0:27
All right, everyone. Thanks for joining.
0:30
Apologies for earlier. I was actually out with family
0:34
and I just got back well after putting the kids to sleep at
0:39
about maybe 40 minutes to take a look at all this stuff.
0:42
And I did read a little bit of what people had posted online as
0:46
well, which was helpful. But yeah, let's let's get into
0:50
it. And so I took a few notes.
0:54
I reviewed some of the disclosures from the company,
0:56
actually got some color as well from the company.
1:00
And so I, I'll, I'll split this into two things.
1:03
And so some initial thoughts and then some of the color that I
1:06
heard. So where should we start here?
1:10
So yeah, the company this evening after the market closed,
1:14
they announced that they were doing an overnight $1 billion
1:17
ten year paper convert, 10 year, meaning the maturity is 10
1:22
years. And so this, this convert, I
1:24
believe we'll have a 2% coupon. The conversion premium,
1:29
actually, I think I missed that. I think it's probably like
1:32
around 20%. But we'll find out the deal
1:34
terms tomorrow. I think they did price it this
1:36
evening, although I didn't see price stock listed on Bloomberg
1:40
just yet, but we'll find out soon enough.
1:43
From what I heard. Yeah, sorry.
1:46
It is 20% conversion premium. And so if they priced it off of
1:51
the close today, which was around 96 bucks, the 20%
1:55
conversion premium means that the convert can be converted
1:59
into equity at around $115.00 for sure.
2:04
But yeah, so they're doing this convert on an overnight basis.
2:07
They brought people over the wall confidentially.
2:11
And so people got restricted, you know, convert investors.
2:14
And then they did a quick marketing.
2:17
I think it was like a 20 minute call from what I heard.
2:20
And so they close the books at 5:00 and this thing will get
2:24
priced tomorrow, right? And one thing I would say is
2:28
that. This is really.
2:31
Powerful. For the company in that they've
2:33
become a very seasoned issuer and so they have a very deep
2:36
convertible investor base. And so it's you know, for the
2:41
company to be able to do a drive by overnight on 1.15 billion.
2:45
You know, the extra hundred 150 million is if they exercise the
2:49
over lotment option, which they they certainly will.
2:52
As long as you know the convert, there's enough demand and and
2:55
the stock price performs reasonably well.
2:58
But having a very deep and liquid convert market is very
3:02
powerful because you can go raise money on a dime.
3:06
And that's, you know, these are people who are a mix of, you
3:10
know, long only fundamental guys convert arms, but.
3:13
You know people. Have credit backgrounds.
3:16
This also is going to open up the path to eventually raise
3:21
straight debt, you know, high yield bank loans, you know,
3:24
eventually once the business really gets going.
3:27
And so having access to this market is is.
3:31
Is very helpful. Because you want to have the
3:33
ability to tap markets when you know, investment opportunities
3:37
arise. If, if there's like an
3:39
acquisition or, or something that comes up, you know, maybe
3:42
you want to buy some spectrum, it's helpful to.
3:45
Have the ability to do this. And it also minimizes dilution,
3:50
which I'll talk about a bit later.
3:53
When you, I was talking about this with, with Ryan in, in the
3:56
chat, we're like, oh, so what's the dilution impact from the
3:59
company issuing stock to retire some of their, the existing
4:03
convertibles and then the what they're about to raise and the
4:06
potential dilution. So of course when they retire
4:10
some of the existing bonds, I think they are going to
4:13
potentially issue up to what was my math like 2.6 million shares
4:19
for $250 million worth of converts that they are planning
4:22
to retire. If you take that number and then
4:25
the potential shares that might be issued from this, this
4:28
convert that they're doing overnight, which is you know, up
4:33
to 9.98 million shares, that total potential issuance is 12.6
4:39
million shares. And so when you look at that
4:41
compared to shares outstanding, that's three-point 4% solution
4:45
like it's, it's really tiny. It's not that much.
4:48
And so that's the luxury of having a company that is, you
4:55
know, now at 36 billion in market cap, you can go raise
5:00
effectively, you know, one point was it $1.4 billion and do that
5:07
at 3.4% solution like it's tiny. And that's by the way, I always
5:11
make this comparison. But if you look at AC Space
5:14
Mobile and April of 2024, the market cap in totality was 760
5:19
million. And so why we've come a long
5:22
way. But yeah, so I I do want to go
5:25
into the. The change in the wording of the
5:30
use of proceeds, I think that's a very big tell and and, and I'm
5:34
was told like that was very, very deliberate in terms of the
5:37
language user and so, so maybe we'll just start there.
5:41
In any of these, you know, offerings you're going to have.
5:45
A use of proceeds. Section and so previously as
5:49
space mob member keys had pointed out in October when the
5:52
company had issued their last massive convert which is a $1.15
5:57
billion two percent basically the same terms right 10 year
6:01
paper. They, the language that was in
6:04
there beyond just general corporate purposes was this,
6:08
they also included this language including without limitation
6:13
funding the deployment of ASD Space Mobile's worldwide
6:16
constellation of satellites in anticipation of adding
6:19
incremental strategic markets for its space mobile service.
6:23
And so that was very deliberate. And you know, we, we pulled
6:26
apart that language back then, but that was expanded upon and
6:31
updated for this offering. And so the new language is this
6:35
including without limitation comma accelerating the
6:38
deployment of our controlled spectrum bands on a global
6:40
basis. Comma monetizing capabilities of
6:43
our proprietary technology to capture the evolving commercial
6:47
opportunities related to artificial intelligence.
6:50
Comma enhancing investments in government space opportunities
6:53
in the US, comma reducing higher interest debt, that's pretty
6:57
straightforward, comma and pursuing opportunistic
7:00
investments to accelerate our space mobile service and
7:03
capabilities. And so I wanted to talk about
7:08
those each one of those sections and discuss what what could that
7:14
be. And so first acceleration of
7:18
deployment of controlled spectrum bands on a global
7:20
basis. And So what that tells me is a
7:23
number of things. One if you.
7:25
Are. The controlled spectrum bands of
7:28
the company has on a global basis.
7:29
Is you know. Primarily Legato, the L band
7:32
spectrum here in the US, which is the what they acquired out of
7:35
bankruptcy from Legato, that's the 1.5 gigahertz Spectra band,
7:40
which is great for it's 25 megahertz of dedicated spectrum
7:46
here in the US and also in Canada.
7:48
And that is going to be very good for carrying data.
7:51
It's also unencumbered in the sense that there's no
7:55
terrestrial service that's being used on that spectrum.
7:58
And so once the company lights that spectrum up, it can be used
8:02
anywhere. It can be used all across the
8:04
US, all across Canada. It's not limited to dead spots.
8:07
It's going to overlap with the terrestrial network.
8:09
And so AST is going to have the ability to go to Verizon, AT&T,
8:14
Bell Canada and say, hey, not only are we going to provide
8:17
even better broadband coverage and dead spots, but we're going
8:22
to help you augment your network in.
8:24
Areas where you do have terrestrial coverage because.
8:27
Then you can offload some of the traffic on on this this this
8:30
network. Additionally, the company can
8:32
sell has the opportunity to sell.
8:36
Other, you know, other uses on top of that spectrum, whether
8:39
it's like IoT, other types of data services, you, you name it.
8:46
But having the flexibility to deploy that spectrum is going to
8:49
be. Key.
8:50
But that's L band and then of course the company is pursuing S
8:53
band spectrum globally, right. So they, they purchase the
8:58
spectrum rights for S band recently and with that they're
9:03
going to go pursue opportunities globally.
9:06
And So what does that mean just to give you an idea.
9:09
So there's probably like 3 avenues of how you could acquire
9:14
additional L&S and spectrum. One would be.
9:17
Through partnerships. And so a, a very easy example of
9:20
that is Saudi Telecom. The people maybe have already
9:24
forgotten that we we signed a commercial agreement with the
9:27
company, with Saudi Telecom for 10 years, but they provided an
9:32
upfront. $175,000,000 prepayment, which which hit the
9:36
books in December, I think, by the way.
9:38
That was included that potentially could be included in
9:41
our pro forma cash number, which I'll talk about later.
9:46
But but that L band spectrum or sorry that that partnership with
9:51
Saudi Telecom, interestingly Saudi Telecom already has L band
9:54
spectrum rights in Saudi Arabia and so that's.
9:58
Their their allocation of L band is actually pretty big.
10:01
I think it's 60 megahertz. So it's 30 megahertz by 30
10:04
megahertz, 30 megahertz downlink, 30 megahertz uplink.
10:08
So once the block. 3 constellation is up and running,
10:11
they can just go to solid. Telecom and say, hey, we'll
10:14
light up that spectrum for you and you know we'll figure out a
10:16
good use for it. And so that one way to do that
10:19
is through partnership. The other way is to actually get
10:21
an allocation from regulators. And so I tweeted about this
10:25
earlier today, but the EU has been trying to work on their own
10:31
consolation to wean themselves off of having to use Starlink or
10:36
some of these other providers. And so interestingly, Orange who
10:42
is a partner of AST and Deutsche Telekom, they are two primary I
10:48
guess contributors into this whole Iris to consolation.
10:53
And then they, they recently in this article said, hey, we're
10:58
not really confident that that thing's going to get off the
11:00
ground. And even if it does, if the
11:03
performance is not comparable to Starlink, then we're not
11:05
interested in doing it. And so right before eyes, we're
11:08
seeing Iris 2 already starting to fall apart even before, you
11:14
know, trying to start formulating a plan around that
11:18
consolation. And so Iris 2 is.
11:21
Probably, or at least. You know previously was thought
11:25
to be well positioned to get an allocation of what is going to
11:30
be a reallocation process for the two gigahertz S band
11:34
spectrum that the EU basically doles out to different players
11:38
that that's going to come up for reallocation in 2027.
11:42
The existing holders the the key ones that people know are
11:46
Echostar and Bias hat there's probably a very good chance
11:50
that. They are not going to get new
11:52
allocations in 2027 and so Iris was expected to get one.
11:58
I think AST Space Mobile in their Satco JV with Vodafone.
12:02
I think they're very well positioned to get an allocation
12:05
and. Perhaps, you know, maybe
12:07
Starlink, although it depends on if it depends on, I guess.
12:12
You know what? Musk's political relationship is
12:17
with Europe at that time, but you know we still have about a
12:21
year and three months before that happens.
12:23
But I think I think AS TS pretty well positioned, but that's that
12:27
would be like an allocation process and then I think once
12:30
you get the spectrum allocated. You've got to work with each.
12:33
EU member on a country by country basis to properly deploy
12:37
that spectrum and then Third Ave. would be acquisitions and
12:40
so the the the the map or the you know the the.
12:45
Market for S band and L band spectrum is pretty fragmented
12:50
all around the world. And so this was historically A
12:52
backwater, this satellite spectrum that was being properly
12:57
used around the world. And so there's now probably
13:01
going to be this kind of a land grab, but there's only two
13:04
players that can really utilize it properly.
13:07
And that would be ASD Space Mobile and it would be.
13:09
Starlink. And so.
13:13
You know, I think I think there's some ambitions from
13:15
other players hoping to develop, you know, these legacy guys who
13:18
initially 567 years ago and of course, even as late as.
13:25
2022-2023 Pooh poohed the idea of direct to devices as a as a
13:29
market, but now everybody's talking about it, whether it's
13:32
ViaSat or Telesat or any number of legacy companies that are
13:36
trying to stay relevant SES, they all kind of view this,
13:40
they, they see like the interest and where the market is going.
13:43
And so they're trying to pivot. But you know, when you have a,
13:48
when you have SpaceX that is looking to go public and is
13:51
going to amass a pretty large war chest.
13:53
And then of course, the company tonight based off of their their
13:57
arrays, you know, I think they're going to have.
14:00
In addition to, you know, some capital that they used, they
14:03
utilized from their pre-existing ATM.
14:06
They're going to have $4 billion of cash, which is pretty insane.
14:12
You know, $4 billion in cash is I, I compare that to the
14:16
company's market cap again back in April of 2024 of of seven
14:22
hundred $800 million. I mean.
14:24
That. Yeah, it's, it's, it's pretty
14:28
crazy. But given the opportunities in
14:32
front of the company, like you want to be well capitalized, you
14:35
want to have the ability to pursue growth opportunities when
14:39
they present themselves. And so, and that also means
14:43
pulling and accelerate pulling forward and accelerating the
14:47
pursuit of those opportunities. And so within this, this part of
14:50
the disclosure, this acceleration of deployment of
14:53
controlled spectrum bands on global basis.
14:55
I I also read into it that they're probably looking to pull
15:00
forward the production or design and production of Block 3
15:05
constellation, right, because to do accelerate the.
15:08
Deployment of that controlled spectrum you need to build
15:11
consolation and so. The mid band Bluebirds would be
15:14
part of that equation where you can go acquire a spectrum.
15:17
But hey, let's let's let's put that consolation up sooner than
15:21
expected. And so the way that the company
15:23
was capitalized previously, they were they felt good about.
15:27
Being able to deploy 90 to 100 satellites and getting standing
15:31
up service whereas this additional capital.
15:34
Means that they can. Start thinking about the next
15:36
shell and and be aggressive and executing against that the next
15:41
part of that disclosure, monetizing capabilities of
15:45
prioritary technology to capture evolving commercial
15:48
opportunities related to AI. This screams data centers to me.
15:53
And it also means, you know, exploring work with strategic
15:56
partners and helping some of these AI companies when thinking
16:01
about edge compute and and of course compute out in space
16:04
working on those relationships. But.
16:08
I think it's important to note that the company just unfolded
16:11
the largest phased array in lower Throwbit and that
16:15
satellite can generate what is the Kardashev Level 2
16:20
utilization requirement of 100 kilowatts per satellite.
16:24
That's happened already. Like there's even SpaceX is
16:27
like, hey, we're going to go pursue that.
16:29
And it in the V3 satellite, I think can do 20 kilowatts.
16:34
But you know, they're talking about the ability to eventually
16:37
get to 100 kilowatts. Guys, we're already there.
16:40
We're already at 100 kilowatts. And so the fact that that we
16:45
successfully deployed this new spacecraft that can generate.
16:49
And I think, you know, some of us have speculated that it's
16:52
actually more like 120 kilowatts with the solar tail, but we're
16:56
already there. And so if you can imagine the
16:59
types of conversations where if. It's Google or.
17:04
Amazon, you know, Blue Origin, Microsoft, I mean open AI, you
17:10
name it. Like there's probably people
17:13
calling, emailing, you know, texting.
17:16
Hey, we're interested in figuring out if we can utilize
17:20
some of your technology to go do this stuff.
17:22
I'm sure there's plenty of conversations that are happening
17:25
right now. And so, as we've said many
17:29
times, you know, the company has the patents, it has a building
17:33
blocks, the expertise that the key thing is expertise, right?
17:36
Because space is hard, as we all know.
17:39
And you can't take engineers that are that are working in, in
17:45
whatever applications terrestrially to say, hey, you
17:48
go become aerospace industry and engineer and figure stuff out.
17:53
There's an experience at a, you know, a, a time to get that
17:57
experience to, to make mistakes and learn from the the.
18:00
You know the the folks with the white.
18:03
Hair and all that. I mean, I remember going to the
18:06
Blue Walker Three launch and being an elevator with Kook and,
18:09
and there were some like. AST Space Mobile.
18:11
Engineers in there. These were some of the Gray
18:13
beards. And I remember I've told this
18:16
story a lot of times, but asking them like, hey, this is the
18:18
night before the launch. It's like, hey, are you guys
18:19
nervous, you know? Is there anything?
18:22
That is keeping up keeping or that would make you I guess,
18:26
yeah. Stressed about the launch and
18:28
tomorrow. And they both these two
18:30
engineers like no, no, we've we've been there done that
18:34
pretty much like they they're they were confident.
18:38
They were so confident that they had planned for any type of
18:42
situations and that there was enough redundancy and they're
18:45
like, no, it's just going to work.
18:46
And I remember like feeling my blood pressure.
18:49
I mean, I was excited and nervous at that time.
18:52
It was the night. Before lunch but I remember our
18:54
blood pressure just going down and be like.
18:56
Wow, these guys are really confident.
18:57
Like they're, they're not nervous and they're not scared.
18:59
And, and so that's what expertise and experience brings
19:03
you, right. And so as I mentioned before
19:06
that, you know, the company has 3800 patents, It's got all the
19:10
building blocks in place. I mean, they're basically chunky
19:13
up a chunky up a, an orbital compute satellite out there.
19:17
Now that's Bluebird 6IN block, you know, Bluebird one through
19:20
5. But that, that satellite is with
19:23
all its processors and, and solar power and batteries and
19:27
all its glory is focused on communications.
19:29
But you could easily see that even reconfigured, optimized for
19:33
something else. And so that's why, you know,
19:37
we've talked about like how the company is pretty conservative
19:39
in, in the disclosures. And so for the, for this to be
19:44
put in there like I, I, I don't, I don't think there's any other
19:50
way to explain it. I mean, there's got to be the
19:54
the to capture evolving, evolving commercial
19:56
opportunities related to AI. Yeah, it's pretty.
20:00
It's pretty blunt. It's.
20:02
That's they're saying that there's opportunities there.
20:05
And what does that mean? Does that mean like the
20:08
company's going to develop its own consolation and manage it
20:10
for somebody else? No, but they're going to have
20:15
production capabilities, you know, eventually going from six
20:18
satellites right now to 12. They're they're procuring more
20:22
space to do that. They're going to build more, you
20:23
know, more shells. And then eventually once those
20:27
constellations up that they're going to have this production
20:29
capacity like where, where are they going to?
20:31
What are they going to do with it?
20:33
Right. So maybe they'll they'll go
20:35
build satellite for someone else, or maybe they will build
20:38
satellites and own them and then, you know, outsource or be
20:43
be almost like computer as a service or who knows, right?
20:47
Like there's any number of possibilities.
20:49
But but yeah, I think that that's a pretty big disclosure,
20:54
which, you know, it's not something that you do lightly
20:56
because then going forward, the company in their ongoing
20:59
disclosures in the quarters and of course they're going to get
21:02
questions asked by investors and all these things, right?
21:05
They just opened up this big can of worms and it's for a very
21:07
specific reason because they want to talk about it and it's
21:10
real. So let's see.
21:13
Enhancing investment in government space hops.
21:15
And so I think that's pretty straightforward.
21:17
I mean, there's, it's funny, like we've probably already
21:21
forgotten like the fact that the company is, has an IDIQ for
21:25
Golden Dome and they're working towards that.
21:27
But when you, when pursuing these government contracts, if
21:32
you're, if you have the ability to go to SDA or you know, MDA,
21:39
any of these, these acronyms, these these government agencies
21:43
and say, hey, we're serious in pursuing this work and we've got
21:46
$4 billion of cash. To go execute on it.
21:50
That's going to get their attention, right?
21:51
As opposed to some startup. Yeah.
21:53
You know, there's I think one of the criticisms of of people kind
21:58
of going through these award lessons like, hey, everybody and
22:01
their brother is like on this list and it's all these little
22:03
small companies. That's all fine and good, but
22:06
when it comes to actually delivering and winning hard
22:09
contracts? You're going to need money to do
22:12
that and I think. The Department of War, like
22:15
Peter Higgseth has emphasized this like the old days of of
22:19
cost plus contracts to your old school primes where they, they
22:24
got to live off the, the government heat.
22:26
And, you know, they, they got to develop things in a slow process
22:32
and, you know, you got cost overruns because it's basically
22:34
there is like no capital at risk, right?
22:36
And, and those programs were very, yeah, they're very
22:41
wasteful and they, they didn't deliver what they needed to on
22:46
time. Whereas now I think there's a
22:48
shift to having neo primes like your new prime contractors, like
22:53
you need to go develop these capabilities.
22:56
Here's our, here's the RFP. You need to go develop the
22:59
capabilities and take risk, you know, spend your own money and
23:04
then come back and then we'll. Reward you with with the
23:07
contract. And so that's kind of the new
23:08
model and that's why you've got to have money.
23:11
To go pursue them. So I think I think enhance, you
23:16
know that that specific language is obviously, you know, lo meol
23:19
we've got. Two satellites, FM 1 and FM 2 or
23:23
BB6 and BB7, one of which is out in space right now.
23:27
But those two satellites are basically government satellites,
23:31
SDA Halo satellites, and there's a number of different research
23:35
that's happening around those two satellites.
23:37
And so in order to commercialize.
23:42
You know what comes out of that testing, we're going to need
23:44
money for it. And you know, I've talked a
23:47
little bit about how for Golden Dome there is this idea and
23:52
within the space mob. That.
23:54
There's one potential area of use would be that the, the
24:01
Bluebird satellites would actually quarterback Golden Dome
24:03
quarterback, meaning you're going to need to command and
24:06
control out in space that can do, you know, AI compute and but
24:10
those Alice need to generate a ton of power and communicate
24:14
effectively. And what better asset than a
24:18
Bluebird satellite which can do all those things?
24:21
And so, yeah, that that could be one way forward for Golden Dome,
24:27
aside from all the different use cases, whether it's radar
24:31
sensing, electronic warfare, jamming, spoofing, all that
24:34
stuff, you know? The backup GPSI mean?
24:38
Again, the company back in the last investor conference talked
24:43
about 10 different use cases. And so yeah, you pick your
24:48
poison. There's, there's a lot of
24:49
opportunity there reducing higher interest rate debt.
24:52
And so I think the the company is consolidating all of its
24:56
paper that converts down to the two primary issues will be this
25:02
new convert which is going to be $1.15 billion, a 2% coupon 10
25:06
year paper. And then the previous one that
25:09
they raised which is exactly the same.
25:11
And then they're looking to retire the four and a quarter
25:16
convert. I think there's only like 50
25:18
million of face value left in that issue because they retired
25:22
quite a bit of it already. And so you know the the company
25:27
talked about. Using $50 million of cash on the
25:30
balance sheet to cash purchase some of those bonds and then
25:33
they are also going to issue $250 million of stock.
25:38
At the closing price which was $96, they'll do that to retire
25:42
some of the two and 2.375% convert which there's like I
25:48
think it's $575 million outstanding and so.
25:51
The the two key. Issues that will be outstanding
25:55
will have 2% and that will be like what, 2.3 billion in size?
26:01
And it's got 10 year maturity so plenty of time.
26:04
Like if, if the invert doesn't, you know, convert to equity,
26:09
you're going to have 10 years to basically go refinance or, or
26:12
pay it off. Let's see here.
26:17
So, yeah, reducing the higher interest rate, I mean, that's,
26:20
that's an economic benefit. And of course, as I mentioned
26:22
before, this company's going to have $4 billion of cash on its
26:27
balance sheet and that. That's as of 12. 31 And so some
26:30
people might be, might ask, well, why do they need that much
26:33
money, as I said? Before you want to have absolute
26:36
financial flexibility to go execute and on top of that, the
26:39
company is spending a lot of money.
26:41
And so to build satellites and then to pay for launch providers
26:46
and, and all those that you know, go pursue government
26:49
contracts, it takes a lot of money.
26:51
They are also looking to expand production.
26:54
So we're at 500,000 square feet. They're looking to expand that
26:56
even further. And so it takes money.
26:59
It it it. Takes money to make money and
27:02
sometimes people forget that and.
27:04
I think sometimes also people are in this.
27:07
I like I saw some Twitter responses from people that are
27:09
like, oh, they're raising and career like why do they need the
27:12
money? We're talking about like a one
27:16
point one $1.15 billion issue for a company that has a market
27:20
cap of 36 billion. Dollars like this is not really
27:23
that much. And for a company of that market
27:27
cap to have $4 billion of pro forma cash, like that's
27:30
important because cash is, is having a large war chest is, is
27:34
a weapon that you can use offensively, right?
27:36
And especially for a growth company.
27:38
And then for a growth company that is still, you know, on the
27:41
cusp of commercialization and has is not at a point where
27:45
revenues can, can meet all their costs, that's important.
27:49
And so, you know at this point in time where the company is
27:54
having the ability to go raise that money and keep cash above a
27:58
certain level because you don't ever want to get below a certain
28:00
level gives you a lot more flexibility.
28:03
And it's just smart. It's just smart corporate
28:05
finance. Let's see.
28:08
And then the final one is pursuing investments to
28:11
accelerate space mobile servicing capabilities.
28:14
I think this. Is kind of the stuff that we
28:15
already know which is ramping up production.
28:18
So again going from six satellites to 11:50 technology
28:23
development. I talked about this before, but
28:25
like the whole idea of, you know, the company already
28:30
thinking about Block 4, block 5 satellites, but then also what
28:35
else can the satellites be used for?
28:37
Like I think that's that's a very important thing that
28:42
perhaps and this. Is like what we we discussed,
28:45
which is. You know the NVIDIA example
28:48
where you have the satellites that are used for a specific
28:51
application. But then, and this is already
28:54
played out like the fact that initially the satellites, we all
28:57
thought, oh, it'll be for directed device communications.
28:59
But then the dual use case of having the ability to use that
29:04
phased array for all these other applications for military just
29:07
opens up new, new markets for you, right?
29:10
And so how can you leverage some of that technology for other use
29:15
cases? And so I think technology
29:18
development is another thing that the company will continue
29:21
to pursue. And, you know, we joke around
29:23
like. Maybe they should.
29:25
Create like a skunk works group and and think about.
29:29
For example, some of these AI data center applications.
29:32
And then finally. Acquisitions and so you know the
29:35
company has not been acquisitive, everything has been
29:38
pretty much home grown. The only time that they've
29:40
acquired anything and it wasn't really acquire, but when Astra
29:45
had acquired this this company that made Halon.
29:49
I think it's Halon. Thrusters I I don't know if I'm
29:51
pronouncing it correctly. But when they couldn't?
29:53
Deliver on producing those thrusters.
29:55
The company then acquired a license to make those thrusters
29:57
themselves so that they could get to this point of, you know,
30:01
95% vertical integration and not, not worry about suppliers
30:06
failing. And so they're potential
30:11
acquisitions, you know, tuck in acquisitions.
30:13
That's always a possibility, but at least today.
30:16
The company hasn't really. Gone out and done that.
30:19
So, so yeah, they're they're raising this $1.15 billion
30:23
convert. As I mentioned before, they're
30:25
also repurchasing some of the existing issues.
30:28
And so the company disclosed that they're going to spend 50
30:32
million in cash to retire some of the four and a quarter
30:35
converts. I think that issue is so tiny.
30:37
It's probably like one or two fundamental holders that own
30:40
that paper, you're just going to take them out of that paper,
30:44
maybe pay them a small premium, and then they're going to issue
30:47
250 million of stock to retire. Some of the 2.375 converts which
30:53
there's 575,000,000 outstanding. And so they're just cleaning up
30:59
some of these issues. And I think the interesting
31:01
thing to note is that the company because they have they
31:04
were so well seasoned and they've got like this large
31:06
investor base on the convert market, they can do a drive by.
31:11
What I mean by that is like they, they're pricing this thing
31:13
overnight. They did a 20 minute investor
31:15
call and they were able to raise one point, one $5 billion just
31:19
like that. I mean, that's, that's really
31:22
powerful. And so by having these issues
31:25
out there and like the 2 anchor pieces of paper at 10 years,
31:29
they can go back out and raise if they need to at some point in
31:32
time in the future, they can go. Raise seven-year paper, they can
31:35
raise five year paper. Like people are going to want
31:38
different maturities to invest in this company depending on
31:42
like you know, what the respondents is.
31:43
And so so that's really powerful.
31:48
Let's see here. So yeah, those are some initial
31:52
thoughts. I mean, I think I weaved in a
31:55
little bit of some of the feedback that I got.
31:59
And I think just taking a step back, I mean, as I mentioned
32:02
before, you know, before this raise, you know, the company was
32:07
fully funded for 90 to 100 satellites and you know, the
32:11
business is fully funded through 2027.
32:13
However, this just adds additional firepower.
32:16
And and they're able to pursue additional opportunities and
32:19
then perhaps accelerate the Block 3.
32:22
Satellites, I think when I understand, you know the company
32:28
is signed the last three months they've signed a number of
32:31
commercial contracts. Obviously, you know Sally
32:33
Telecom was was the key mark marquee one, but you know they.
32:38
Feel really good about their. Pipeline and I think.
32:43
Based off of, you know, the. Feedback that they're getting
32:45
from the market, they are the partner of choice.
32:48
It's either for the next 10 years, it's either you partner
32:51
with SpaceX or you partner with us.
32:53
And we all know that Starlink, Starlink in particular, their
32:59
fixed wireless service, which is the MC Dishy, you know, the
33:03
terminal that you have, you hang out the, the dish that you hang
33:06
outside of your, your home or I guess for the crazy people on
33:10
top of your car, that fixed wireless service, you know,
33:13
competes with the, the fiber business and the 5G home
33:16
business of, of the wireless carrier.
33:18
So the M and OS. And so so yeah, they, they view.
33:23
And obviously with all the news recently about Elan potentially
33:26
being interested in releasing his own phone and competing.
33:28
Service, they all feel threatened, right and so the
33:32
conversations that the company is having right now with with M
33:36
and OS around the world, I think I think it's for them it's a
33:41
matter of. You know, how do you sequence it
33:43
right? Like how do you how do you sign
33:46
the right? Partnerships initially, what are
33:48
the economics and then how do you stage those things because
33:51
everybody wants to work with you, but then do you have the
33:54
ability to properly, you know, execute on those commercial
33:58
agreements if you sign them and so?
34:00
And it's not as if once the constellation's up, like you can
34:03
turn everybody on at once, like you're going to do it in a stage
34:05
fashion where you're going to do the most important markets or
34:08
the most strategic markets and then, you know, kind of grow
34:10
from there. And so at this point, it's a,
34:13
it's a. Matter of you know, how do you
34:14
manage that? Which is not an easy problem,
34:18
but it's a good problem because when there's a lot.
34:21
Of demand and people want to work with you.
34:24
That's good. That's good.
34:26
You don't want to be. You don't have the problem where
34:28
no one wants to work with you and there's no demand.
34:32
But I think but yeah, it's, I think the.
34:35
Company's in a in a great position.
34:36
Obviously we've talked about it before where you know that this
34:41
whole idea of, of, of inevitability where yes, the
34:46
company is very deliberate. And they've got to take their
34:47
time and doing things right and things are going to slip.
34:51
And as I mentioned earlier in my space today, you know, are they
34:54
going to get to 5 over the launches by March at this?
34:57
Point. That's not looking.
34:59
That's not looking likely. But are they going to be able to
35:02
get to 3 probably or maybe, but we'll see.
35:07
But at that point, I mean, having a a push back in timeline
35:12
or depending on how I guess how the sequence, all this push back
35:18
in timing of a month or two is not really that big of a deal.
35:21
When your closest competitor, the technology is inferior.
35:26
The existing you know service which is the 650 direct cell
35:30
satellites and then and then the future service based off V3 is
35:34
still going to be inferior based off of what we know.
35:38
And the technology that we're about to deploy in space on top
35:42
of that. I will point out that just from
35:45
my observations, like the fact that I mean imagine like if
35:49
you're a SpaceX investor today and then.
35:52
You know, there was this like major fanfare, hey, you're going
35:55
to merge with XAI and it's it's going to be great.
35:58
Like they're going to be integral to the data center and
36:04
space idea. And.
36:08
You know you're going to be. Able to extract some value from
36:10
it I I'm not. Exactly sure how they.
36:13
How they pitched it internally, but then, you know, you walk in
36:15
today and it's like, OK, several.
36:17
Of the Co founders are left, they're restructuring the
36:19
company. And I think they're letting, I
36:22
don't know, like how real some of the news.
36:25
Is on on X, but it's like, hey, they're letting go 50% of the
36:28
employees like wait a second, I just I just agreed to give them
36:34
you know X&X&XAI 20% of the company and right off the RIP,
36:39
like half the people are getting being like or they walked out
36:42
like I don't feel that good about that.
36:44
And so I think, you know, I have a tremendous amount of respect
36:48
for for Elon Musk, but. As a business person.
36:53
You know, at one point do you hit this level of diminishing
36:56
returns where it's like, OK, you're getting pulled in all
36:58
these different directions and you've got a lot of the ideas
37:01
and you your ability to execute at some point.
37:07
Starts to suffer. Right.
37:08
And so I think today when I was reading the news about all the
37:13
internal turmoil at XAI and, and depending on where you read it,
37:17
it's like, oh, it's being positioned as good or it's being
37:20
positioned as, as, as something bad.
37:25
That seems like a pretty good thing for space mobile, right?
37:28
Because then this company's being distracted.
37:30
On top of that, SpaceX in order to fund the ongoing massive, you
37:35
know, cash burn of XAI, like they're going to have to really
37:38
ramp up the commercial side of the business like Starlink and
37:42
also launch like I remember a lot of bears would say well, you
37:46
know, SpaceX, they can just like decide not to launch your
37:49
payloads and that was never the case, but it's definitely not
37:53
going to be the case going forward like they are are they
37:55
are going to need every external dollar to feed the AI beast over
38:00
there and then on top of that, like.
38:02
They're going to need to fund the.
38:06
You know, the, the data center in space, like all the R&D that
38:10
goes around that. But I, I think it was like, I
38:14
think there was an article saying that XAI was burning like
38:17
a billion dollars every month. That's pretty insane, right?
38:21
And XAI, you know, I know some people.
38:23
Use croc I I use it sparingly, but I I.
38:25
Primarily use Chat 2 BT and Gemini, but you know, as a
38:31
fourth player in the AI race and then of course you've got the
38:36
Chinese and any number of other other players as well.
38:38
Like that's a huge, massive arms race that is not going to I I
38:42
don't know the one thing that. That I've thought about is like.
38:46
In the in the AI arms race, it's it's great for consumers.
38:50
And, and, and for industries that are not being disrupted by
38:54
it, which are like, you know, this whole idea, if you want to
38:58
survive AI, you need to be able to move around atoms like you,
39:00
you need to do like Caterpillar is probably going to survive AI,
39:03
right? Because building machines, AI
39:06
can't do that yet or, you know, so, but this, this whole idea
39:12
of, you know, for SpaceX, it's like they're, they're going to
39:18
be burning a ton of cash and, and.
39:20
They're going to be distracted and they're going to need.
39:23
Every piece of commercial cargo they that they can, they'll go
39:26
launch it in space. But then the end game for all
39:29
these companies that are investing in AI like I guess a
39:34
philosophical question is like, is it going to be a Pyrrhic
39:36
victory like? If you win.
39:38
Do you end up being a loser? Right.
39:41
And that's, that's, that's a key.
39:43
Question which we don't know now and we're probably not going to
39:45
know for quite some time because I think.
39:48
The how powerful AI is is in indeniable and the utility
39:53
people get from it. You know, obviously it's there.
39:55
I will say like this, get off my soapbox after I say this, but it
40:02
is making people lazy in a sense that, you know, even on X over
40:07
the last two or three days, like there's I'm just going to give
40:11
you guys an example. There was this one person who
40:12
was like. Clearly every they, they don't
40:16
hire, they're like everything I do is powered by Gemini.
40:19
Like I asked Gemini to analyze this situation three times and
40:23
based off that I'm going to do this or that.
40:25
And they were kind of arguing with me.
40:27
Well, like, well, Gemini said this.
40:29
So what do you think? And, and I think it, you know,
40:33
and I was talking to Cook about this too.
40:34
It's like Gemini doesn't have judgement or experience and you
40:37
know, maybe it'll get better or sorry, you know, maybe it'll get
40:40
better at some point. But you can, if you talk to any
40:44
AI agent or chatbot and you ask it to help you do something or
40:50
you ask it advice, like it's going to tailor the device, the
40:53
advice to what you are seeking, right?
40:56
And so, but what it lacks is judgment.
40:59
And so it's, I don't know, it can be frustrating to see some
41:04
people who who solely rely on it, right?
41:07
Like it's a crutch, like, OK, I don't have experience in
41:10
finance, so. Whatever Gemini or chat GP tell
41:14
tells me like it's it's almost like it's almost like a
41:18
religion. It's like, OK, this is I'm going
41:20
to trust what it says or it's. God, like it's all knowing and
41:25
what it says is what I should do and that's the dangerous part.
41:28
But anyway, I went on a tangent there, but I think going back to
41:35
going back to, you know, SpaceX, I think it's going to be a
41:40
pretty big distraction. And I'm not sure I, I don't know
41:44
how that's going to impact the company and then the competitive
41:46
landscape, but it does seem like it's going to be something good.
41:49
For AST space mobile because. You know, there's a few things
41:52
to take away from it. One, Starlink and what they're
41:56
doing. You know, how many engineers are
41:58
going to get pulled from direct to cell and then go go focus on
42:01
data centers. On top of that, you know it's
42:05
going to be a distraction, right?
42:06
Like Xai, you're going to have some.
42:09
Potential for infighting and and.
42:10
People who were working in space search, so like.
42:12
Oh man, now, now we've. We own a bit of xai and and
42:16
it's. Somewhat of a catch burn today?
42:18
It's unclear. Like what it's going to add.
42:21
And so I think there's a little bit of that distraction, but
42:24
then on top of that, the big, the big part is that.
42:28
From a competitors perspective. It makes AST Space Mobile a much
42:33
more attractive partner because there's Musk and then there's
42:36
everyone else and we happen to be an important piece of
42:39
everyone else. And everyone else is like a very
42:43
large ecosystem of companies that are very important.
42:46
And so that's a good place to be.
42:48
It's not just companies that are important.
42:51
It's like a ton of M and OS. It's also governments,
42:56
countries. It's a whole.
42:59
Host of things, right? And so so that's a good place to
43:01
be. The other thing is that I, I do
43:06
think and it's a matter of timing exactly when the company
43:11
might, you know, talk about this more, but you know, it seems
43:16
like everybody wants big stuff in space now.
43:19
And so as I mentioned before, like the the unfolding of BB 6 I
43:22
think has opened a lot of people's eyes, whether that's
43:26
from the government, but also potential strategic partners.
43:28
And so the company now has this platform, this this, like this
43:33
spacecraft, they've got the FM one, FM 2, the spacecraft, they
43:40
still have Block 1 spacecraft and now they have Block 2.
43:43
And so as I mentioned before, you know, you can populate
43:46
Fpgas, ASICS, GPS, whatever you want on that.
43:49
And so. That's a very.
43:50
Powerful platform. You can use QV backhaul, you can
43:56
use the antennas for low band, mid band, C band spectrum, high
44:02
band spectrum, depending on how you architect that, you can use
44:04
laser links. There's a whole host of things
44:06
you can do and hey, it has built in, you know, thermal management
44:12
and radiating capabilities. Now, obviously, in my, in my
44:15
opinion, like I think the satellite probably, you probably
44:19
might have to add additional radiators to, to the satellite
44:23
if, if it's going to be in the sun constantly versus, you know,
44:27
currently the Bluebirds go in and out of the sun.
44:29
And so the, the need to dissipate heat is probably not
44:33
as high. But these are all things that
44:35
you can work on, right? And, and that's what's exciting.
44:39
But yeah, I think the, you know, the the company having a
44:45
platform is, is very valuable and it's something that the
44:49
market perhaps doesn't see yet, but it will Let's see here.
44:54
And I think the other thing is that as we've seen in the past,
44:57
you know, the company has raised, they've learned this
45:00
like this strategy where when they raise money, they do it
45:05
ahead of really big catalysts. And so we'll see what what lies
45:09
ahead. Now is something going to get
45:10
announced tomorrow or Friday or Monday or Tuesday?
45:13
Who knows, right. But what we do know is that BB7
45:18
is going to get launched and so are the other satellites and of
45:21
course the companies work on a whole host of other things.
45:23
And so at any point, you know, things can get announced and.
45:26
And so I will say that I. Actually thought this evening
45:31
before doing the space I was like should I even do a space
45:34
because I kind of want the stock to go down because.
45:38
You get, if you get like people too excited and the stock
45:41
doesn't go down, then then there's like there's no buying
45:43
opportunity. And so I think, you know, I'm at
45:48
a point, I don't know about you guys, but I'm at a point and
45:51
Kook, I think is also at this point too, where I have trust in
45:55
management. Like they, they've been great
45:58
stewards of capital and they've they've spent in the right areas
46:01
and they've executed and yeah, timing has slipped and but they
46:05
just unfolded the largest phased array in space, you know, 5 ton
46:10
satellite and they've got more in the works.
46:12
And they're the only guys in do this.
46:14
Like we talked about this, yeah, this morning and, and last
46:17
night, like aside from NASA and a few government entities, like
46:21
no one has been able to pull this off.
46:23
And that includes SpaceX. So that's really valuable.
46:27
And if the company wants to raise a billion dollars because
46:32
they see some opportunities or they they want to beef up the
46:35
war chest because any number of things could pop off, Go ahead,
46:38
do it. Do it like if you if the
46:42
potential dilution, not the actual dilution, but the
46:45
potential dilution is 3%, then go raise it like the company.
46:50
I think it's important for you to understand like the market is
46:53
giving the company a mandate right now to, you know, you guys
46:56
are the are the perceived leaders in direct to device and
47:00
these are the other applications we're going to give you this,
47:04
this valuation and this market cap.
47:06
And so with that through by being a good steward of capital,
47:11
you can go raise money and pursue opportunities.
47:14
And so I think like some of the, again, some of the, the
47:18
accounts, Twitter X or Reddit, people kind of have a small
47:22
mindset. They're like, oh, this company
47:24
is still 5 or 600 million in size and, and they should only
47:28
maintain $100 million cash balance.
47:30
No, you've got to think beyond that.
47:31
Like. We're we are so far from that.
47:36
You know, this company is talking to having conversations
47:39
with every global M&O. It's having conversations with
47:42
governments, the US government, European governments,
47:46
governments in Asia. It's doing very important
47:48
military work. This is not some small tiny, you
47:53
know. East.
47:55
Back company, it's, it's, it's doing important stuff and, and
47:59
it needs capital and that's OK. That's going through some of my
48:05
notes here. Oh, so one thing I wanted to
48:10
highlight. Let's just.
48:11
Talk about some of the numbers here or maybe before I do that,
48:17
I, I will say, you know, given the opportunity to get out
48:21
there, it's, it's important for the company to raise some money.
48:24
Even though you know that one of the criticisms I saw online was
48:27
like, well, why don't they wait until they've launched more
48:30
satellites and the stock price is higher?
48:32
That's not how capital markets work.
48:34
You, if you want to do it properly and reward investors,
48:38
you do it ahead of positive catalyst, right?
48:40
And so you give them the incentive to buy today and get a
48:44
position. And perhaps that, that might be
48:46
at a discount, but you, you execute that offering and with
48:53
the idea that, hey, and we're going to have these big cows in
48:57
a few weeks time, months time, which is why you want to get in,
49:01
right? And so you don't do it off the
49:03
back of something, which I think the company learned the hard way
49:07
back in the day when they were like, oh, you know, we're going
49:09
to try to be like a biotech company where you announce
49:12
positive results and then you go raise money, which that's how it
49:15
typically works in biotech, but or for space, you want to raise
49:21
money before the big event because you want to give people
49:24
the the incentive to get in. So, so I think, you know, this
49:28
raise is no different. I think there's, there's going
49:30
to be some positive events that are coming.
49:32
I don't know exactly what they are, except for of course the
49:36
the launches, but then you know I can rattle off any number of
49:40
things. Like the fact that.
49:41
BB6 unfolded successfully. That increases our probability
49:45
of getting our U.S. market app, US commercial market access
49:52
application. Granted, that went up pretty
49:55
materially from BB6 being unfolded successfully, and so
49:59
there's again. There's a whole host of.
50:02
Of Catalyst, which maybe I'll try to update it, maybe not
50:05
tonight, but tomorrow I'll update it and send that out.
50:09
Let's see here. Just going through my notes 011
50:14
interesting nugget that's on the side.
50:17
There was someone who reached out to me anonymously who I
50:21
believe has done some recruiting work for the company and they
50:24
were just telling me that they've done, they've had a ton
50:28
of business from the company where they've picked off a lot
50:30
of people from SpaceX and Level 3 and, and a bunch of primes and
50:35
they've placed people at, at ASD.
50:37
So that was a fun nugget when I heard that.
50:40
I, it maybe, maybe smile quite a bit because I think obviously
50:46
it's, if you, if you think about like Midland, TX, it's kind of
50:50
out of nowhere and there's not a ton of stuff to do there.
50:53
It's probably a super nice town, but it's, it's not going to be
50:58
some of these hubs of innovation because it's, it's back in the
51:01
day, it was like, or it historically has been an oil and
51:05
gas, you know, driven economy. But to attract like the cream of
51:09
the crop, aerospace, defense, you know, RF engineers,
51:15
production managers, all these, all these kinds of people from,
51:18
from, you know, companies in the sector to attract them to
51:21
Midland, TX is not easy. And so it's not just going to be
51:25
like cash compensation, which company doesn't pay much stock
51:29
compensation. That's great.
51:31
That's, that's a, a great incentive for people.
51:34
And, and for a company of this size, like with the growth
51:36
opportunities ahead, there's still a lot of upside in the
51:39
stock. But, but aside from all the
51:41
financial incentives, like, you know, joining a company that you
51:44
believe in where you can make a difference, like that's, that is
51:48
going to be for especially, I mean, young people.
51:51
That's going to be a real reason why you go, go join a company.
51:54
And for the company to AST for, to attract people to Midland,
51:59
it's not easy task, but that should give you guys some level
52:03
of comfort that, hey, what these guys are doing is pretty
52:06
special. And the fact that people are
52:08
leaving these great cushy jobs. And we, we, we talked about some
52:14
2 executives from Raytheon that joined recently.
52:18
Yeah, that's huge. But going to the numbers, I did
52:22
want to point out a few things. So the disclosure today because
52:25
they raised the convert, they did have to pre announce a few
52:28
numbers. And so one cool nugget that came
52:32
out is the fact that the company is going to.
52:36
It hasn't been. Finalized yet, but they are
52:38
going to do about 63 to $71 million of revenue, which was in
52:42
line with guidance. The guide for the year was 50 to
52:45
75,000,000 and so so hey, we're not a pre revenue company
52:49
anymore. We're going to generate
52:52
somewhere between 63 to 71,000,000.
52:54
Some someone asked, you know, why, why isn't that number more
52:57
firm? Well, there's still even though
53:00
the year ended, you know you're they still haven't finalized the
53:02
books. And so, but you know, we are
53:05
going to fall within that range. And I believe you know, due to
53:10
some timing issues, there was the potential to potentially
53:13
beat that range. But it is what it is like
53:17
companies going to to make that money or, or or report revenue
53:21
within that range. The other thing is adjusted
53:24
operating expenses, which doesn't take into account stock
53:27
based compensation is going to come where come somewhere in
53:30
between 275 and 263,000,000 which is which is quite a lot.
53:35
And so as I mentioned before, the company's spending a lot of
53:38
money in this stage of this stage of the process.
53:44
And so you know, raising additional money is going to
53:47
give them a lot more cushion to go execute cash and equivalents.
53:52
At the end of December we're we're $2.8 billion and ID pro
53:57
forma for this offering and also some use of the ATM will get us
54:02
to about 4 billion pro forma again a really big number, but
54:06
also not that big when considering the market cap of
54:09
the company is about 36 billion in size.
54:12
And so when people ask about dilution, the shares that are
54:17
being issued directly, so they're they're the direct
54:20
issuance that the company talked about today for $250 million
54:24
that. At the.
54:25
Closing price of 96, that's only 2.6 million shares and then when
54:30
you take it account that convert which is what if you assume the
54:34
overallotment option is exercise that's $1.15 billion.
54:38
At a 20% conversion premium to 90.
54:40
Six, that's 115 the potential issuance of shares from the
54:45
convert. If they.
54:46
If they. You know at some point exercise
54:48
in the future and they're in the money that would be about 9.9
54:52
million shares. So in total, everything comes
54:55
out to 12.6 million shares, which is about a day of trading,
55:00
which is not that much. And the implied dilution based
55:03
off of shares outstanding, which is 369,000,000 shares is only
55:07
3.4%, which is, which is really nothing.
55:12
And so I, you know, I saw the stock price like move down and
55:15
it's going to trade, you know, heavy tomorrow because you're
55:18
going to have convertible Arbs that are going to, you know, so
55:23
there's a bit of a bounce where if they, let's say they, they
55:27
placed all 100% of the convert with what we call fundamental
55:31
long only holders who own the convert.
55:33
They they like the credit, they like the fundamental story, they
55:36
like the potential upside of the stock price and so they would
55:41
just buy the issue and then not hedge anything.
55:44
Whereas if you were to place it fully with convert Arbs, then
55:49
you know those guys would go out and hedge the underlying deltas
55:53
of the warrant that you get in, in the convert.
55:56
And so there you have like some level of shorting that happens.
56:00
So based off of, let me just look here.
56:07
I mean, if we assume like, I don't know, maybe 70% of the
56:11
issue is given to convert Arbs and they, they're maybe on a 60D
56:15
or so. I think, you know, they might
56:17
need to short like Ford four to four and a half million shares
56:21
to get hedged. And so that's not too bad.
56:24
But you know, there's going to be some selling pressure.
56:26
Some of that happened after the close today and it'll happen
56:29
tomorrow. What I would recommend people do
56:32
is like if you are interested in buying these prices, you know,
56:36
you can kind of pick at it, but just wait and see like how it
56:39
settles. And of course, you know, the
56:40
market has been very volatile. The entire space sector was off
56:43
today, which this is another reminder like for people who are
56:48
following single stocks like, hey, what's wrong with the
56:51
company? Something's going on.
56:52
It's like, oh, you should look at the sector because you know
56:55
if. If the entire sector is down,
56:56
there's. That it's not just something
56:59
that's company specific, although today is the exception
57:03
AC being down was, you know pricy and this convert to a
57:07
degree. Although you know the unfolding
57:09
news the company was only down 1 or 2% for most of the day and
57:12
closed just slightly off which was good right.
57:16
Let me see here. Yeah, we were basically and
57:20
that's that's actually a testament to, you know, the fact
57:26
that they marketed this confidentially and brought
57:29
people over the wall. The fact that the stock actually
57:31
hung in there was pretty impressive on the day where the
57:33
space sector was off. Like, I don't know, you pick a
57:35
name like Intuitive Machines is down 9%, Carmen is down 13% see
57:42
a rocket level is down 3.4% Firefly 9, you know, basically
57:47
10%. The fact that the company.
57:49
Stock price closed up. Today and they were marketing
57:52
this convert and of course after hours, you know, the stock fell,
57:55
but that's pretty impressive even, you know, on the back of
57:59
positive news. And so anyway, I guess my point
58:03
is that the there will be some downward pressure from hedging
58:07
tomorrow, but you know, it's not, it shouldn't be that bad.
58:10
And then you'd. Expect maybe after a handful
58:13
days, 2-3 days like that's going to subside and then and then
58:17
we're. Depending on what's.
58:18
You know what news comes, we're off to the races again.
58:21
So anyway, I think that's pretty much what I had to cover.
58:27
We just look and see if there's any questions.
58:35
Let me look here. By the way, if anyone has any
58:39
questions, you can put them in the comments.
58:47
I haven't listened yet, but could those buying puts been
58:50
prepping for this? I wonder if they anyone had
58:52
prior knowledge. So let's see, did anyone have
58:55
prior knowledge? Yes, people definitely had prior
58:57
knowledge. But when you're restricted, when
59:00
you're brought over the wall, that's Wall Street speak for
59:03
like, hey, are you interested in doing this deal?
59:06
If you are or if you want to hear about a deal, we're going
59:09
to bring you over the wall. And So what happens?
59:11
Like they don't tell you who the company is or what's going on,
59:14
but they're but then if you're willing to be restricted, then
59:17
they'll say OK. We're bringing you over the
59:20
wall. You agree to be restricted.
59:22
We're doing this convert offering for ASD space mobile.
59:25
So what happens is like, if you get right over the wall, you're
59:27
not supposed to trade on it, nor is your firm supposed to trade
59:30
on it. And if you do, you can get into
59:33
a lot of legal trouble. And so, but often times, even
59:38
though that's the case, things will get leaked and people find
59:41
out one way or the other. And and that's where you see,
59:43
you know, maybe the stock price comes under some pressure,
59:46
although today, as I mentioned before, because of the BB, the
59:49
unfolding news, the stock closed up relative to the rest of the
59:53
sector, which was down 34510 up to 10%.
59:57
But but yeah, there's probably going to be a few.
1:00:00
People out there. Who knew how to time and maybe
1:00:03
they trade on it. But I will tell you this like if
1:00:06
you are in in possession of material, non public information
1:00:11
or you're restricted like don't trade on it, it's not worth it.
1:00:16
Let's see how's the launch cadence?
1:00:23
That's all I care about. If they can't hit that, I won't
1:00:25
add to my position. The launch cadence is what it
1:00:28
is, right? Like as we've talked about the
1:00:32
there is a backup in processing because there's, you know there
1:00:36
I think and I'm not as close to this.
1:00:39
But I think SpaceX they're. Maybe one or two processing, you
1:00:45
know, one or two pads are down right now and they're launching
1:00:49
Dragon, I think on the 13th or maybe that's been updated.
1:00:52
And then you've got Artemis as well.
1:00:54
And then of course you got Blue Origin, New Glen 3, which is our
1:00:57
ride. And so that's going to happen no
1:01:00
earlier than late February. And that probably slips into
1:01:03
February, slips into March, and then the Falcon 9 launches like
1:01:08
that we have lined up. There's probably slip into late
1:01:12
March and probably early April, depending.
1:01:14
And so I, I think we'll probably get 3 orbital launches by the
1:01:18
end of March. But, but yeah, it's not, it's
1:01:21
not great, but it's also not the end of the world by any means.
1:01:24
I mean, as I mentioned before, it's inevitable.
1:01:27
It's going to happen. And sometimes things take longer
1:01:31
than you expect. And that's quite all right.
1:01:33
And often times that's good, right?
1:01:35
For space, you can't screw up. You can't fuck up.
1:01:38
And so you don't want to send satellites up in space that get
1:01:41
bricked and become, you know, inoperable and and people get
1:01:46
upset. You want to send.
1:01:48
Satellites that are working. And you want things to go off
1:01:51
lossly, at least that's the the, the DNA of this company.
1:01:55
Let's see here. Some other comments here.
1:02:01
Someone is putting the Olympics on mute for this.
1:02:04
Oh, thank you. You know what's?
1:02:06
What's kind of funny is like, I have not had any time to follow
1:02:09
the Olympics, so I've missed most of it, Lulu says.
1:02:13
Just means dilution. Yeah, it does.
1:02:17
But guess what? Dilution is not bad.
1:02:20
Yeah, I, I think people are conditioned that dilution is
1:02:25
bad. And I guess maybe folks have
1:02:28
invested in really shitty companies before that maybe
1:02:32
their MO is to just, you know, run the company to pay
1:02:37
themselves. And they just keep.
1:02:38
Doing offering after offering and I've seen some of those, by
1:02:41
the way, not that I've invested in them, but.
1:02:44
But this company in particular, you know, you've, you've seen
1:02:47
some critics say, well they've raised a lot of money and
1:02:50
they've deluded people yeah, they've had to raise a lot of
1:02:52
money. They're they're printing out
1:02:53
they're doing something really hard.
1:02:55
They've spent several billion, I think it's like 1 1/2 billion
1:02:58
dollars in developing the satellites and they're about to
1:03:02
lock commercial service. And putting up satellites is not
1:03:04
cheap. It's it's really expensive.
1:03:07
But once you have that asset, you know, that consolation
1:03:10
floating out there in space, you can amortize the cost of that
1:03:14
over multiple carriers. And of course, like you turn on
1:03:17
the subscriptions and it becomes a cash flow machine, right?
1:03:20
And so it takes money to make money.
1:03:24
And so when you see flip, you know, these flip posts of, oh,
1:03:28
they just means solution. Well, OK, what is that?
1:03:31
That's not helpful. Like not all dilution is the
1:03:34
same, right. And so if you were to say, you
1:03:39
know, if if you owned a piece of, I don't know, you pick any
1:03:44
company like Facebook back in the day when Zuckerberg started
1:03:47
it and but he needed, he needed the few $1000 to get the thing
1:03:52
off the ground. And if you were an existing
1:03:55
investor and you owned, I don't know, you owned like 20.
1:03:58
Percent of Facebook back. Then and then someone came in
1:04:01
and said, Hey, I'm going to give you $30,000 to get this company
1:04:05
really off the ground. But I want you, I want to own
1:04:07
like 10% or 20% of the company. And you're like, well, no,
1:04:10
that's way too much solution. It's worth more.
1:04:13
Go screw yourself. And then then of course, like
1:04:15
the company never gets all the ground and doesn't become a
1:04:18
trillion dollar market cap company.
1:04:20
Like who's the bigger fool, right?
1:04:21
So it takes money to make money. And, and I think people need to
1:04:26
kind of, they just need to get over.
1:04:29
This idea that. Raising money is bad.
1:04:33
If that money is being raised for accretive opportunities,
1:04:37
then it's good. Let me see here, did you catch
1:04:45
the ATT, AT&T Eptronic investment announcement?
1:04:48
I didn't, but I will take a look at that.
1:04:53
Let's see. I think those are most of the
1:04:57
questions. So anyway, I hope this was
1:05:00
helpful. I personally, you know, I think,
1:05:03
I think the stock is going to open, you know, in the morning
1:05:07
like there's going to be hedging and, and it's probably going to
1:05:10
take a day or two, but the amount of hedging.
1:05:13
Relative to daily. Trading is not that bad and so
1:05:16
of course, you know, who knows what the macro environments
1:05:18
going to bring, but I'm going to be looking to take advantage of
1:05:23
this and if we do fall heavily, then I'm I'm going to try to
1:05:30
look for some upside as well. But OK, Geek street.
1:05:35
Do you think this will be the last raise?
1:05:37
Well, that's do I think it's going to be the last raise?
1:05:40
Do I want it to be? The last raise.
1:05:42
Yeah, it would be great if it's the last raise, but if the
1:05:45
company, I guess I'll, I'll put it this way.
1:05:48
If the company gets a $3 billion award from the US government and
1:05:53
they're like, hey, in Word to get that award, you need to go
1:05:56
spend. I don't know.
1:05:59
You need to go spend an additional $500 million.
1:06:01
And the company's like, well, we've already allocated, you
1:06:05
know, the $4 billion that we have, we've already allocated
1:06:07
some of it for this and this and this.
1:06:11
But we've now the government's asking me to spend $500 million
1:06:14
for a three $4 billion contract. You know what, I'm just going to
1:06:17
pass on it. I'm not going to raise the
1:06:18
money. I'm not going to, you know, $500
1:06:21
million, which is like what, 1 1/2% dilution and it's not worth
1:06:25
it. No, of course not.
1:06:27
The company is going to go raise the money and in the future what
1:06:32
it will look like though is that as additional commercial
1:06:36
contracts come in and you have prepayments then those are going
1:06:39
to be non dilutive payments. You, you still have this $500
1:06:43
million application for EXIM financing that's out there.
1:06:46
Eventually once the company gets, you know, stands up
1:06:50
commercial service and has revenue that's of size and you
1:06:55
know, they'll be able to go raise debt against it.
1:06:57
And so it's, you're going to raise other forms of capital.
1:07:02
But at this stage in the company, like you don't want, if
1:07:06
there's a creative opportunities for them, you, you don't want to
1:07:10
put a, a muzzle on them and say, Hey, you can't go raise money.
1:07:14
No, like I think it's important like to understand.
1:07:19
If. And this is really important for
1:07:21
any investment. If you don't trust the
1:07:23
management team, like if you don't trust the management or
1:07:26
board to be good fiduciaries and stewards of your capital, and
1:07:30
you should not be invested in that company.
1:07:32
And this holds true for every company.
1:07:34
And, and often times I'll see on X where people like, oh, I don't
1:07:38
trust management. Like, I don't know why they're
1:07:40
raising money. And you know, there it's.
1:07:44
Like a it's like a knee jerk. Reaction the stock is down.
1:07:47
It's not down that much. It's from the close, it was down
1:07:50
what, $9? And then of course, and let's
1:07:53
see, let's check on Robin at which.
1:07:55
By the way, like these at these overnight markets, they're not
1:07:58
that accurate because it's not on much volume, but you know,
1:08:00
stocks at what, 89? So it's down $7.00.
1:08:03
Like it's not the end of the world like on any given day
1:08:06
where you have some level of pull back in the sector, the
1:08:11
stock could be. Down on its own that much
1:08:13
anyhow. But.
1:08:16
But yeah, when when a company raises money like, yeah, no, it
1:08:19
doesn't feel good like this, you take a mark on the stock and it
1:08:22
goes down. But for good raises, which, you
1:08:26
know, the company, someone had pointed out earlier, every time
1:08:30
AST Space Mobile has raised money in, in recent, you know,
1:08:33
in the recent, what I guess the last two years, the stock has
1:08:37
performed quite well post raise and has gone on to new highs,
1:08:42
right? And so I don't expect the that
1:08:45
dynamic to be any different. And that's why even today, you
1:08:49
know, I had added some ASD this morning and I felt good about
1:08:54
it. And then of course, like they
1:08:55
announced that they're doing the convert.
1:08:56
And the stock is? Down and and my initial knee
1:08:59
jerk reaction was like. Well that sucks.
1:09:01
Like I I, I bought. Some stock and I bought a little
1:09:05
bit of options today and OK so that we're.
1:09:07
Going to be down on that, but then.
1:09:09
Of course my mind flipped immediately.
1:09:10
It's like, well, what are they raising money for?
1:09:12
And I looked closely at it and it's like, oh, I'm excited about
1:09:15
this. And so I went from this sucks.
1:09:18
I'm down to, OK, where can I buy more?
1:09:22
And you know, for example, for those that that know, I, I have
1:09:26
this like pretty large option position in Vodafone that's done
1:09:30
quite well. And so I've been, I've been
1:09:34
actually monetized a little bit of it today, but tomorrow I'm
1:09:37
like. Oh, maybe I should.
1:09:38
Monetize more of it because I I feel like if there's if ASD
1:09:43
drops enough like I think that'll be a pretty good buying
1:09:45
opportunity but yeah you know as I mentioned before like Cook and
1:09:49
I when. We were talking earlier.
1:09:52
Today, and you know, we, we felt comfortable with the fact that
1:09:57
the company's raising this money.
1:09:58
It wasn't it wasn't like, oh shit, why are they raising this
1:10:00
money? It was more like, oh, they're
1:10:03
raising a billion dollars. Like, I wonder what they're
1:10:05
going to go do with it because because nowadays, given
1:10:08
everything that's in front of the company, it's something to
1:10:11
be excited. About.
1:10:11
It's like, OK, they're they're raising this money 'cause they
1:10:14
want to go pursue some of these really huge opportunities that
1:10:19
that are going to be very creative.
1:10:22
And so, yeah, I'll in the space with that that thought, I'm
1:10:27
sure, you know, overnight hopefully think of other things
1:10:31
too. But yeah, I'm excited to see how
1:10:33
the stock price reacts tomorrow. I personally am hoping that it
1:10:37
opens pretty weak so that I can I can, you know, put on some
1:10:42
trades, but we'll see. But anyway, I hope this is
1:10:45
helpful. And yeah, I think if you believe
1:10:48
in management, events like this should be very exciting because
1:10:52
it is a foretelling of something that's going to happen.
1:10:55
Companies don't raise money out of the blue.
1:10:58
Good companies that have a lot of opportunities in front of
1:11:01
them. These are, these are events to
1:11:03
be celebrated, right? Because they, they, they see
1:11:06
opportunity and they want money to go pursue them.
1:11:08
And that's how you should think about it.
1:11:10
Anyway, that's it, hope everyone has a good night.
1:11:13
And we'll catch up again tomorrow.
1:11:15
Take care. Thanks for listening to the AST
1:11:19
Space Mover podcast. If you enjoyed this episode and
1:11:23
you'd like to help support the podcast, please share it with
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others, post about it on social media, or leave a rating and
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review. To catch all the latest news
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about AST Space Mobile, make sure to subscribe.
1:11:35
Thanks again, and I'll see you next time.
1:11:40
We're doing something very, very big and I think with this
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technology, we can really affect billion lives.
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AFT Space Mobile is the only company that has human
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technology to deliver several mobile connectivity directly
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from space to do every day as much, people will just basically
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turn their phone be seamless. But regardless of where you are,
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we don't want the user even to know that it's connected by
1:12:04
satellite. Our role is to bring this into
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reality, all this information to the MMO.