Latest / AST SpaceMobile Podcast / Kook's Weekly - November 09

Transcript

Kook's Weekly - November 09 · AST SpaceMobile Podcast

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This is the AST Space Mobile podcast where we.
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Just basically come 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 saver.
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Listen, the opportunity that we have is very, very, very large.
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Large. Good evening everyone.
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Chargers really kicked the crap out of the Steelers, so now we
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can begin. So let's start with some of the
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crazy things that happened this week.
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For one, AT&T baited us all with really some engagement farming,
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which was pretty funny. And so it really just showed the
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power of the space mob, which from AT&T's perspective, what
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you can see they've identified is that when they do something
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like sponsor, you know, NCAA, you know, they get the
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engagements, you know, like 10 likes.
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When they do something with the space mob, they get 2000 likes,
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3000 likes, something like that. And you, you have to believe
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that they're marketing and media people are totally aware that
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they've tapped into this crazy amount of product market fit.
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And so as much as we kind of joke around about this stuff,
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make no joke about it, at the end of the day, ASTS is AB to B
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company. I don't think they ever really
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thought about themselves as a consumer brand.
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Maybe they did, but I highly doubt it.
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Unbeknownst to them and frankly probably unbeknownst to the have
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and no partners, a very strong consumer brand has emerged
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really because of the space mob. But it's showing just what the
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demand for the services. And so when AT&T sort of plays
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into this with the waffles and you know, frankly, the, the red
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AT&T, which we always joked about trying to get them to do
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it and they finally did. It is telling you that they see
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how important this is going to be for consumers and how
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important it's going to translate into lower churn and
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higher ARPU. And so never take your eyes off
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the ball in terms of what it what this stuff looks like from
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the MNL perspective. And the, you know, they see an
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ability to get, you know, thousands of likes and reposts
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and things like that and a heartbeat.
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And, you know, they're going, hey, this is going to be a big
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consumer product. And that helps ASTS in all sorts
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of ways, like a profit share of things like that.
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But then you also have to ask yourself, well, why did they do
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this video? And so John Stankey, who's the
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CEO of AT&T, as most people know, was in Midland last week.
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What we know is that a Bell is like me and seemingly very
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superstitious and likes to have his M&O partner sign the
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satellites. So what is seemingly very likely
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that happened is FM 2 was effectively christened.
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And so as you might imagine, they don't break bottles of
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champagne over these satellites. The solar is very fragile.
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And so they don't do that, but they do sign them.
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And then they did this promotional video.
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You're not doing these things unless there's something that is
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coming. And so I think that by all
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accounts by suspicion is that F 1-2 is done and the formality of
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announcing A shipment date is probably outside of their
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control, whether it's waiting for a rocket or something like
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that. We have some theories that they
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might be bundling that launch, but I would say that this is at
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best 5050. But that would be very exciting
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actually, if all of a sudden, instead of FM 2 being a single
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launch, if they surprise people and say, you know, actually
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we're going to do 3 or 4 in a batch.
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And I think that there's some possibility that that's going to
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happen. But I do overall just view this
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as another message to the space mob.
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Frankly, when I was getting to be pretty bummed out on Thursday
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or whatever day this was, I was starting to feel the impact of
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this correction. My, my mood was going South.
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I was whatever, right? Emotional sentiment indicator.
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And you know, this was kind of my reminder of just how many
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exciting, exciting things are coming.
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And so then let's take a quick little side tour to Cantor.
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Kirk Arwen. He's always, he's an engineer,
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so he's not an emotional roller coaster like myself.
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And so he started the press release and went, wait, hold on.
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They have nearly 500,000 square feet of facilities now.
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Well, just in August, they had 400,000 square feet of
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facilities. And So what we're seeing is just
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the continued ramp of AST's physical plant.
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And you know, we, it's hard to, to triangulate square footage
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into one thing or another. But what it is telling you is
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it's it's confirming the narrative it's got set is that
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they have a massive opportunity in front of them to scale up the
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production rate to first and foremost 26 satellites per
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month, but potentially to 12 per month.
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And they would do that under certain circumstances where they
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had government business. And so this type of scaling of
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the facilities, of course, this could just be them hedging their
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bets and could really mean nothing.
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But it could also mean they have some visibility that they have
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some big government deals, you know, cough, cough, golden Dome
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that are coming. And then they're really ramping
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up to be able to facilitate that.
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And as Scott said, worst case scenario, you know, they do all
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this, they ramp it all up and they fulfill these contracts.
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And then, you know, maybe they have some stranded equipment
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down the line that we measured, you know, ten, $20 million of
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stuff they didn't need. But they want to err on the side
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of having this capacity so that if and when there's an
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opportunity, they're able to seize it 'cause this really is a
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first to the prize type of opportunity.
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We also had Vodafone up the ante and so we had the CEO of
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Vodafone reminding all of us that at the start of the year we
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have this historic call done by ASTS with Vodafone gateways.
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They were really fast out of the gate to get their gateway set up
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so that we could start to show these proof points.
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We had the UK call, things like that.
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And whoa boy, were we in for surprise on Thursday night when
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there was another press release by Vodafone and we'll get back
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to a SEC get to that in a second.
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But before even we we get to the European news, we have Bell
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Canada coming out in their earnings call and they said,
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quote, they announced A partnership with AST Space
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Mobile to deliver planned Canadian owned and operated
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direct assault service in 2026. And so we're all waiting.
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This should not be a surprise, but we're all waiting for a Bell
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Canada DA. They've tested they, they have
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the licenses, they're now saying that they have a partnership.
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It's in the the earnings slides. It would make sense that a Bell
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Canada DA would hit. And after the STCDA we had the
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other day, we're starting to see that these dollar prepayments
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are starting to get quite substantial.
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And so I don't know about Canada will follow suit.
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They're already an investor in the company.
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There might be some different treatment for, for people like
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that. But we do know that these
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prepayments and, and revenue estimates are, are getting to be
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very big numbers. And frankly, in line with the
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bullish estimates that people like me and the rest of the
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space mob Haverks company, you know, we're all you can
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bifurcate this into maybe three groups of people.
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There are the ASTSQ people who think this company will fail
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them and go bankrupt. And that's one bucket.
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So for them, this is all just, you know, one big pump and and
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doomed. So whatever.
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Then there's the second bucket, bucket of people.
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These are the same people that would have said, well, OK, Tesla
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can build a car, but this is going to be a very niche market
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for, you know, if you're using a Tesla analog.
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They would have seen the Roadster and go, well, how many
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people could could buy that? And then maybe when they hit got
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hit with a Model S, they go, yeah, but you know, the high end
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luxury car market's not working. They wouldn't have seen the
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Model 3 in the uptake of things like that.
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So that's fine. These are just this will come
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small thinkers. Then there are the people like
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me who are, are well beyond the dead spots.
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And so I should actually go back a a bit.
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That middle bucket are people that believe this is kind of a
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dead zone fix and that's it. And then they'll look to these
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documents, which are all out there by the FCC that show, you
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know, what percent of the of the population in the landmass have
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5G service and you know, cell phone coverage, things like
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that. And it's pretty small numbers.
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And there's like one or, you know, you start to say, well,
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only, you know, 1 or 2% of the people will use this regularly.
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Therefore, it's small market and, and I and I think they've
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missed the force for the trees because then the people like me
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say, hey, this is going to be a lot like home insurance where
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the frequency is extremely low, but the perceived severity of
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what happens to you is very high.
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So you're willing to pay a small price to insulate yourself from
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that risk. And never mind that there's
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going to be these government contracts first net things like
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that IoT defense, you know, and so once you peel back the onion
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and and do the work, dead zones become frankly, you know, just
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like a little, you know, Ant hill have an opportunity versus
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the pyramid that is actually going to exist.
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So now when we think about that massive opportunity, the
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Vodafone press release we had on Thursday night, it is one of
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those Oh my God type of choices. ASTSI think it was like 2:00 in
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the morning for for New York people.
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I happened to be up past my bedtime.
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And so there's always kind of funny, we know if you want to
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believe in just they, you know, simulation or or whatnot, a
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couple times in my career where for one reason or another, I've
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been awake at a time I really shouldn't have.
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And one time I remember really vividly, it was back in 08,
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right as the great financial crisis was really ripping.
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And one of my big investments was pretty aft.
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I remember I woke up just out of the blue at like 3:00 in the
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morning or something. And this company is based in
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Europe. And at that moment, a pressure
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has hit a massive contract. They won that that really would
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have given them, you know, a path to live.
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And there was a probability of just waking up randomly at 2:00
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in the morning and then decide to check Bloomberg for every
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reason because you, like felt something.
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And so here I had no way this was coming, but I was up past my
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bedtime and, you know, then this hit and it was almost like I
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was, you know, meant to be watching this.
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And this press release is quite the Riddle until we read this
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and it starts to look a lot like Iris squared.
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It looks a lot like the initiative the Europeans have
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been trying to do to respond and acknowledge the the gap they
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have in terms of their reliance on Starlink.
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And so let's start to talk about what they what they released.
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It's a planned EU constellation. They talk about this synthetic
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control, this control switch, which was really allowing the
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constellation to have sovereignty, really important.
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And so then you start to think, was this a new constellation?
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And that starts to be a little bit confusing.
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And then they talk about how it's going to have the
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equivalent of European Firstnet. And so in addition to doing
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commercial mobile broadband, the constellation will support
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public protection and disaster relief efforts.
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Until then, we ask ourselves, is this an entirely new
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constellation to support Europe, or are they adding features that
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allow an existing constellation to, you know, effectively be a
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synthetic European constellation where it's needed?
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But they have some interesting things that have dropped from
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this. There's a new ITU filing in
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Germany for a mid band EU constellation.
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It has this command switch which allows EU oversight.
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It is therefore a separate regulatory network in the eyes
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of the EU. And so it's the same hardware.
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So it's the same Bluebirds. But we do think that it because
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it's going to be a mid band constellation, it's actually
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going to be a different shell. And that's gets really exciting.
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I was talking to Katzie and Aampe Man about this because
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it's not like you're going to build this constellation and
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only have it utilized well over Europe.
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That makes no sense. That was actually the original
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flaw in the Iris constellation because economically that's kind
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of a dud. Well, now it's entirely possible
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that the EU will just substance. You can give you a bunch of
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money to make that work out, but it's also entirely possible they
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will subsidized you and make that work out.
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And then you have this nice mid band constellation over the rest
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of the world as well. And then we've dramatically
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increased our capacity beyond which we had already planned for
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and really just started to hyper scale.
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And the other thing that is immediately obvious to a lot of
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us is that these guys just get the EU 2 gigahertz MSS spectrum.
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Did they just back door into inmarsats in Echostars spectrum?
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So these spectrum bands are already being actively reviewed
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and what I actually should have researched this a little bit
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more, but there were some work by Mega Constellations, which is
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an account we've talked about a lot here.
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And they talked about how some of these spectrum licenses are
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actually up for review in kind of 20/27/2028.
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And it's not for sure that the existing holders of the spectrum
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are going to maintain the same rights.
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They might have to be forced to coordinate with AST and share.
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And so it ends up getting pretty interesting as to whether or
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not, you know, Elon just spent 20 plus billion dollars on his
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spectrum. It's be quite the coup if
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Vodafone figured out a way to get it for free or near free or
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get paid to take it. So I strongly suspect that
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there's going to be a lot more to talk about from the earnings
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call on this to the extent they're able to.
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And I would just like to point out a tweet from Doctor Mike,
15:46
who's Cyanoplasmic Ana And he just points out that the date of
15:52
sovereignty issue is likely what convinced the EU to award ASTS
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the IRS 2 contract. Now he's making it an assertion
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that we actually won the IRS 2 contract, which I don't know to
16:03
be true, but it's it's certainly looking possible that that's
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what happened. And that would be a big deal.
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The take away would be EU just anointed us at Starlin and then
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we're going to be able to get the economies of scale of that
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to then have a dramatically unfair advantage serving the
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rest of the world with that very same constellation.
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Pretty interesting stuff. So the press release wasn't
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specific enough to say that everything I just said is true.
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And there's a, you know, very high probability I either got
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some things wrong or, you know, with good intent but got it
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wrong or left out details 'cause I just don't know or don't
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understand. But I think the the general
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thrust here is one that is somewhat unbelievable.
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And I again suspect that tomorrow we're gonna learn a lot
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more. Ampan man did a spaces illness
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topic as well, so I've linked that out.
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And then also just useful. And this is less relevant now if
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people are following that the US government's gonna reopen.
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But Katzie was noticing that despite the government shutdown,
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ASTS was actually still getting letters processed by the FCC
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showing that we had our spectrum consent letters in line.
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And so the spectrum consent letters, why this is important
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is this could mean the approval of our supplemental coverage
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from space application, the SCS and we're, we're looking for
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that final market access approval, which I firmly believe
17:38
we will get timing uncertain, but that could actually be
17:41
happening, you know, potentially pretty soon.
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And I think that that would be a pretty meaningful event.
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It will the very least be the final sort of regulatory wall
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that will come down. And frankly, the wall that most
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people three years ago said would have been an
17:55
impossibility. And, you know, all else equal,
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rewinding back to that point, of course, when the stock was like
18:04
between two and $5, you'd expect a quite dramatic change in the
18:09
market assessment. And now that we're sitting here
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at 70, you could say, well, the the market is probably.
18:14
Now finally arrived at the idea that the FCC approvals are in
18:19
fact inevitable, but it was still nonetheless be a really
18:22
nice event to get past us and important for for very large log
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only investors too, just to know that there's that regulatory
18:29
certainty. So we want to have that and get
18:31
it out of our our way. So now let's take a little chat
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with Kevin Chen. So Kevin as always is plying the
18:41
world for all things ASTS and he found a really cool article with
18:46
Safaricom CEO and they're talking about the active trials
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they're doing with, you know, they don't mention ASTS by name,
18:55
but with ASTS, and I think it was point that Africa's scale
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and geography mean that there will always be areas that are
19:01
hard to reach with traditional infrastructure.
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Satellite is a compliment, not a replacement.
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That's what they always say, but I think that will be blurred
19:09
lines pretty soon. But they say we see three big
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roles. First, direct to mobile moves
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toward universal coverage, even the most remote places.
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Well, we know that. Second, this is interesting
19:21
backhaul. So it's vital in some of these
19:24
markets like Ethiopia where fiber is still developing.
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And so it'll help light up sites faster, more cost effectively.
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I remember Helly hadn't thought about the system being used to
19:34
facilitate backhaul, but there you have it.
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And then third, broadband bringing reliable connectivity
19:40
to rural communities. And that's really where the
19:44
blurred lines occur with the SpaceX terminals.
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For a lot of people, having their phone as a modem with the
19:52
speeds we're able to reach is, is going to be good enough.
19:58
And I think that's going to be the threat that SpaceX is going
20:01
to have to confront Where for, you know, like rich Western
20:04
countries, for example, I have, what do I have?
20:07
I have Cox, I have fiber in my house.
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So I don't I don't need this, but if I had if I.
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Didn't have a fiber line and I had SpaceX and I'd pay it or
20:16
whatever. But for a lot of people, you'd
20:19
be able to get that 35 megabits per second on their mobile
20:22
phone. It is going to be good enough in
20:25
these developing countries where it's really a 2 for one.
20:27
And that's where I think you're going to see this market
20:30
segmentation where a lot of the potential demand SpaceX either
20:33
wanted to get or couldn't get because of price elasticity,
20:38
we're going to be opening up this entirely new segment of
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effectively what's the fixed wireless market.
20:47
And that's going to be a surprise to people.
20:51
So anyway, that's that's exciting things.
20:53
And then let's also just check in with Tanner again, just to
20:58
review kind of what happened this past month.
21:00
And it didn't just establish until September 30th Vodafone's
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CEO, isn't it? Wow.
21:09
September 30th, they got a production update.
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They said, you know, we're actually going to do this.
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We're not going to we're not going to F it up.
21:14
And then October 2nd, the Bell testing results again, that's a
21:20
precursor to ADA, I'm almost sure.
21:23
Also on October 2nd, we had Scott on Bloomberg saying, hey,
21:27
guys, things are going to be good.
21:30
Then we had the ATM announced. That was a head fake.
21:34
That's when Shorts got super excited and then got their
21:37
brains blown out because the next day Verizon DA dropped.
21:42
Then we got an award. Then we skipped FM 1, which is
21:50
exciting. And then at the end of October
21:52
we got included in the three GPP standards.
21:55
And then the next day we had the AT&T CEO visit.
21:59
The day after that we had the STC contract announced and then
22:07
of course, we just had this big, you know, potentially we won the
22:09
sovereign system for Europe. The pace of development here,
22:15
I've said this so many times, but the pace of development here
22:18
is astounding. And Tanner is evidently getting
22:23
lazy because what he left out too is that we also secured A
22:27
Legato financing last week. We got $420 million of non
22:34
recourse debt done for the bridge loan.
22:37
That is the the amount of money needed to pay Imersat to
22:41
basically get those guys to shut the hell up until we get our FCC
22:45
approval, which case. Then there's the take out
22:47
financing of that bridge. But it was a $420 million loan,
22:51
which is, you know, supposed to be funny to people on Reddit.
22:56
And we did the meme, but the Lagata financing was done.
22:58
And then some of us were thinking with the amount of cash
23:01
the ASTS had on their balance sheet, it occurred to me that
23:05
maybe they were just actually going to pay the legato fee off
23:08
their own balance sheet just because it would effectively be
23:12
a carry trade. And I thought, OK, I could see
23:14
how I could justify that. But I'm, I'm almost glad they
23:17
kept the original structure. Keeping it totally non recourse
23:20
makes the story more simple where we have this operating
23:23
business of satellites, which is really the, that's the recourse
23:26
business you have when you own a a share of ASTS, that operating
23:32
business is you know really what you're looking to.
23:35
And then you have this other bucket where you're going to
23:38
have this capital structure which doesn't impact your claim
23:41
on ASTS. But really to the extent that
23:44
lagato spectrum is worth a lot more than what we paid for it,
23:47
which almost certainly it's going to be worth 10 to 20X more
23:52
than all of that excess equity value flows to you as to a
23:56
shareholder. But if it is a bust, for
24:00
example, if the FCC inexplicably doesn't approve it or something
24:03
like that, then you're really no worse for wear.
24:08
And that's great. And so I think that's the right
24:10
structure to have. It simplifies it.
24:12
There'll be some element of some of some of the parts for a while
24:16
as people look at this company. But then over time, it's going
24:20
to blur and people will just look at the overall operating
24:23
results, which are in part due to the satellites we have and
24:26
then in part the enablement of our satellites by the spectrum
24:30
we have. And there will, you know, a year
24:33
or two people won't really distinguish between the two.
24:37
But for now they can and they can do some of the parts on,
24:40
hey, you know, what is this 45 megahertz spectrum worth?
24:44
We're getting some comparable transactions put up on the tape.
24:48
People could start to see that this is, you know, maybe worth
24:51
then $20 billion per just for STS and start to realize maybe
24:58
my downside is actually really protected.
25:00
Maybe, you know, for these margin and safety guys, you
25:03
know, maybe they actually start to see this put you have on the
25:06
share price that is pretty high and then that they then arrive
25:12
at the asymmetry of this investment, which is certainly
25:14
what I see. But that anyway is a long way of
25:16
saying that these guys got their non recourse loan done, which is
25:20
exciting. And so now let's go back and
25:23
talk more about spectrum. And so I think a lot of us are
25:26
learning. Let me just take a sip of water.
25:30
A lot of us are learning or being reminded of just how
25:35
important this satellite enabled spectrum is to everything
25:41
outside of your phone. And so we have an account at Tom
25:46
Ster 000 was sharing some thoughts and just pointed out
25:51
that a Level 5 vehicle must operate.
25:53
So Level 5 being a fully autonomous car, which hopefully
25:57
we'll all have one day, must operate safely even with 0
26:01
connectivity. SO5G is optional, but it can
26:04
enhance situational awareness. And so the big markets, EUUS,
26:09
Japan are going to require redundancy.
26:13
In other words, a car must not depend on connectivity for
26:16
safety critical functions. It must have positive control.
26:20
And so this is where satellites come in.
26:22
Because if you're dependent just on the terrestrial network,
26:26
you're not going to be able to have positive control of of
26:29
these autonomous devices all the time.
26:32
And this is going to make everyone's life a lot easier
26:34
when you do have redundancy #1 but also then universal
26:41
coverage. And I think we want to separate
26:44
two of these concepts because the universal coverage component
26:47
is the dead, the dead zone concept, you know, the 2 to 3%
26:52
of the population that is in common small number redundancy
26:57
is actually 100% of a population.
27:01
Redundant means the dead, the dead zones plus the things that
27:05
are covered by the terrestrial network.
27:07
And that's where I think people have misunderstood the market
27:10
opportunity here because that's where capacity payments come
27:13
into play and and simply just enablement that could not happen
27:18
without the redundancy. So that's where the really big
27:22
idea happens. And then we also had some sell
27:26
side guys chime in. So for example, we had William
27:28
Blair chime in on really just kind of reflected on the SpaceX
27:34
Echostar Spectrum deal and just went and this is reverberating
27:36
through the market. You know, you're seeing the
27:38
legacy guys really freak out and try to sell themselves, but in
27:43
fairness, like they're also having the value of their
27:45
spectrum piloted. And it's a tricky thing if
27:49
you're investor, because I I certainly believe that the value
27:53
of the legacy spectrum has been revalued.
27:55
That's a belief I have. But you go back to, you know,
28:01
simple M and a dynamics of well, if global started Iridium and
28:05
and VSA etcetera, have these valuable MSS spectrum assets.
28:10
Great. Can they really use them?
28:13
Is the value at use by them high?
28:15
Well, no. These are, you know, not
28:18
particularly valuable companies, you know, single digit billion
28:20
dollar companies. And then was it valued to
28:23
someone else? Is it valuable to someone else?
28:25
Yes, it's valuable to AST Space Mobile and SpaceX.
28:31
But when they have enough, the incremental value goes down a
28:36
lot. You don't have a lot of buyers
28:40
potentially. And this is the problem that
28:42
Charlie Ergen got himself into. He went and squatted on a bunch
28:46
of spectrum, but he only had two or three buyers.
28:51
And then those guys figured out something else to do for a long
28:54
enough period of time to really drive him to a near death.
28:58
And then he was able to get a deal done.
29:00
But you know, certainly wasn't the deal he had hoped to get
29:04
done. And so that's kind of the
29:05
problem is legacy guys have is there's some prisoners dilemma
29:08
of who gets a deal done first because you, you just don't know
29:13
is ASTS good after the 45 megahertz of spectrum?
29:17
Very, very possibly, you know, they, they could just say we're,
29:21
we don't need any more. You know, we, we have no more
29:24
bid and SpaceX just bought obviously a huge amount.
29:28
And so it's a little scary if you're global starter or Iridium
29:32
or MRSA or VSAT, you know, there could be some game theory of
29:35
sell, sell fast, you know, before these other guys are
29:40
full. So it'll be interesting to see
29:42
how that plays out. We also had cancer come out with
29:46
a note and and they actually went right to the whole Iris
29:49
Square idea and they started talking about it.
29:52
And you're really questioning, did ASTS just win Iris Square?
29:57
What's interesting about that is Latinic.
29:59
And so Cantor has connections at this point directly to the top.
30:05
So you will really want to watch what Cantor is saying and
30:10
they're saying some good things. So we'll we'll find out soon
30:13
enough. But it is nice to see some of
30:15
the sell side getting to the same conclusions that that we
30:20
were having. And now let's think about SpaceX
30:24
a little bit. Until Elon got his trillion
30:27
dollar pay package. Great.
30:29
I could see why if I'm a Tesla shareholder, like I would do
30:32
that. Then Elon also came out this
30:34
week and said maybe SpaceX should become a public company
30:38
despite all the downsides of being a public company.
30:41
Well, the downsides of SpaceX being public are numerous.
30:47
I just can't even imagine developing Starship under public
30:53
pressures. I mean, it'll be really
30:55
interesting to see where that thing trades when you you think
30:59
about it, because Starlink is a business that could very easily
31:01
start to have some competitive pressures.
31:03
You know, if you're looking for an analog of that, it's called
31:06
Charter Communications, which had been the, you know, golden
31:11
child of all things Tiger Capital Management 10 years ago.
31:16
And people just couldn't get enough with John Malone's Cable
31:19
Alchemy. And now it trades like crap.
31:22
You have competition, no growth margin.
31:24
It's coming in. And you know, Starlink at some
31:28
point, you know, already might be having those issues.
31:32
We don't know, we're on their financials.
31:33
And then you might have the launch business having some
31:36
significant pressure in the coming years as new capacity
31:40
comes online. And so I could see why Elon is,
31:44
you know, seize the downside. And that's what he that's what
31:48
he talks about. But then you have to ask
31:50
yourself, how healthy is SpaceX? They just spent another 2 1/2
31:55
billion dollars on some additional spectrum from
31:58
Echostar. They just spent 20 billion.
32:01
They couldn't do it all in cash. They're doing, you know, half
32:04
and half. And yeah, I don't know what the
32:10
cash flows really look like on the launch business when you
32:13
think about the the amount of money they're spending on on
32:16
Starship until, you know, we go back to whether ASTS is actually
32:21
really the dominant financial player in this space.
32:26
You know, especially when we think a couple of months out,
32:29
then we think about what Spacex's ability is to truly
32:32
compete in DTD and we see all these other rumors, you know,
32:36
we'll look to this right now, but with these rumors around
32:39
Globalstar and Apple and just kind of what a mess these other
32:43
companies were. And so there's a really great
32:46
article by Quilty, which is a space consultant, but of the
32:50
actual good type. And so Quilty's been around.
32:53
He used to be a banker, forget where he was, it was like
32:56
Raymond James, I think. And, and he he doesn't have
32:59
these same biases that Tim Farr has.
33:02
I've always really respected Quilty.
33:05
And so Quilty did this great analysis of of GSAT and, you
33:11
know, global surgery is in a tricky position because they
33:14
have all these repayments due from Apple and Apple kind of
33:19
have them by the throat with their spectrum working tied up,
33:24
you know, really tight because Apple's effectively paying for
33:27
the constellation off it on its own balance sheet, but just
33:32
through the balance sheet of global star.
33:35
And now the market's kind of moving and these interesting
33:38
ways. And global star probably wants
33:40
to get a piece of it or exit if they could.
33:42
But now you know who can buy it with their spectrum.
33:45
We're already spoken for and you really have to ask permission
33:49
for Apple to do anything. And so we've been really racking
33:52
our head as to whether SpaceX is is really going to buy global
33:56
star and if they did, what that would mean.
33:59
And I think my conclusion now is that the global search
34:04
transaction is in trouble and they're trying to plant stories
34:07
to kind of put some feelers out, get some other interest, but
34:11
otherwise seemingly kind of boxed in.
34:15
And so you can read this Quilty post to be just trying to stay
34:18
on top of it. I'm leaning, I guess, you know,
34:21
Monday will be interesting because it's always merging on
34:23
Monday. But I'm leaning and thinking
34:25
that they're kind of in a problematic position.
34:28
And then it seems pretty unlikely that ASTS is gonna step
34:32
in because I don't know why they would.
34:34
And then when we we had some articles floating around this
34:36
weekend after I put out the weekly about how Apple, you
34:40
know, really does have these ambitions to have satellite
34:44
connectivity in their phones. But really, do you want to draw
34:46
the line where they're not competing with the M and OS yet
34:49
at the same time want to offer more than what Global Star can
34:53
provide? All roads really lead me to
34:57
believe Apple will partner with ASTS and you know, to a man on
35:02
the hammer of the world looks like a nil.
35:05
But that really does seem like an obvious conclusion.
35:08
Whether it's inescapable or not remains to be seen.
35:12
But you know, we we do know that Apple is aware of AST space
35:16
mobile because they are gonna have to incorporate this legato
35:19
spectrum now that we're in the standards, you know, as one
35:23
minor point. So time will tell whether
35:27
there's another transaction. And the last thing we did not
35:30
have this week was in new club launch that got scrubbed because
35:35
of the weather. That's now going to be on
35:37
Wednesday if the weather permits.
35:40
And you know, frankly, Omo was glad because I don't know if my
35:43
little heart could handle so much excitement.
35:45
What a weekend. And that means we'll have a nice
35:49
idiosyncratic earnings call tomorrow without any, you know,
35:53
plus or minus news on New Glen. But I, I do think people, I read
35:57
the comments that people are pretty negative on New Glen.
35:59
And I'm always surprised it's the largest operational rocket
36:03
currently in the US market. You know, key point operational
36:08
Starship is not. And so I always amazed the
36:11
people negative on New Glen when it actually already did the
36:14
thing and Starship has not. So I'm pretty optimistic that
36:18
these guys are going to get to orbit again.
36:21
And it it's always useful to remember that whether they can
36:25
land the booster is a blue origin problem now the cargo
36:30
providers problem and they have a bunch of boosters in
36:33
production and they will figure it out.
36:35
They've been able to land Glenn Shepherd or New Glenn.
36:40
Where is it going? Shepherd new show like the
36:42
little one that looks like a phallic symbol.
36:45
They've been able to to land the, we'll call it the, the
36:48
little pee pee many times. And so these guys are able to do
36:52
it. And I am convinced that they
36:54
will be able to land New Glen, which is then the reusability
36:58
component, which just allows Bezos to not blow a lot of
37:03
money. But a cargo provider is not
37:06
going to be paying a higher price for New Glen because their
37:11
next best alternative is SpaceX. And so New Glen, if they want to
37:16
have any cargoes, is going to have to be price competitive
37:18
with rockets that can be reused. And if New Glen cannot be
37:23
reused, again, that is a Jeff Bezos problem that is not an
37:26
ASTS problem. And so we'll all be looking
37:28
really closely to see how this launch goes because it really
37:32
just adds more competitive pressure to the launch market.
37:36
But my belief is that we're going to have ample capacity
37:39
from SpaceX. And maybe that's what we're
37:40
going to learn tomorrow, is that we got some more capacity with
37:45
SpaceX. But I think that this is really
37:47
just going to be a buyer's market for people that have
37:51
cargoes really into 2026 and beyond.
37:55
And in the, the, the launch questions that people might
37:58
have, I think will dissipate. So that's what I have a big
38:03
emotional swing this week. I, I again, I was really getting
38:06
pretty beat up and depressed with the way the stock was
38:10
trading this week. And you know, I kind of would
38:13
post that too, but it's always useful like when I start to get
38:15
really dejected, that really is usually the time when the the
38:20
bottom is coming in. And it's useful to take a take a
38:23
zoom out and remind yourself of the market opportunity and, and
38:28
just really the path to a trillion dollar company, which
38:32
is a goal that maybe they'll have, maybe they won't.
38:36
But the key thing is to figure out, does your company have a
38:39
trillion dollar opportunity that they can capture?
38:42
You know, so you look at these guys Duolingo Antonio let arts
38:47
has certainly been capturing my attention lately, not always for
38:52
the best reasons, but you know, his his belief just to give an
38:55
analog is the Duolingo is going to revolutionize and own global
38:58
education. But when I thought about that, I
39:02
don't know why he's wrong. You know, why doesn't it make
39:05
sense that an AI powered learning platform is what
39:10
schools should use for for kids and not saying you replace
39:14
classes, but for kids to be whacking away at for their
39:17
Spanish lessons, for example in math lessons versus McGraw Hill
39:22
provided materials. I don't know.
39:24
I use Duolingo. I think I've learned more on Duo
39:26
Lego than I did in school. So then it comes down to go to
39:31
market and that's where Duolingo got its butt handed to it this
39:35
week is it had its user growth slow.
39:38
So then that goes back to it might have a great product, but
39:41
people are worried about the impact of AI and slowing user
39:45
growth would be a pretty clear cut sign either you've capped
39:49
out your market or AI is chipping into it.
39:52
Well, that's not good. And so while there might be a
39:58
view that there's a trillion dollar opportunity there, the
40:01
ability to realize it has a pretty obvious headwinds you
40:05
have to confront and get past. With AST Space Mobile, the
40:09
obvious headwind to our trillion dollar outcome is, Tim, if it's
40:14
just for dead zones and you have a really low attach rates and
40:17
people won't pay for it, then this is not going to be a
40:20
trillion dollar company. If this is a ubiquitous service
40:25
that everyone wants because it's like house insurance and the
40:29
attach rates are really high and you're selling your capacity
40:33
many times over because you're selling it to government,
40:35
military, consumer B to B. And then, oh, by the way, you
40:39
create markets that no one had ever contemplated, such as IoT
40:43
markets and autonomous driving markets, because they all demand
40:46
this ubiquitous always on service.
40:48
Then then the market's way bigger than you ever
40:50
contemplated. Then all of a sudden sort of
40:52
your path to a trillion dollar market opportunity is sitting
40:56
right in front of you. And so in the past week, we know
40:58
I look at this and go, well, this I, you know, this, we don't
41:02
know if it's Irish too, but this European thing is, is nuts.
41:07
You know, this is, you know, I'd talked about Iris too for a
41:10
while, but you know, and you see the Vodafone SAT code structure
41:15
and you know, they're kind of thinking about that.
41:17
But I thought Europe was too far into this and, and was doomed to
41:22
fail. But all of a sudden for this to
41:26
now be in the, you know, realistic opportunities for ASTS
41:30
based mobile, it just adds so much potential enterprise value
41:35
That was never contemplated. You know, people five years ago
41:38
like us when we're making this investment would have never
41:41
contemplated that we'd be seriously having a conversation
41:45
about whether or not we won the deal to provide the sovereign
41:50
European system, whether we actually win it or not.
41:53
We would have never even been bold enough to suggest such a
41:56
thing. We would have never contemplated
41:59
Golden Dome, which by the way, now that the government's
42:02
reopened, we can start speculating on that.
42:04
Yeah, which which we love to do. So there's a lot of crazy market
42:09
developments that you need to always take stock of because
42:13
there's, I'm just trying to think of another good analog,
42:16
you know, NVIDIA maybe being the best 1, you know, start small
42:19
gaming ships, you know, where's the Tam?
42:21
Crypto. It's just crypto.
42:23
Where's the Tam? And then, you know, same
42:26
technology allows them to line up for the for the mother lode
42:29
of AI. You're, you want to look for
42:31
those things and you don't want to have a static view of the
42:33
stock. That's where you can make a lot
42:36
of mistakes is an investor will kind of learn it and get
42:38
arrogant sort of in their knowledge and think they kind of
42:40
understand it. And then even if they're bullish
42:43
erratically, they have kind of a target price in their head.
42:46
And this is an easy thing to fall, fall to.
42:49
And I have target prices in my hand that I don't necessarily
42:51
update dynamically. And there's also some prices
42:53
where it's like, well, I kind of just like feel like that's where
42:56
I kind of told myself I would diversify a little bit, you
42:59
know, that's all. That's all fair, fair.
43:02
But when things are really inflecting to the upside because
43:04
they start to create markets and become platforms, that's where
43:08
people can exit for one reason or another and then look back
43:12
and go, Oh my God, they literally sold what it was de
43:16
risked and had the most upset. And so just always be cognizant
43:20
of that. I'm not telling anyone to change
43:22
the plan they might have otherwise had, but make sure you
43:25
keep having mental flexibility to adjust in these really quick
43:31
moving markets when something is moving beyond a perceived niche,
43:35
niche solution and never lose sight.
43:38
And I forget who said this, but it you know, because this is VC
43:41
advice passed back over the ages.
43:44
If you want to have a killer company, you kind of think of a
43:47
house and you need something that's going to win in the
43:50
foyer. Well, that's the full house, but
43:52
you need to be just dominant in that first room of the house
43:56
when you walk in and like the butter room, you need to just
43:58
blow the socks off the mud room because if you don't do that,
44:01
you're not getting anywhere near the living room.
44:03
Because why would you? You were just, you know, you
44:05
were mid at the beginning until if you win the four year of the
44:10
house, all of a sudden, then you got a right to go into the
44:14
kitchen, into the family room, into the living room, you know,
44:17
then upstairs and then take the betters.
44:19
And, and so that's what's exciting when you look at some
44:21
of these companies is all of a sudden they just dominate what's
44:24
perceived as a small market. And then from that use it as a
44:28
launching point to take on adjacent markets, create new
44:32
markets, win big markets. And that's where you can have
44:35
something that people always thought of as well.
44:37
Maybe best cases is a $20 billion company and they look
44:40
back in a couple of years and they go, holy crap, how did this
44:43
become a $200 billion company or a trillion dollar company?
44:46
So with that, I will let people Stew on these existential
44:50
questions of life. And I'm, I'm excited about
44:53
tomorrow's earnings call. You know, I'm sure, I think as
44:57
cat seek, I've already said, you know, with, with all these
44:59
things that all these companies at this stage, there's always
45:01
going to be some good and some bad.
45:03
And I mean, it's just hard to to really shake out production.
45:07
But I think that the market will be really relieved if they
45:11
continue to show this path to really getting ramped production
45:15
by Q. You know, let's just say Q12026,
45:19
which would be a little bit of a slip, but at this point, we're
45:21
already done with the year effectively.
45:24
And as long as people see that the thesis will really take form
45:28
in 2026, I think people are going to like increasingly just
45:32
confirm the inevitability of of what's happening here.
45:36
So thanks for joining me. I really appreciate it.
45:38
And I look forward to catch you and everyone next Sunday.
45:41
Same, same tire, same place. Have a good night.
45:47
Thanks for listening to the AST Space Mover Podcast.
45:50
If you enjoyed this episode and you'd like to help support the
45:53
podcast, please share it with others, post about it on social
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45:59
To catch all the latest news about AST Space Mobile, make
46:03
sure to subscribe. Thanks again and I'll see you
46:06
next time. We're doing something very, very
46:11
big and I think with this technology we can really affect
46:14
billion lives. AST Space Mobile is the only
46:17
company that has full technology to deliver cellular broadband
46:22
connectivity directly from space to the everyday smartphone.
46:26
People will just basically turn their phone and be seamless,
46:30
regardless of where you are. We don't want the user even to
46:32
know that it's connected by satellite.
46:35
Our role is to bring this into reality, always in partnership
46:39
with the animal. Listen, Waffles.