Latest / AST SpaceMobile Podcast / Kook's Weekly - January 11

Transcript

Kook's Weekly - January 11 · AST SpaceMobile Podcast

0:06
This is the AST Space Mobile podcast.
0:10
Where we just basically come, your phone being seamless,
0:14
regardless of where you are, we don't want the user even to know
0:17
that it's connected by satellite, satellite.
0:21
Listen, the opportunity that we have is very, very, very large.
0:24
Large. Good evening everyone, thought
0:28
I'd start a little early. Now that the game ended, the X
0:33
app keeps getting worse and worse, or it doesn't let me
0:36
adjust the time anymore without crashing the app, which is a
0:41
seemingly a problem. But anyway, let's talk about our
0:45
favorite investment, ASTS. So last week was pretty crazy.
0:49
Obviously, we started off with this, RIP a thon, and then
0:55
Scotiabank came out almost kind of like firefighters to a fire
0:59
trying to put it out and then just got totally mugged by Bank
1:04
of America. And so I don't even know what to
1:08
think of it. It's just a lot of volatility
1:11
without a lot of news. And so let's just think about
1:15
what happened this week. Then the ASTF started off with a
1:19
hype video kind of getting us all ready for 2026, which is
1:23
good. So it shows the company's focus.
1:25
They're starting to set the narrative, but we didn't get the
1:30
thing that I'm looking for, which is the batch one delivery.
1:34
So that's going to be the big one.
1:37
But Scott was at CES and I've linked out all the different
1:43
ways in which you can listen to that presentation.
1:46
I, you know, I'll say it and I'll say it again.
1:48
It's just listen to Scott. And so he lays out what will
1:51
happen. The timing is always frankly out
1:55
of his control, but certainly beyond our ability to guess when
2:00
I'm sorry, within the period of weekly options trading, which I
2:04
know some people are pretty, pretty good at myself not
2:08
included. And so but he he, he won't tell
2:11
you when you know a satellite is going to launch.
2:14
In terms of the specific week, some would say the specific
2:17
month, others would say the, the specific year, but he will in
2:22
fact tell you what they are going to do to the extent they
2:25
have the ability to do it properly.
2:28
And that's what I sort of adopted now two years ago, I
2:31
realized that talking to the company, all I really did is
2:35
mess up my own internal clock. And so the things that I could
2:39
see as somewhat obvious, I, I would, I would frankly ignore
2:44
because then I would listen to the company and you know, now
2:47
that they misled me. But the companies are always
2:49
going to be kind of bullish and you'll always feel like you know
2:53
something if you talk to the company, even if they just
2:55
repeat the earnings call to you. But in a private forum, there's
2:58
a bias to think, oh, I have, I know this secret when you really
3:01
don't know anything because they certainly didn't tell you
3:04
anything, especially this company.
3:06
So I've, I've just backed off and you just listen.
3:10
I'm in listen only mode. And it turns out to be a pretty
3:12
good strategy when you listen to what they say and don't
3:15
overthink it. It is actually been a very good
3:18
road map for what has actually happened.
3:21
So with that as my sales pitch, please just listen to Scott at
3:24
his presentation and they really tell you what they're lined up
3:28
to do. We did get a clue.
3:32
This is almost like a murder mystery.
3:34
You know, it's ASTS is now playing this game, which I
3:38
encourage them to do. I love it where they'll send a
3:42
picture of the executive that did a tour of the facility.
3:44
Now they're actually just flat out showing us the signatures,
3:47
which is cool, but we have. Marco Bebeck, the CEO of Bell
3:52
Canada, went with his team to Midland for a closer look at the
3:58
technology behind the Bluebird program.
4:02
So now, interestingly, the pressure at least wasn't more
4:06
detailed. Didn't say we're going to go
4:08
look at Bluebird #8 They said something more broad about the
4:15
technology. And then they did show them
4:17
signing something. And I'm thinking that this is
4:19
the clue to the space mob that they were giving.
4:21
Most people are just glanced over it.
4:23
Oh, whatever. The CEO signed something.
4:26
Well, when you kind of put all the pieces together in the last
4:29
update on the production cadence, they had moved or they
4:33
changed the language to include testing in terms of how the
4:38
satellites were progressing. And I've, I've gone through and
4:40
it's in the DD doc to show how they've changed that disclosure
4:46
and sort of how many arrays they've had, how many satellites
4:50
are in construction, da, da, da. And to me, it was a pretty clear
4:53
cadence that they've started to sort of move 6 units through the
4:57
funnel per month. So if you hold that to be true,
5:00
which of course could be wrong, but if you hold that to be true,
5:04
then that means that between 1:00 and 6:00 or more satellites
5:09
are in the clean room. Well, you're not going to go
5:12
have ACEO walk in there and then go sign satellites when it's in
5:20
a clean room environment. My that my understanding is that
5:23
is not what happens. So then the implication is that
5:25
he signed something. So worst case it means that
5:29
batch 1 is nowhere near done. However, that doesn't add up
5:33
with the prior disclosure and it doesn't add up with common sense
5:36
to me. So that implies they sign
5:38
something else, which is pretty neat.
5:41
And so I wonder whether that was in fact the hint, the fact that
5:46
they did not sign batch one. From what I can tell, the
5:50
implication to me is that they signed either batch 2 or
5:54
something beyond that. And then it begs the question,
5:56
what did the, what did AT&T sign Mcelrush?
6:00
I don't think that he signed FM 2.
6:04
I think he signed batch one, which would make sense.
6:08
AT&T should sign the first batch of commercial satellites.
6:12
That's what I think. So anyway, you might be
6:16
thinking, I don't care what you think, Cook, you know what?
6:18
That is a totally fair conclusion to this, and I would
6:21
say you are not alone. Other people who don't care what
6:23
I think include many shorts, and we'll get to those guys later.
6:27
So meanwhile, the FCC really cares what ASTS says because
6:33
they've been signing things with the great haste.
6:40
And so we have FM 2 was granted the authority.
6:43
We have gateways being signed both home and abroad.
6:47
The regulatory machine is moving ahead.
6:51
And then you also have Brendan Carr talking about his focus on
6:54
direct device, about how they're going to clarify the SCS rules
6:59
so that billions and I quote, billions of dollars of
7:02
investment can move forward. This is all happening in a great
7:08
way. And so I think we don't need the
7:11
SES approval just yet. And so that's nothing's being
7:15
held up by that. But in the next couple months,
7:19
that's when that would be actually needed because we'll
7:21
have the birds in the air and deployed unfurled, if you will.
7:27
And so then that's when we're going to want the service links
7:30
to be, you know, basically a scalable solution, not just St.
7:34
as and not testing. We're going to want the broad
7:35
regulatory cover to press go. And so meanwhile, in the docket
7:41
for said regulatory threshold, we have just some final sort of
7:48
bickering. Catsy does a really nice job
7:51
going through all this part of, I don't know, bullshit that
7:55
SpaceX does and all their little letters.
7:57
And this is all kind of fun and games.
7:58
Catsy really makes it awesome. And so I've included those links
8:02
if you want to follow along in terms of like the final comment
8:05
letters. But I just think this is your
8:08
typical law fair. This is how lawyers stay
8:11
employed. God bless them.
8:13
But at the end of the day, FM 2 was just cleared.
8:16
That's the important thing. That's next on the Twitter
8:20
thread. The bears were wrong.
8:23
What is new they, I don't even remember this one because I've
8:26
kind of tuned them out. But I think between the idea
8:30
that there were enough changes that these satellites couldn't
8:32
be approved, I don't even remember the request for
8:36
approvals with great, you know, sort of expedited time.
8:39
And they said that was impossible.
8:40
Well, well, here we are. FM 2 is cleared.
8:43
FM 2 is sitting in the launch facility at this point.
8:47
So that's pretty cool. But let's not forget about FM 1.
8:51
So FM 1 is somewhere over the rainbow.
8:56
And that gives me a reason to go update my orbital data.
8:59
So Catsy put out some data. I separately restarted my bird
9:02
watching, I don't know what you want to call it, antics.
9:08
So my bird watch and antics have have been reinstated.
9:11
And so I'm looking at this too. I'm always going to defer to
9:14
Catsy. He's just better everything than
9:18
I am, but I'm always going to be independent.
9:20
And so I think he was sort of thinking maybe wanted to squint,
9:24
but I don't think he came to that conclusion.
9:25
I'm pretty sure he didn't or actually I know he didn't.
9:27
And when I'm looking at the data that I'm looking at right now, I
9:30
certainly don't see evidence of FM 1 unfurling, but I do see
9:36
evidence that it has likely achieving more stable orbit and
9:43
flight plan. So my suspicion is that perhaps
9:46
it has finished detumbling or certainly done a better job of
9:50
detumbling and and gone into a better flight formation.
9:55
That's what I see on the data. I'm staring at it right now and
9:58
you might say, well, kook, that's so bad ass.
10:00
How do you start flight data? I can't tell you.
10:04
And So what I can tell you is that Saudi Telecom just raised a
10:11
what is this called again, a sukuk.
10:13
And so it's a Sharia compliant financing structure for for
10:17
those who celebrate. But they raised a big bond and
10:20
so they just, you know, gassed up a bunch of money.
10:23
I still haven't seen a press release of that money hitting
10:26
ASTSS account. So I don't know that they would
10:31
press release it, but in any event, following in the
10:35
financings of our partners can sometimes provide clues in terms
10:38
of how well they're situated to make do on their obligations.
10:42
And I would imagine that Saudi credit exposure is something you
10:45
can sleep pretty well on at night.
10:48
Some credit exposure I don't know if I'd sleep well on at
10:50
night is the UK. But never mind that, let's think
10:55
about what they're doing with D to D service.
10:59
And so right behind Australia, which was leading, you know,
11:02
Australia has the Outback. Outback's all fun and games
11:06
until you run out of gas or get a flat tire and then you realize
11:10
there ain't a lot out there Outback.
11:13
And so you really want your cell phone to work and the Australian
11:16
government is making it work. So now the UK space Agency is
11:22
looking for solutions to supplement their emergency
11:25
services network. This is all very interesting,
11:27
these government initiatives which are basically going to
11:30
force what what otherwise in my view would have happened anyway,
11:34
but it's going to force the technologies into adoption
11:37
faster. And so they're really trying to
11:40
solve these coverage gaps first and foremost, but then second,
11:44
they're going to want the redundant backups.
11:45
That's the thing that they certainly would have already
11:48
already known, but investors like us might not fully
11:51
appreciate that that last mile coverage actually turns into all
11:55
mile coverage when there's a disaster event.
11:59
Going to mute really quick 'cause I got a call.
12:05
All right, I'm back. So it's nice to keep seeing this
12:08
regulatory evolution. What I think is going to happen
12:12
is as these technologies are rolled out, that clamour by
12:18
governments to mandate more and more things will, I think,
12:23
expand beyond our wildest dreams.
12:25
This goes directly to the bare thesis on the limited total
12:30
adjustable market, kindly known as a Tam.
12:34
And some of you might think, is that a chocolate?
12:36
No, that's a Tim Tam. So a Tam is very, very different
12:39
from a Tim Tam, but a big one is as satisfying as a Tim Tam.
12:43
They're both good so long as the Tam is big, but Tam is what
12:48
ultimately is going to justify a high trading value for this
12:52
company and high multiple for this company.
12:54
Where ASTS is not a good investment is where it is a
12:57
niche point solution with limited applicability.
13:01
If that were to be the case, then the shorts would very
13:05
likely be right when thinking about a $40 billion valuation or
13:09
it would be a jump ball too hard to call for.
13:13
For yours truly, where that market application tends to be
13:19
very big and dynamic, then all bets are off in terms of what
13:23
something could be worth. And now that comment alone is
13:27
still not going to satisfy the shorts and I, you know, whatever
13:30
that's what makes a market and and we'll hopefully have a
13:34
spaces with said short at valuations this week or
13:37
sometime. My whole point to him today when
13:40
saying the ground rules is this doesn't this isn't, you know,
13:43
like a confirmation hearing where I have to get red in the
13:46
face and scream at someone. People are totally entitled to
13:49
have different views. And you're really just defining
13:53
betting lines. And so someone that thinks this
13:55
is a small market is just taking the under 40 billion.
13:59
Someone that's has a big position in the company like I
14:01
do thinks it's certainly bigger than 40 billion, but I have to
14:06
believe that it's a lot bigger than $40 billion of value
14:10
because I'm not playing for $45 billion of value.
14:14
Simple as that. Just the same way the shorts
14:17
have to play for it being meaningfully lower than $40
14:19
billion of value, because they're also probably not
14:21
playing for $35 billion of value, although many of them
14:24
probably are. Many of them probably going to
14:26
be pretty happy to scalp 10% from their short and move on.
14:30
Call us a bunch of knuckleheads, you know, and whatever.
14:33
But anyway, going back to the Tam discussion, India.
14:37
So India is also coming up with some new mandates.
14:40
Cars need connectivity. This is actually a really cool
14:43
solution where they're going to have the cars basically formed
14:46
from, I can tell, a mesh so that they talk to each other.
14:51
So if you're barreling down the freeway and there's a, you know,
14:55
traffic jam up ahead, your car will be able to sense that in
14:59
advance of you being able to see it or potentially if you didn't
15:02
react correctly. This is going to require, first
15:06
of all, a lot of data, a lot of bandwidth, but a lot of
15:09
connectivity. And so they're allocating 30
15:11
megahertz of spectrum to enable this vehicle to vehicle
15:14
communication plan, which is the first I've heard of.
15:18
So again, a really nice contribution.
15:20
Someone added me on this, which is what I want people to do when
15:23
they find something cool because I certainly didn't find this by
15:25
myself. And so I highly recommend anyone
15:31
that wants to see what I see to look at the the tweet that I
15:35
titled India comes up with new mandates.
15:37
And you can see for yourself other reasons that make me
15:40
believe that this isn't a good short are what Nokia's doing.
15:46
And so Nokia is opening up five new career opportunities, which
15:50
all mention ASTS in the description.
15:53
So the spectator reminds me of a friend when I was in a
15:57
fraternity. We all had pledge names and one
16:00
guy was had to be called the dictator and he had to wear a
16:04
potato around his waist. Yeah, the dictator and, you
16:12
know, whatever. The fact that I still find that
16:13
funny says says a lot about what my wife has to deal with.
16:17
But in any respect, we have Nokia hiring all these people to
16:24
integrate with space. Oh, not SpaceX.
16:28
Thank God. You know, Can you imagine what a
16:29
downer that would be if I read this little blurb and realized
16:32
it was actually really good for the shorts?
16:34
But no, it's not good for the shorts.
16:36
It says the NTN project. That's non terrestrial network
16:40
project is Nokia cooperation with ASTAASTS space mobile
16:46
company that enables innovative directors, mobile satellite
16:50
staff. Our defense portfolio offers end
16:53
to end customized tactical, tactical solutions for our
16:55
customers. No, not casual solutions,
16:57
tactical. And so again, we're having our
17:01
partners, some of the biggest telecom companies in the world
17:04
really gear up their own internal sales apparatuses,
17:09
apparati and engineering staff to specifically serve customers
17:14
with ASTS space mobile solutions.
17:17
And this brings up another key point that I'd like to just hone
17:20
in on to be a point solution or to be a platform.
17:25
A platform is something you should pay a really high
17:27
multiple on. I've taken certainly in the
17:29
private markets, I've taken a couple swings on things that
17:32
could potentially be a platform, but but otherwise they'll, you
17:35
know, look like point solutions. But if you can find something
17:38
that can be a platform, the difference in the valuation
17:42
multiple is extreme on the order of 3510X.
17:45
Because what happens when you have, you know, call it user
17:48
generated content is that your technology starts to propagate
17:53
with the creativity and capital and sales efforts of others, not
17:57
your own. That allows for a very different
18:00
level of scalability. And So what I see and what I
18:03
hope and heavily encourage the company to pursue is treating
18:07
Space Mobile as a platform because the use cases at the
18:12
ground level, the end mile kind of in the hands of the people
18:15
power, you know, kind of the, The Federalist Papers version of
18:18
AST Space Mobile is individuals and small companies have
18:22
problems with connectivity that really only they understand, but
18:26
only Asts could actually solve. And So what you want to do is
18:34
open up your platform. So all of those interesting use
18:37
cases can be solved by other people, but you benefit from it
18:40
financially. And that's what I think we're
18:42
already seeing in the military use cases, but I think that the
18:47
consumer use cases are going to go crazy.
18:49
So imagine that India car use case, cool.
18:53
Think about all the recreational use cases.
18:55
Also cool, think about all the IoT use cases.
18:59
It goes on and on and on. And so meanwhile, another way to
19:05
express this bet, really a way to prove that this bet is right
19:10
around the platformization of ASTS Space Mobile, is Satco.
19:16
And so our friend Peter Lindmark, who is a regular
19:19
person by day, but a European undercover agent by night, has
19:25
been closely monitoring the situation as we all should be
19:28
doing all of the time with Satco.
19:31
And so he found out that Satco made their first hire and it is
19:36
a commercial lead, so a sales hire.
19:40
This is exactly what we want to see.
19:42
This is a person being hired by Satco.
19:44
So that's 5050 that's going to go out, pound the pavement and
19:48
get business to oversell our capacity.
19:52
So every time our satellites fly over that's capabilities that
19:56
are flying over a region, the concurrency of usage, the number
20:00
of people, no matter how diverse these cases are, will never be
20:04
100%. So if I subscribe to something
20:06
like right now I'm a subscriber of Netflix, do I have it on?
20:08
No. Therefore the concurrency of
20:10
Netflix is below 100% in this exact moment of, of usage.
20:16
And a lot of things are like that.
20:18
And so you want to be able to sell your capacity so that you
20:23
maximize monetization. And that's what Safeco.
20:25
Not Safeco, that's what Satco. Is going to help do among many,
20:31
many other things. So then we think about other use
20:34
cases which are really kind of coming to the the head again,
20:37
one thing that we have been following pretty closely is PNT.
20:42
So position, navigation and timing.
20:44
And so here I have a tweet from Socrates who actually just put a
20:48
message and said he couldn't get into the spaces, which is quite
20:50
ironic. But now that I know that
20:51
Socrates is not on the spaces, we can really talk honestly
20:54
about this guy's contributions, which are awesome.
20:57
And so he has a really good understanding of physics and
21:01
science. And this is an issue, the PNT
21:05
issue is explored pretty in a pretty detailed way in the DD,
21:10
which is my pin tweet of course. And what we started to realize
21:14
is that the ANSTS positioning system is far more robust than
21:19
GPS because GPS is low power. It's a one way broadcast and so
21:24
it's very fragile. It's very easy to defeat and to
21:26
jam, which is what's happening in all these war theaters that
21:30
we're seeing recently. ASTS Space Mobile can operate
21:33
under the noise floor, which means that is unjammable.
21:37
But alternatively also it's so powerful, it can just overwhelm
21:41
all other radio frequency traffic, which prevents it from
21:44
being blocked. Pretty cool.
21:46
And so this is just going to continue to be a bigger trend in
21:49
terms of advances in PNT and what is needed really by
21:54
everyone most of the time. And then we also have the Wall
21:58
Street Journal putting out a really cool article about
22:00
electronic warfare. It's really highlighting the
22:02
growler, which has played a pretty important role in in
22:06
recent raids, but also the question of whether the US is
22:10
under investing in these types of technologies because they're
22:13
not as sexy. You know, they're you imagine a
22:15
Top Gun Maverick sequel where it's about the guy flying the
22:20
growler. And it's like silent, like, you
22:23
know, in that like key moment, then the climax, he like flips
22:27
the button and it's like, yeah, we jam the RF, but he just like,
22:32
flies back and lands. It wouldn't be a good movie, you
22:36
know, until Phil Philadelphia's Growler pilots, they come back.
22:40
Everyone's like, oh, you're you're in the, you know, you fly
22:42
for the Air Force. What do you do?
22:43
How many kills do you have? He's like, I dropped like 50
22:47
megahertz of jamming capacity, bro.
22:50
People are like, I don't know, man, not cool.
22:53
So that's why we got to just have satellites do this so that
22:56
these talented aviators can actually launch live munitions.
23:00
But the US military is going to really up the ante in this in in
23:05
my strong belief. So that's really a lot of this
23:09
stuff that happened. It's good time for especially
23:11
because the space mob seems to expand and contract pro
23:15
cyclically with the stock price. So welcome all the new people in
23:18
the 90s, just get ready because at some point you'll probably
23:21
have your conviction tested. So make sure you study so that
23:24
you're not one of the suckers that, you know, in October, the
23:27
people that got excited and bought the stock at 100 or about
23:30
the stock really, you know, 90 eighties, 90s and then they saw,
23:34
you know, a quick flip to 50 bucks.
23:36
How many of those people still hung on?
23:38
Well, I hope a lot of them, because that's really the goal
23:40
is to really understand the investment you've made.
23:43
Quote, know what you own now, but for, for new people, we've
23:47
included some tweets would bring you back to some of the basics
23:51
of things. And so one is, you know, really
23:52
one of my favourites is this Catsy tweet from 2022.
23:57
This was back when there's just a couple of us sort of staying
23:59
up all night trying to figure this company out.
24:02
And Catsy, I mean, this blew my mind that he started doing these
24:05
sketches, which I really view as kind of leaving our Da Vinci
24:09
level of work and, and as beautiful.
24:12
And so, you know, he got it general, you know, generally
24:15
right in terms of how these mechanisms work.
24:18
And so his real well, many contributions.
24:21
But one of the critical contributions he made was in
24:23
understanding the mechanical physics of all this, which then
24:28
our friend Steve Larison, who is a software engineer, software
24:33
defined aspects of how this was going to work in terms of the
24:36
Doppler compensation and the connection with the local core
24:41
and things like that. And so then the two together
24:44
could put together the full piece.
24:47
And and Steve Larrison also had a really good understanding of
24:49
AI chips. He was an AI engineer and, and
24:52
had worked at a bunch of defense companies as well.
24:54
So really understood this. And so putting the two together
24:57
is really what allowed of all of us, but but certainly Ampan Mann
25:01
and I to really increase our conviction to understand some of
25:05
the technological questions. But now some of the things that
25:09
are are really salient, you know, knock on wood that we have
25:12
no tech surprises. But this next tweet we have with
25:17
the title back to first principles with Katzie really is
25:20
the type of stuff that should really always be grounding for
25:25
us that we really want to make sure we understand.
25:27
I definitely subscribe to this first principles type of
25:29
thinking. You know, if you're looking at a
25:31
commodity company, you always want to make sure you are or
25:36
understand if you're not the low cost supplier, you know, things
25:40
like that. Some rules just to understand
25:42
the survivability of your business, what the competitive
25:44
advantages and things like that. Catsy is very focused on making
25:48
sure he understands whether we've maximized the output or in
25:51
other words, are we the most efficient place for spectrum to
25:55
go? If that's true, and if the
25:58
company is designing to ensure that it is the most efficient
26:03
way to deploy spectrum for M and Ms., then all sorts of really
26:08
good things that we can't necessarily anticipate should
26:15
happen. And and that's OK if you can't
26:19
anticipate it, because what is most important is to know when a
26:24
good thing will happen. So you don't need to know which
26:27
party it is. You just want to make sure you
26:29
show up at the place where the party happens and the party is
26:32
going to happen generally with the lowest cost, most scalable
26:37
solutions with viable economic propositions for both itself and
26:41
its partners. And so that's why these first
26:43
principles with Catsy is a very important thing to to study, but
26:47
also it's important to really study history.
26:49
And so I think a lot of us too have, you know, thought hard
26:52
about, well, now this is like a new cool thing right now.
26:56
Well, it's not even a thing yet. ASCs has not deployed to
27:01
consumers. But when it does, what's the
27:04
staying power? Is this something where people
27:06
pay for it for a year or two and then people would get so
27:08
accustomed to it that the price just sort of goes away and it's
27:11
free? You know, I think there's a lot
27:13
of confusion out there on this topic because initially there
27:16
was a thought that SpaceX was going to offer its solution for
27:20
free. Well, it turns out it wasn't.
27:22
But also my point was always, nothing is ever free.
27:25
And so even if it was quote UN quote free to the consumer,
27:28
you're paying for it one way or another.
27:31
The way you're paying for it could easily just be the fact
27:33
that you don't churn anymore. So you actually don't view that
27:36
as a cost because you're like, whatever, I'm still paying the
27:39
same cell phone bill and I'm happy.
27:42
But to the MNO you, you actually did pay a lot more because churn
27:48
is super expensive. If I churn off of AT&T, they
27:51
have to go buy another customer. And if anyone, anyone's been
27:54
watching NFL all weekend, it's incredible the load on cell
27:58
phone commercials. It's all, you know, switched AT
28:01
and TS the best network, the lowest price and we'll buy you
28:04
out of your phone and give you a free iPhone 16.
28:07
That's CAC, that's customer reservation cost.
28:09
That's very expensive. And so they really don't want to
28:13
have customers churn because then just to stay even, you have
28:18
to buy a new customer. They'd much rather just keep me
28:21
and then buy a new customer and have two.
28:23
And so this might sound like I'm saying that the price will be 0
28:28
and it and I don't think it will, but I'm just making the
28:30
point that even if it were zero, that doesn't mean that the M and
28:33
OS are going to pay ASTS 0 and so on.
28:36
This analysis at Keys, Minnesota presumably did a really nice
28:44
write up. This is really impressive write
28:47
up, just kind of articulating all the different ways where the
28:50
M and OS experience a benefit of various avoided costs, CapEx
28:56
efficiencies and things like that, which allow them to pay
29:00
billions and billions of dollars per year without breaking a
29:05
sweat. Never mind the consumers are
29:09
likely to be willing and able to pay quite large increases in
29:13
their ARPU for the service. And there's a lot of debate.
29:15
This is the core of the short thesis is that people aren't
29:18
willing to pay a lot or that that base is very small.
29:23
We could argue all day and it's kind of silly because it goes
29:26
back to what I said in the beginning.
29:28
There's a line in the sand and you just have to figure out
29:31
which of the three options you would like to take.
29:33
You can be short, you could decide, I don't know, I'm just
29:37
not participating, you know, good luck, space pod, because
29:39
they're wild. Or you can decide, oh, I'm
29:42
taking the over and then you buy.
29:45
Doesn't mean everyone has to be in a holy war against each other
29:47
all the time. We just don't know.
29:50
And for some of us that have researched this, I think there's
29:54
an abundant evidence that the attachment rates and so the
29:57
percent of consumers that decide to pay for it and the price
30:00
they're willing to pay for it, and the number of use cases,
30:03
including communication, but also including non communication
30:05
use cases are going to be so large that this is going to be a
30:09
really big business. If you believe that, then you're
30:12
probably inclined to buy the stock.
30:14
If you don't believe it or you're really uncertain, you
30:17
might wait, decide too hard, I'm going to go buy some other stock
30:21
or or you can short it and that's OK.
30:24
But this trip around how the text messaging market evolved
30:28
is, is pretty interesting. And so, you know, I just would
30:33
suggest just to think about these issues because they are
30:37
relevant to the investment for sure.
30:39
But they're certainly become more relevant as the angle of
30:42
attack from short sellers moves from technology, financing and
30:46
regulatory, because those are all kind of done now, which
30:49
isn't sort of like something to say lightly.
30:51
Those are big, hard things they had to do.
30:54
Really. Very, very few companies in the
30:57
world have ever accomplished those things.
30:58
And now it's sort of taken for granted.
31:00
But in fairness to the shorts, yeah, the stock price is 100
31:03
bucks. And so they are taken for
31:04
granted. The stock price is $100.
31:06
And so those things happened and people that got that right had a
31:11
really, really nice return. And so now the next leg of the
31:15
investment, the next questions to knock down in the market is
31:20
just making sure they execute. You know, there's still a lot to
31:23
show there. And then the commercial model
31:25
model has to deliver. So those are the uncertainties.
31:29
But it's great that we're reducing the number of
31:30
uncertainties we worry about, but we still have uncertainties
31:34
and then those uncertainties become much more acute because
31:37
there's more focus on them. That's why you're going to hear
31:39
the volume pick up on these issues and and that's OK and
31:44
it's OK to have different viewpoints.
31:46
That's what I'm going to hopefully be able to can not
31:49
convey to evaluations. He understands that, but
31:51
hopefully be able to demonstrate to people if we have a spaces
31:54
that you know there is a line in the sand doesn't doesn't make
31:58
you know one person like a thought criminal or not.
32:02
But moving on, we have SpaceX again, they are confirming that
32:07
they're going to fly at a lower altitude.
32:09
So this, this actually is, is relevant to the short thesis
32:13
too, because there's this, there's this idea that people
32:18
like me potentially don't understand what EBITDA means.
32:21
Rest assured, I do. And so in my models, you're,
32:24
you're always going to see something quite notable is that
32:26
I'm always reconciling to EBIT. Why is that?
32:30
It's because I like to save all my text messaging bills.
32:33
And so I don't want to use too many characters.
32:35
So I, I just leave off the DNA and that saves me two
32:39
characters. That's why.
32:40
So from that we cannot move asking.
32:42
So reason why the the difference between EBIT and EBITDA is
32:46
depreciation and amortization. Now if you went to some fancy
32:49
Chamanche Business School, which which I most certainly did not
32:52
go to Stanford GSB and I think I'll make that abundantly
32:54
obvious. Now.
32:57
Most business schools would be like, well, you know, just add
32:59
about DNA and you know, they don't really get into this
33:03
concept of using accounting numbers really as economic
33:07
proxies. That's kind of something that
33:10
I've noticed, but it really is important to understand economic
33:13
depreciation. So is economic depreciation.
33:16
That means the actual cost that you spend to replace your gross
33:20
assets as they economically depreciate.
33:23
Now if my balance sheet to pay in a hypothetical, if my balance
33:26
sheet just consisted of gold or land, that does not depreciate.
33:31
And so if GAP for one reason or another required me to
33:34
depreciate those assets, which they do not, then that would be
33:37
uneconomic depreciation. That just makes no sense.
33:40
And so the the relevant accounting number I would look
33:43
to as a partner in that business of of EBITDA would would be the
33:47
right one. Now if I owned a bunch of I
33:53
don't know what depreciates in like a very, very straight line
33:56
like a Maserati. So let's say I had 10 Maseratis,
34:00
those depreciate like no one's business.
34:02
It's like throwing a rock into a lake, like how fast can it go
34:05
down? And so there that depreciation
34:11
matters. If I'm looking at EBITDA off the
34:13
earnings of my Maserati fleet, well, whoa, you know, in five
34:17
years I'm going to have hell to pay if I didn't reserve
34:20
properly. That's where EBIT is so
34:21
important. And so with satellites falling
34:24
out of orbit because they deorbit, EBIT is an important
34:27
number because you got to replace those birds.
34:29
Otherwise your constellation goes down.
34:31
So it's really important to look at EBIT margin.
34:33
It's really important to understand the bridge between
34:38
cash flow from operations and free cash flow.
34:40
And so I'm acutely aware of this and modeled it out quite
34:44
carefully in my own model that that does independently have a
34:49
depreciation build so that I'm keeping track of this.
34:52
So back to physics. So when you're flying at a low
34:57
altitude, your replacement of those satellites is higher
35:01
because it's non linear. If you fly lower, your
35:04
satellites are going to deorbit at a non linear rate faster than
35:10
if they're at a higher orbit. And so ASTS is able to fly their
35:13
satellites at 670 kilometers because there's so much power
35:17
that they can close the link budget way up high, whereas
35:21
SpaceX cannot. And so they're flying much
35:24
lower, which requires them to have more satellites that's more
35:27
dollars in orbit, and those dollars are going to burn up in
35:30
atmosphere at a faster rate. And so this is something that I
35:34
think will matter because if you have the more capital efficient
35:37
company, the market's going to give you a higher multiple and
35:40
the market will at some point pick up on free cash flow
35:43
conversion. It's a big deal.
35:46
But the size of the market is also a big deal.
35:48
Not to always slam on SpaceX, it is incredible what SpaceX has
35:55
accomplished, especially with Starlink.
35:57
And it is also incredible and humbling to see the implied
36:01
market valuation of SpaceX. And so we have Peter Adderton,
36:06
who is this MNOCEO likes to troll us a little bit just fine.
36:14
He says SpaceX has a market cap that's bigger than the combined
36:18
market cap of the world's largest M&O carriers.
36:22
Yeah. So what, You know, that's kind
36:24
of funny. I, I, there's some other
36:25
examples which I are escaping me in this moment, but nothing says
36:30
that a different take on an old business can't be far larger
36:36
than the combined market cap of legacy businesses.
36:38
Those legacy businesses are structurally just not good high
36:41
cap backs, super competitive with price compression.
36:45
They can be big in terms of their importance in the
36:47
industry, but they can have very low economic value creation.
36:50
And then someone new comes along that disrupts all of the roles
36:55
and can capture all of the value.
36:57
So think, for example, about a company like Apple.
37:01
They just make the phone phones. The manufacturer of phones
37:06
hadn't been viewed as a particularly good business.
37:10
Hardware, bruh, don't invest in hardware.
37:12
That's what they told me. And you know, it turns out Apple
37:15
did pretty OK. And there's reasons why we won't
37:18
get into Apple. But, you know, they were able to
37:21
blast through some of the perceived ceilings.
37:23
They're, they're bigger than the things they depend on, which are
37:25
the F and Ms. And so SpaceX, whether that's the right price
37:30
or not, I'd much prefer to see a publicly traded SpaceX so that
37:33
we have real price transparency. But it is without a doubt a very
37:39
large company. And Mr. Market is therefore
37:42
telling you there's a big opportunity in what they're
37:44
doing. And ASTS is doing everything
37:47
also to show that they too see a big market.
37:50
So what got me all so excited this week is they filed for S
37:55
band access internationally and this is the core I believe of
37:58
the Inmarsat sort of pre Legato bankruptcy emergence adversary
38:04
hearing. I might have lost probably half
38:06
the audience when I just said that, but there is what's called
38:09
an adversary proceeding, which is sort of like a side fight
38:12
during during the Legato bankruptcy got super duper
38:15
interesting and ASTS really showed its hand to Inmarsat,
38:20
which is owned by VASAT, that it was in fact going to go global
38:25
with S&L band spectrum acquisition.
38:28
And so ASCs is on the move and then kind of prosecuting that
38:33
strategy, which is which is great, but don't let big
38:37
thinking get in the way of Scotiabank trying to drive the
38:40
stock down South. Scotiabank came out with a hit
38:42
piece and you know, in fairness, like when I read it, let me just
38:46
pull it up. You know, everyone decided they
38:51
were going to destroy Scotia Mac and let me just find that report
38:57
because where was it? He still has huge numbers in the
39:01
report. I was just clicking through
39:02
these links I had. But you know, he just says
39:05
things that are kind of obvious. It's like without yet a single
39:09
retail customer. Yeah, they haven't launched yet
39:12
Guy. And and faced by the challenge
39:15
of orbiting 50 satellites. Yeah, we're we're dude, we're on
39:18
it. We're tracking delivery of
39:19
satellites, you know, like a child tracks Santa Claus.
39:22
So I don't know what to tell you.
39:24
And then he says evidence of slow user adoption in the US and
39:27
Japan. I'm not quite sure what evidence
39:29
he's suggesting, but, you know, sort of an uninspired,
39:34
uninspired piece. You know, he does sort of say
39:36
the quiet part out loud. It's almost like I wrote this
39:38
report on a on a down day when I'm complaining to Tut because
39:42
he went, you know, quote, the technology is impressive, but we
39:45
cannot remember a single time when the when the company got
39:47
timing rate. Well, yeah, that's true.
39:50
You know, it's like Scott will say, generally when they're
39:52
going to do something, but maybe not the year in which they're
39:55
going to do it. Although I do believe that that
39:58
guidance issue will change. We are the next three to six
40:01
months whenever you're shaking down.
40:03
But anyway, this, this report really took the steam out of
40:07
things. I had frankly just thought the
40:09
stock was going to correct for a week or two.
40:11
Usually when when it gets hit in the face like this, there's so
40:15
many call options that have been built up.
40:17
There's so much heat. That the unwind tends to, you
40:20
know, just take a little bit of time to work out.
40:21
I was actually pretty emotionally conditioned for that
40:25
to happen. But then was very honestly
40:29
surprised to see just how fast that decline got bought up.
40:35
And so Bank of America just reminded people that, yeah,
40:38
sure, this, you know, guy in Canada can sort of nitpick on
40:43
some things that are just maybe not all factually inaccurate.
40:47
Like, yeah, sure. We don't have a we don't have a
40:49
consumer yet because the the service literally has not been
40:52
launched. Bank of America zooms out really
40:55
kind of the way reform trader has been educating me on his own
40:59
thinking. It's just like, hey, zoom out.
41:02
2026 is is going to be the year Star SpaceX is going to IPO.
41:07
All the regulatory things are changing and these services are
41:10
going to come live. They're all ramping.
41:12
Space is getting federal support.
41:15
It's becoming critical to the war fighter as evidenced in an
41:18
increasingly hostile environment where these technologies are
41:21
being used and deployed. Bammel just kind of zooms out
41:25
and reminds people, you just, you know, don't overthink it.
41:31
And the market sort of said Yep, and gobbled it all up.
41:36
Now, I don't know what will happen next week.
41:38
If I did, that'd be wonderful. But it was surprising to me to
41:42
see that this time people just totally ran over Scotiabank.
41:48
And I think that makes sense. It's a new year, so people
41:51
positioning in Adventure of a Names are going to see that this
41:53
is going to be a mother of all Adventure of a names.
41:56
And that the space backdrop, the SpaceX backdrop are all really
42:00
great. And that ASC Space Mobile is
42:02
positioned in a super duper way, so makes sense that the stock
42:07
was strong. Meanwhile though, people still
42:09
continue to fight it. And so I've been trying to get
42:12
more of these shorts to engage with me.
42:14
Really, I don't care. I feel like I really understand
42:18
this investment at this point, but I know it.
42:20
And I think it is really helpful to have that other voice so
42:26
people can see what shorts either know or don't know.
42:30
Sometimes, you know the the big bad short in the shadows can be
42:35
scary. You know when this Anthony Boza
42:39
guy for for your name it was fun was presenting at some
42:42
conference and all that came out is a tweet going boza shorting
42:45
is TS. People went like Oh yeah, what
42:48
does he know? But then you know you want to
42:51
hear these guys talk. So sure you know someone with a
42:55
great reputation can be short the stock.
42:57
Let's let's hear it. You know, that's the that's the
43:03
key is what do they what do they got?
43:06
And I want to have these people come out and and explain to us
43:09
what what do they see that we don't see and engage them in a
43:13
thoughtful way. I'm not going to be
43:14
condescending to them unless they're sort of deserving it or
43:18
it's sort. You know, it's like the doctor
43:20
with his one call option that he's short, but his guy
43:23
evaluations seems like a real person.
43:26
And and did you know, take the time to write a sub stock?
43:30
I I read it. That was well written, just in
43:33
terms of the diction. I actually thought it was pretty
43:35
funny with the, you know, Ken Griffin can buy another dinosaur
43:38
fossil. So I had a good chuckle with it
43:40
and and I presented it for everyone.
43:44
But, you know, it would be, you know, useful just to point out
43:48
that a lot of his thesis is really courted, driven by
43:51
behavioral pattern recognition, which is fine.
43:55
He's entitled to do it. So as a screening mechanism,
43:57
when you see something on the outside like space mob before
43:59
you dig in, I, you know, I see his point usually kind of
44:03
frenetic activity. You know, if you see a boil in
44:06
the water with retail, like, you know, there you go, there's your
44:11
next sort of crazy stock. The space mob, as we all know,
44:17
is built different as a community in terms of the
44:20
expectations of research and, and the quality and the length
44:24
people have been doing this. So that's where I think he
44:27
doesn't really understand the the depth of the cult, but it's
44:30
for him to learn. And he also concedes that he
44:32
just doesn't understand the technology, which is also fine.
44:36
And I appreciate his honesty. He didn't like Caristel made-up
44:39
things that were incorrect about technology.
44:41
For instance, when I, when I knew that Caristel was was full
44:45
of crap is when their short thesis included the cost curve
44:50
of Galladium solar panels, which I knew factually ASTS was not
44:56
using. And so when, when they had some
44:59
experts say, oh, you know, those galadium arsenic solar panels
45:02
are really expensive. It can not possibly work
45:04
economically. That's when I went, oh, you
45:05
showed your hand. And that's why it's important to
45:07
get the shorts to talk because in that moment, I knew that they
45:10
didn't know what they were doing.
45:11
They were wrong. They just fundamentally were
45:13
black and white wrong. And so then I knew that they
45:16
didn't have the jump on me. Funny stories, stocks still went
45:19
down 90%. So they kind of had the jump on
45:21
me, but at least I knew that I was not wrong on my
45:24
fundamentals. And that gave me the wherewithal
45:25
to fight to live another day. So the space mob did chime in.
45:31
There's some really nice rebuttals of his report.
45:33
I included some of them. But it also is interesting to
45:37
think about the quote UN quote risks to the short, which which
45:43
is neat. You know, what are the things,
45:45
you know, when we think about our long investment, the ifs
45:47
versus unlesss, you know, if the company does not launch
45:53
satellites, our company is not going to be a great investment.
45:58
That's that's an if statement versus we're very shortly going
46:02
to be flipping that to unless there's a material change in the
46:06
production cadence and launch cadence of our satellites.
46:08
Think about me talking, you know, this time in May of 2026
46:12
where we're launching, you know, satellites regularly.
46:14
If I say, well, unless something bad happens, we're going to
46:16
launch 243 satellites, then that means we're our long thesis is,
46:20
is pretty good. So here he's saying, well my
46:23
short is is great, but the risks are the AT&T may offer beta
46:28
service with first net in the first half.
46:30
Well, they are they just announced it.
46:32
My short thesis is great unless they have successful satellite
46:36
launches. Well, yeah, they're they're
46:38
going to have successful satellite launches.
46:41
My short thesis is great. Unless SpaceX IP OS at $1.5
46:45
trillion create an increased sector FOMO.
46:47
Well, they probably are going to do that.
46:49
They announced that so on and so forth.
46:51
And so his upside risks are, you know, he, he would say, well,
46:56
you know, you guys are so specky.
46:58
I mean, I, I think those things are, you know, like done.
47:04
But we'll, we'll see. And that's again, really nice to
47:10
know what they're thinking And great show.
47:13
Show me your cards. I'll show you mine.
47:15
I published them. You know, it's kind of like
47:17
Rommel, you inglorious basterd. I read your book.
47:20
Well, I published my book. You know, people want to know
47:22
the long thesis of AST Space Bubble.
47:24
It's on my pin tweet. And so we got some other write
47:27
ups which I've included. Now Space Mob has vibe coded
47:30
evaluation model, which is pretty cool.
47:32
I've included that as well. And Pin Man spent a lot of time
47:34
checking it. I have not.
47:36
And then you even have Kevin Mack apparently willing to
47:38
capitulate and say that ASTS is going to go to $1000.
47:42
And so I don't I can't keep up with Kevin Mack's ever changing
47:46
risk regimes. But I will say this about Kevin
47:50
Mack. His returns are sick.
47:53
And so that guy has put up some incredible numbers.
47:57
So a lot of respect and a lot of, you know, frankly envy to to
48:03
him being able to do that. But if you were trying to do
48:06
returns like Kevin Mack, please, please, please be careful before
48:11
you start using leverage ETFs. And so I was just included a
48:15
tweet, someone else included, where if you had bought ASTX,
48:18
which is the double X levered ETF, when the stock peaked the
48:24
last time ASTS had hit 100, you'd actually be down about 30%
48:29
because of the the gamma burn there.
48:32
Just so you know what that means.
48:33
It's with these levered vehicles, whenever the stock
48:37
goes up, it's buying more of that security to maintain its
48:41
tracking error on the short term.
48:43
When it goes down, it's selling that asset again to maintain its
48:47
tracking error. So what does that really mean?
48:50
It buys high and sells low. If you do that, rinse, wash and
48:55
repeat, buying high and selling low is generally not a recipe
48:59
for success and that's why that vehicle ends up underperforming.
49:03
I've also well does underperform.
49:05
It will underperform in almost every scenario unless the stock
49:09
is just straight up and to the right.
49:11
That's the scenario where you where you crush it on those
49:13
lever vehicles cause the gamma doesn't hit you.
49:16
You're buying high, buying more higher, buying more even yet
49:20
higher. You know that that's OK.
49:23
It's the volatility that wipes you out on those things.
49:25
And so then lastly, I've included the CES sessions for
49:31
some of the other satellite players.
49:33
I think it's global star and then Iridium.
49:34
I can't remember. I haven't had a chance to watch
49:36
them yet. So that's all we have for this
49:38
week. Thank you very much for joining
49:41
me. And we'll hope that we have some
49:43
other cool fundamental research that happens over the course of
49:46
the week, which I'm pretty sure we will, given that we've been
49:50
able to now hit this for over a year and a half.
49:54
And I haven't ever had to say, well, there's no weekly guys,
49:57
there's nothing happened. So I'm sure that the streak will
49:59
continue. Take care.
50:01
Bye. Thanks listening to the AST
50:05
Space Mobile podcast. If you enjoyed this episode and
50:09
you'd like to help support the podcast, please share it with
50:11
others, post about it on social media, or leave a rating and
50:15
review. To catch all the latest news
50:17
about AST Space Mobile, make sure to subscribe.
50:21
Thanks again and I'll see you next time.
50:27
We're doing something very, very big an activity with this
50:29
technology. We can really affect billion
50:31
lives. AST Space globally is the only
50:34
company that has proven technology to deliver cellular
50:38
broadband connectivity directly from space to the everyday
50:42
smartphone. People will just basically turn
50:44
their phone and be seamless, regardless of where you are.
50:47
We don't want the user even to know that it's connected by
50:50
satellite. Our role is to bring this into
50:54
reality, always in partnership with the MMO.
51:03
Listen, Waffles.