AST SpaceMobile vs SpaceX Spectrum

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[00:00:59] Speaker C: Okay, it's that time of year again where I keep pushing my spaces because of games. So anyway, that last, uh, Ravens-Baltimore game was pretty good. So between the Seahawks, the Ravens, the Falcons, it's, it's a lot of birds. And so pretty fitting because we have a lot of birds. So last week was shaping up to be pretty, pretty exciting until it was the opposite of exciting, and it turned into a horror show, which I guess in hindsight, nothing's ever really new with the stock. And I just never really understand why things always have to be so difficult. I look over across the neighborhood and see the Rocket Lab bros. Admittedly, their stock is down a ton, but it just, it just feels different. It just doesn't— I don't see the drama there. You have Starship launching, Blue Origin coming back to the pad, and the Rocket Lab bros are like, dude, we have Neutron. So like, yeah, that's— it's like almost not obsolete, but I mean, that's, that's yesterday's size. I just really don't get it. And nothing against them, they have a stock that's working better than ours, and good, good for them. I just don't really understand why Over the past 5 years, there's been a special type of purgatory for ASTS, and maybe that's just its way of expressing its love language, which is an abusive sadomasochistic relationship with all of us, which is probably the right answer, because I know that's the relationship I have with Anpanman. It's fitting that the stock goes in that direction. The other thing that really sucks is just all the people that are suffering. I'm obviously suffering and getting my ass handed to me, but what really pains me are the people that are on leverage, had been using massive amounts of options, both short-term and long-term, or equally as bad using ASTX. I got some pretty devastating DMs in my account this week, people that are facing basically ruin. There's nothing to say other than that's horrible. It's especially horrible in the scenario where this is all just a typical drawdown, which certainly ASTS has had many of these types of drawdowns. This one feels particularly bad, but momentum stocks have gotten hammered across the board. ASTS definitely is not escaping that. It had several materially bad things happen to it. 3 things in particular, Blue Origin being delayed, its own execution being delayed, and then a lot of confusion around SpaceX. These things always tend to happen when the stock market is also crappy. I don't know why that is, but it's just something I've noticed in my life is bad news tends to happen with some serial correlation with the broader market. You just got to figure out how to survive it, unfortunately, is what I've come to realize. But I really am— I would say pray, but I really pray for people that have physical injuries, like the guy that broke his neck, Gavin, and people losing their homes right now with floods and things like that. But I certainly hope everyone is okay. I hope I'm okay. I'm certainly depressed would be the accurate description. But this weekend, I used it as an opportunity, kind of the the stupor I was in on Friday, I decided to change my diaper and put on some pull-ups and walk around like a big boy. And like most things, I just started doing diligence. I think people probably saw a lot of posts coming from me over the weekend, and that's sort of my coping mechanism, is to just start banging out diligence and slides. It's a weird way to deal with things, but making PowerPoint presentations relaxes me. As I went back to work, I was spending a lot of time on StablecoinX, just because that's some work I've been meaning to do. I started posting a lot more on that as I chewed through some of my diligence, but I was just spending some of today going through my Code Red, which is my ASTS diligence, and starting to refresh that for an ultimate rerelease. It's been— I think it was Gosh, six months now since I released the last update, so I'm going through that again. But it just makes me realize and study history where we've been, what we've gone through, the parallels. Really dug in over the weekend with the Anpanman, Tanner, Kevin, Katzy, these guys, you know, going back to basics. And on on Friday. Spent a lot of time on the phone with Anpan, which, you know, it's bad news when that's how I spend my entire day. But then also just called— actually had inbound from some other friends. And we'll get to the SpaceX stuff in a second before I go on a non sequitur. But let's start with the positive news first. And positive energy is someone who defaults to negativity and darkness. That's why I really try to always embrace positive energy. It's good for you. It's hard for me, but it's good for you. And so the first thing is our little birds are on the move. And so company finally sort of— we bent them to our will, and they decided to go back to tweeting some things every once in a while. Yay, the narrative! And they told us that their satellites had arrived at the Cape, which is interesting because we knew that they had already arrived at the Cape. And so I could paint 2 pictures here. One, the company was of all, busy and is like, guys, we don't need to announce that they arrived in Florida anymore. And a subtext to that would be that they might be trying to also wean off the little micro releases, just trying to be a real company and really desensationalize shipment because there's going to be a lot of shipment. And they probably are like, these guys are getting like way too hung up on every little detail. But then I think with the stock in a free fall, they realized they probably had to post something. And then the other question though is, did they delay the posting about arriving at the Cape because they were waiting on schedule certainty for launch? That's another very plausible answer is the satellites were queued, but until they had a fixed launch date, they were gonna hold off on that. We'll find out because it could very easily be on Monday that they announce a firm launch date and we'll see. I am actually not— particularly hopeful that that happens on Monday. I think we'll see. Then this week, we also had the State Department announce one company in the United States as part of a broader communiqué about Japan, and it was the J-LEO project, which is very interesting. This wasn't just a dog's breakfast of all the companies that are doing this, that, or the other in Japan. It specifically was AST SpaceMobile and Rakuten. Very interesting. And it's showing you from at the highest levels of government coordination with the State Department, with AST SpaceMobile, in terms of the projection of US power and technology among our allies, and those allies that are most important in terms of containment and counterweight on our most important strategic— I won't say adversaries, but our most important strategic competition, which is China. Still don't know why China and us just can't be friends. It's like these guys, I wish they could just have democracy and be happy. I feel like half my friends are married to Chinese ladies, and it seems like— well, actually, upon reflection, it's like war, and the Chinese wife usually totally destroys the guy. So I guess that's how the war would go anyway, just a preview. But one would think that the US and China should not be at odds. And I've been reading this book, The Kill Chain, and I'm really convinced that China and the US are not going to go to war, but I do think as strategic competitors, that is true. But the Middle Kingdom, I don't believe, is wanting to go pick a battle with the US. I think the US certainly doesn't want to pick a battle with China. I don't know why we all can't be friends. But in any respect, having Japan have capabilities to strengthen its own kill chain, which there's 3 parts to that, awareness, ability to make decisions, and then ability to execute those decisions. That first part and the second part are really where ASTS is the strongest. It gives you the awareness of what is happening. And that's where JLEO starts to become much more than just dead spots and emergency response. It becomes strategic asset with Golden Dome. So we had that State Department release. And I really think it's just classy that the company doesn't feel the need to then double down and re-release these things. It's almost like they're so far above it, they have so much going for them, they just let external data speak for itself. It's this Teddy Roosevelt mentality of just knowing you have a very big stick. They're not doing a lot of bullshit press releases. They're not pumping. They're just doing because the doing is hard. I think as we've all seen, execution is very hard. It's not like this company is trying to delay things. It is not like they're idiots. I see the FUDsters saying, oh, they're so dumb. SpaceX is done with these guys because they're such nincompoops, blah, blah, blah. Look at who works at this company. It's a who's who of executive-level people from all of the country's best aerospace companies. It's attracted some of the best talent that there is. There's just no chance that this company is hapless, quite the opposite. And so, it doesn't dismiss the reality that what they're doing is very, very hard, and they're doing it for the first time. Moreover, building the production facility is the challenge. Producing the satellites is a function of producing the facility. What they're doing is very hard, and they're working hard. Abel is sleeping on or above the factory floor in his office, which is on the factory floor. This is not a guy mailing it in. This is not a guy— spending his time doing lunches on Wall Street to convince a bunch of hedge fund people that everything is good while Rome is burning far away. This is a guy on the battlefield. He's leading the troops in battle, drawing his sword like Marcus Aurelius, not from a mansion in Capri without connectivity to his people, which are the employees that he must lead and motivate. This is the thing I think people really understand. A lot of my friends and people I respect a lot, this week, I heard everyone just complaining about control the narrative, and I don't even know what the hell this means. What the fuck does control the narrative mean? It just means control the people on Twitter spiraling because they bought short-term calls that have really high theta burn or have ASTX, which they didn't properly understand or use leverage. What does it mean, control the narrative? The company set a very simple narrative, connect the unconnected. The narrative they haven't set, which we figured out that we've told for them, is we're the center of the goddamn kill chain, motherfuckers. That's the narrative they haven't told. Why? Because it would be idiotic for them to do so. Because Golden Dome is tightly, tightly, tightly managed. They've been very clear that contractors and vendors are not allowed to talk about it for a very good reason. It would be beyond stupid For them to be talking a lot about Jay Leo. Why? It's not signed. Japan is a culture that is not pumpy. A lot of protocol, a lot of decorum. They would not like someone getting out ahead of it. You keep your head down, you execute, and you shut up, and you just do it. Doesn't make a whole lot of sense to be pumping up a lot of SpaceX launches, which is probably your mortal adversary. Perhaps have some humility and just kind of hope it all goes okay. What does control the narrative mean? I don't know, but I got super annoyed by people saying this all week without any concrete suggestion of what that actually means. It's one thing to say this, oh, they got to control the narrative. What do you mean? They put out a 10-K, they do an earnings call, they put out great presentations, they're at all the industry events. They literally do more than most companies do. What they don't do is commit fraud or roll trucks down a hill. If that's the narrative you want, go invest in Redwire. I don't know, but I don't even know what it means. I think people are just losing their minds, and that's okay, because what I decided is I'm just going back to basics. There's a core group of people I work well with. In the middle of when the stock was single digit, we put our heads down, we did our work, we did our research, it all worked out. These are the times when you go back to basics. That's what I'm doing. think you need to conceptualize when you're reading a lot of this stuff, it's easy to read things and then just tacitly agree with them. Oh, yeah, we've got to control the narrative. Just ask yourself always, what does that mean? If any of you are more junior in your careers, just as someone who's not junior in their career, my job is always basically just to reply to an email with a question mark. Some analyst comes up with something to say, question mark. Some VP comes up with something to say, Question mark. Make people explain themselves. Make people eat the dish they're trying to serve and explain the ingredients back to me. It's a great way to synthesize whether what you said is smart or stupid. And a lot of times I thought there were a lot of really dumb things being said this weekend where there's a lot of very important questions alternatively to ask. We'll get to those questions. But in the meantime, as clickbait, I posted two pictures of Brazilian soccer fans. And, you know, elsewhere in the world, we'll get to spectrum in a second. ASTS got spectrum in Brazil. So did SpaceX.
[00:15:07] Speaker D: Great.
[00:15:08] Speaker C: Literally no one cares right now that we are getting— I love how PharmaDes just posted question mark. I get it. Touché. Pretty funny. No one in the world cares about the incremental movement ASTS has on the field right now. I get it. It's fine. Simple big headlines are what drive the market. It's what sets the narrative, so to speak. But at the end of the day, the coil, the spring is coiling. And so, the fundamental stack, ASTS is an international company. They're going to be bringing the fight all around the world, but not even bringing the fight because it's unclear that there really is a fight elsewhere in the world. What I see is they're bringing the partnership. They're bringing the solution. They're bringing the sovereignty.
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[00:16:22] Speaker B: This episode is brought to you by Palmolive. Family time isn't just the big moments. It's weeknight dinners, sitting around the table, everyone talking all at once. So when the plates are empty and the sink is full, use Palmolive Ultra. Palmolive's most powerful formula removes up to 99.9% of grease, leaving your dishes sparkling clean. And the new convenient pump makes Cleaning even easier, so you can spend less time tackling dishes and more time together. Shop now at palmolive.com.
[00:16:55] Speaker C: That each country is requiring; they're bringing the solution that each local MNO can use, which, like it or not, a lot of these governments are going to be very protective. They're not going to go nuke all of their local industries to allow U.S. infrastructure. Players to run roughshod over their domestic champions and put all their MNOs out of business. And we'll get to that in a second. And so we had some nice advancing of the ball in Brazil, got some spectrum. That's a big country. And that's wonderful. Meanwhile, Elon is in a Twitter fight with the country of India, which is actually hysterical. And if you're calling balls and strikes, it's hard not to appreciate what Elon is mad about. India, if you've ever done business there, is a really, really hard place to do business. It is not friendly to foreigners. It is the definition of bureaucracy. I've done business there in the oil industry. It is just red tape times 1,000. And so good luck. You want to litigate? I hope you're young, because by the time you get a judgment on your litigation, you will be old. And so Elon is pissed because Ambani Who's the oligarch for, you know, the descriptor that Elon put, but the billionaire in India that controls all the industry was able to lobby his government to put up a lot of roadblocks against SpaceX. Welcome to how the world works. Elon has done the same thing in the US. This will happen in other countries. Go try to do business in Nigeria and you are going to learn about Dangote. He will put up roadblocks. And you will not be able to do business there if you do not do business with him. But Elon, instead of commiserating with the world leaders, mocks them on the global stage, which, if you read the comments, has absolutely infuriated the country of India for reasonable enough reasons because they are also proud people and feel like they're being belittled and mocked by a person that evidently they don't generally like. And that is not helping SpaceX's cause. We'll see. I'd be very surprised if India just rolls over and opens, opens the door. But, you know, you never know. And this to me is just proof positive of how ASTS is going to walk into all these countries with a very different MO, one as a partner to the existing MNOs, and get tons and tons and tons of business. And that's really important. And so SpaceX is going to struggle outside the US because it doesn't offer the data sovereignty. And so they are the King George of telecom. They have not vested the power in those who they attempt to connect. ASTS is like the US Constitution. It vests the power in those who are to be governed. That's a winning solution. And so if a US company can switch off a national signal like Elon has threatened and shown to do, countries are going to rightly say, we probably cannot rely on you. And that is a big problem SpaceX has. Elon has not painted himself with glory. Fool me once, I remember forever is probably going to be how each of these governments thinks about it. And we can extend that to how the EU is going to think about it, so on and so forth. But the position of ASTS on the international stage gets stronger and stronger. So the Hail Mary that Elon is taking is, if shunned by the world, and having very limited traction with the US MNOs, and having a very exciting book of business of things that are not related to the phones that you and I use today, he took the plunge and bought low-band spectrum, which of course sent our stock into an absolute tailspin. What's funny is all the smart people, which does not include me, but includes things like Barron's and the sell side, all immediately concluded that this was good for AST So, imagine the confusion when the stock was down 15% on like 50 million shares. I remember I just chatted with Tut and Anpan in the morning just saying, hey, just let me know if I should even open my brokerage account today. And Anpan responded, he's like, go back to bed. And I was like, damn it, because then I knew it must have been really bad. So, then I checked, and that really ruined my day. But stock went into a tailspin. And so, I was talking to my friends. And so, I've got some buddies that really don't have a dog in this fight. and are experts in telecom, know all of the MNOs and call them at the CEO level quite regularly. And then one of my friends, it's a banker who has a particular expertise in spectrum. Both of these guys reached out to me unsolicited and said, hey, this is good for ASTS, isn't it? And I went, hey, read the room, guys, check the stock price. Apparently not. And they're like, wait, what? This is definitely good. It's clearly SpaceX just removed themselves as a direct competitor to AST. They are now a direct competitor to the MNOs. ASTS does not compete with MNOs. It's a B2B service provider to those guys, as was SpaceX in the T-Mobile deal. But they have since seemingly removed themselves as a B2B provider and are vertically integrated, which is what I've said the entire time. The business model ASTS has is not consistent with how Elon thinks. Rightly or wrongly, Elon likes to control the entire stack. Smart thing to do. He has a unique ability to do it. He has the cars, the batteries, the launch capacity, the apps, the brain implants, the tunnels. He's got a very interesting portfolio of things. Does not make a whole lot of sense. he's going to be a service provider to T-Mobile. It just never made sense to me. T-Mobile moves at a very slow speed. One of my friends has a deal with T-Mobile, and T-Mobile is aligned in every possible way to do business with my friend. And even on basic development things, which T-Mobile engineers are aligned to do, it's months and months to get something done on their network. This is not the pace that Elon works at. It's fundamentally at odds with how his brain works. And so, lo and behold, is it shocking that he can't do business with MNOs? No, it's not. Is it shocking that then he decides, I need to have a dog in this fight in terms of the future connectivity? That makes all the sense in the world. How are his humanoid robots going to connect? How are his cars going to increasingly connect when they're all FSD? How are people going to access the X app, his payment apps, all of these things? He's got grand ambitions, which are exciting. All of it, or nearly all of it, relies on connectivity. Whether or not Starlink Mobile happens, the spectrum purchase to me is just a one-way option. It's $8 billion, whatever. He can raise that in a nanosecond. He will get it in his market cap. on random stock price moves. The usefulness of this has so many different ways to be applied in a portfolio that where if he never launches a phone, this would still be a good, smart thing for him because spectrum is scarce and he can always just sell it. He'll find a way to use it. And he probably will launch a phone. It probably won't have that many subscribers. Look at all the guys that have tried to enter the market, the Mints, the Boosts, these sorts of things. They can get some market share, but I don't think anyone really believes he's going to get a huge amount of market share. For one, his service is probably not going to be very good. He has to go hang a bunch of towers. He is now totally stuck on a different CapEx obligation. We'll see how he does it. Charlie Ergen is a talented guy. He couldn't get it done. Elon is a more talented guy, but a vastly busier guy. Does he have the people? Is he going to be able to put the best people now on recreating T-Mobile? I just don't really buy it. And this doesn't happen overnight. The tower stocks are up, okay. He has to go then buy all those radios and hang them all. It takes a really long time. There's reasons why AT&T takes years to deploy new spectrum. SpaceX can't just go do this overnight, and the tower companies don't do it for you. It's not like they just flip a switch and boom, you're on. Never mind the absurdity of the price signals we saw on Friday, M&Os getting obliterated, fine. You could say price compression or things like that, I think wildly overblown. But then Canadian telecoms were down. I guess you could say, well, maybe he's going to enter the Canadian market. Good luck. That's a structural oligopoly. That tells you it's really just a correlation trade. Tower stocks skyrocketed. Well, if Starlink is going to put all the M&Os out of business, then tower stocks should go to zero. Because it means that the 3 big companies that actually relied on towers are not going to be there anymore. And the one company that's going to use the fewest towers as humanly possible and then try to displace those with satellite is your only customer. So that can't be true. So the reality is ASTS probably just solidified its contractual win of T-Mobile and the reinforcement of the loyalty of AT&T and Verizon. while also sending a shot across the bow to every single company in the world that you don't want to do business with Starlink because they're just going to turn around and gobble you up. So every other MNO is probably panicking and calling ASTS. Stock should have skyrocketed is my view. So there you go. If that tells you enough of what a kook I am, there you go. But At another level, then people go, well, they missed out on this spectrum. Well, we suspect that the MNOs were potentially bidding on the spectrum, but this spectrum has been around for 20 years. It's, I believe, the Nextel spectrum. And so whether ASTS wanted it or not, I don't know. But the fact that the price went up suggests that there was competition for it, and there's only so many people that could buy it. that tells you that the JV very well have been buying it, and ASTS very well might have been offering a lease deal, but it's highly unlikely ASTS was going to try to buy it directly. Could you even imagine if they did, and then you saw ASTS raise $3 billion, within $3 billion of debt, and then people complaining about dilution and losing their mind? It's just truly, with this base, you really can't win if you're the company, so you just have to do the right thing. And guess what? The company already gets the spectrum for free. And that's actually not true. It's not free. They get the spectrum in exchange for a revenue share, which means that it's asset light, capital's not at risk, there's a lot of leverage to it, and they get the best spectrum that you could never buy. And it can get allocated as you need more of it by your partners. And so, the freakout had many dimensions to it, as I could see. And at least now, we've ripped off the Band-Aid. And we got the best possible solution I think you could have, knowing that you probably were going to have someone add some competition. And what you had is Starlink basically having this paper elephant over the market that has terrified everyone. ASTS was able to plow through it for long enough to get to where they are, but everyone else has basically been snuffed out. And then the one company that could have provided an alternative for the MNOs decided to no longer compete as a B2B company, and instead go be a B2C company. So you've snuffed out all of the possible competition and capital. And then at the last minute, voilà, Starlink disappears as an actual competitor because they will not be serving your customers, And now you have it to yourself right as you are within spitting distance of having it all get done. And you've galvanized the support of all of those customers who very well could have been thinking, well, maybe we're going to delay satellites for a while. Who knows? Why innovate? We got a good thing going, blah, blah, blah. Now all of these MNOs have a fire lit on their butt because they know they have to answer to all of their investors about the threat of satellites, the threat of Starlink, and now they have to have satellites too. Good for them to have it, because AT&T was particularly forward-looking, but now they really need to lean into that. I think you're going to see a big change in the marketing. We'll see how SpaceX competes in MNO. It's super capital-intensive business. I've been a customer of AT&T for, as best I can tell, 30 years. Switching is hard. You're going to go get a new phone, I don't know, I could look at this, but churn isn't particularly high among the MNOs. They're already competing like crazy. I was just watching the National League Championships, and it's like one mobile phone commercial after another. There's mobile phone stores on every block with all these points of sale. They have good and cozy relationships with Samsung and Apple, which give a lot of inducement to move those devices. Have anyone even thought through how SpaceX is going to enter? Are they going to be selling iPhones? You don't even have CarPlay in a Tesla. That means that Starlink is probably not going to get a lot of support from Apple or Samsung. Why would they make a deal with the devil there? Because all that's going to do is enable Starlink to get out the gate with Starlink Mobile, and then as soon as you know, they're going to come out with their own device, which if anything, is just going to chip away at demand for Google, Samsung, and Apple devices. Then is the implication that SpaceX is going to try to compete in the market with its own Starlink phone? Then you have all the lock-in people have with Android and iOS. When you actually start to think about it, it's just a brutal challenge, which is why things like the Fire Phone and the Microsoft Phone died. Maybe this will be different. Elon's an amazing individual, but it is very, very difficult. One of my friends said, who's the particular the closest to all this on the banking side said, I wouldn't worry about Starlink Mobile as a threat to the MNOs as anything before a 2040-type outcome. It's a long time. I will be probably out of the stock by 2040, hate to break it to you. And so needless to say, we're seeing the value of spectrum. It's going up. It's very strategic. Now, a lot of people came out and showed where the spectrum is, who has it. And the answer we've seen is ASTS has a lot of it through its partners. And then we had some good takes from people like Scott Powell, and he has a lot of background in this. He's an experienced telecom executive, a pretty steady thinker, unlike myself, certainly emotionally composed. And he just made the point it validates the breadth of the D2D market, and it forces a strategic lever for all the MNOs to partner with ASTS. And this is actually another point my friend who's a banker said. He went, Kuk, originally, I thought ASTS was pretty niche. I didn't think much of it. I'll let you have your fun, whatever. But this, now with Starlink doing what they're doing, this proves that this is no longer niche. This is core. That's the thing I think is going to be realized on Wall Street sooner rather than later. It will take time. Right now, ASTS is still dismissed as too hard. No one really understands the valuation, whether the stock is at $150 or if the stock is at $20. It's like, I don't know, people need cash flow. It's hard to value story stocks. That's a conversation for another day. It still can be perceived as a meme stock. It's like, don't really short it because you can get blown up, Buying it is regret, because then your portfolio manager is going to go, why did you buy a meme stock? I viscerally disagree that it's a meme stock at this point, but you can see these perspectives as having weight. That's going to continue to change, especially in the near term when this company is just putting up these tuna cans at an increasing rate. Really, when you think about it, SpaceX is what's allowed this company to have the opportunity that it has. Like I said earlier, the M&Os could have just sat around. There was no forcing mechanism for them to innovate and take this risk. And this is what Brendan Carr doesn't like. You have a cozy M&O group that has a lot of lobbyists, has a lot of barriers to entry. They didn't really have to innovate. Where is the benefit to consumers? Where's that fire? And that's why Brendan Carr is giving Starlink what they want to put them in the business. But Starlink is also waking up those MNOs like crazy. I was really not kidding when I was tracking pizza orders all weekend at T-Mobile. And I fully expect that T-Mobile people were at the office all weekend finalizing either a deal with ASTS or just getting their stuff together. It's no joke. And so Starlink is the catalyzing factor for adoption and support of ASTS around the world. And then the blessing we have is they've just recently decided not to even compete with us. And so this is what I just don't think is fully understood now, this pivot from them away from being a B2B provider, which is pure competition to us, to being a B2C provider, where they have to go reinvent the entire mousetrap before they're in market, which is going to take a long time. And this is where the rational people that can take more measured perspectives are also coming to agreement. Barron's agrees. Barron's— I'm shocked that— I love Barron's. I'm shocked that Barron's is even wading into this. They go AST SpaceMobile, stock is down on SpaceX news and it shouldn't be. They said this should be good news for AST SpaceMobile, but it's getting hammered. That's odd. And so they said that it's an endorsement of the strategy, it's a good competitive position, and then they quote some of the sell-side research, which I've linked as well. You have Berenberg and you have, uh, who else, Roth coming out. And so You just don't know. This could have all just been this, we were on the knife's edge because people were leveraged, about to give up, the chart was messy, and then we got stuck in a correlation trade with the MNOs, which is actually one of my friends told me because he was hunting around Wall Street on my behalf looking for good explanations, seeing if I was missing anything. This is what Ampin and I were doing on Friday, because we'll sell the stock. I asked him, he asked me, are we wrong on this? Should we just blow out? We've both made plenty of money on this. It would just make me sick to sell it at 50, but 2, 3 years ago, 50 seemed like an impossible moonshot. Now, it's like death at 50, which is just, again, shows you how crazy time and perception can be. But we really talked it through. Hey, are we nuts? Should we blow out? We always do this from time to time just to try to keep ourselves honest to the extent It's a genuine conversation, which people could question whether we're genuinely even really debating this or just going through the motion. But then I had a buddy who I really trust, who would look out for me, make some calls, and also is a good thinking partner of mine. And that's where he came back from other hedge fund guys, and they were like, I don't know, all the M&Os are down 10%, so this should go down 10% because it is their partner. And it's like, well, but the towers are up. And they're also partners with the MNOs. And so, it might have just been a big correlation trade, a bunch of people on leverage, and it just became a self-fulfilling prophecy. But we'll find out if this all just snaps back. And we'll also find out if we start to get some big dog announcements next week, because there's going to be a lot of people wanting to make moves. And Tim Ferriss, of all people, actually was pretty realistic in his assessment of this. I don't follow Tim, but I have a way of seeing what he writes. And I was surprised. And he made the point, he's like, well, this is just going to delay Starlink, because now they have to go build out this terrestrial stuff, which is going to take them forever. And it's really hard. So it's going to push back their timelines for the V2 solution, which is already delayed to second half 2028. And so it got me thinking, yeah, all those things are true. This just added a lot of work that SpaceX has to do, which it doesn't relate to their actual satellite. And then it got me thinking, well, how are you even launching these satellites? These satellites, these V2 D2C satellites, are similar to the V3 broadband satellites in that they need Starship. Guess what's not ready? Starship. Guess what else needs to go up? The terrestrial satellites. Starlink is not obviously a good business. This is maybe one of the less talked about truths on Wall Street, is that Starlink might not be that viable given the decay of the satellites and the consumption of Falcon capacity. It's just there's a free cash flow question that needs to be asked. And there's a question of whether it all really relied on massive additions of new capacity with a much lower cost basis because of Starship. So if that's true, which I believe it is, then terrestrial satellites should take precedence over this new and very uncertain D2C business. And so even on the DDC business, when I was doing the math, for a minimum viable product, you need like 50 Starlink Starship launches. If I remember correctly, I was doing the math with Grok, here, she'll look it up. And so you need an enormous amount of scaling of Starship to get these satellites in a position where they're useful. And it could just be years. where that's happening. By then, we're already done. And so when you start to compare what it takes for ASTS to get to its 243 satellites using New Glenn, if that flies, which I'm sure it will, versus Starlink with 15,000 satellites, it's like 25 launches we have to do versus 300 or something Starship launches. And so if Starship starts launching on the same cadence as Falcon 9, which would be in insane. That's like over 2 years of just blasting Starships every other day. And that assumes no other commercial cargoes, and that assumes no V3 terrestrial cargoes. So how do you feel now? I feel good. So as I was doing diligence, I was like, holy shit, nothing is fucked. And that's a good feeling. And so that's why then this weekend I also did lots of arts and crafts projects, which one of my good friends made fun of me about, but I commissioned a perfect replica of the B-24 that my grandfather flew, and I've been making a clock out of a Porsche carbon ceramic brake pad. Yeah, that's what I do in my free time. And I've been doing USDE research. So I got to calm down a lot this weekend. Turns out arts and crafts is a really good way to settle the nerves after you lose. huge amounts of money. So Tim was right. Oh, God, it pains me to say, but every once in a while, this guy has good perspectives in his endless cynicism. And what's interesting, though, is to then look further into this JV. So the JV, there was this interesting thing with Roger Entner, who did this interview, and they called it— where was it? They called the JV informally known as the anti- It's called the Non-Elon Club. What does that tell you about the intent of the JV? I think that was the key point, is this JV was really just designed to block Elon. All the MNOs were very worried about the speed with which Starlink might try to set standards, and they didn't want Elon having control of things. It was just a hedge in a way, Of making sure that what Tesla did with setting the charger standards wouldn't happen with satellite, and also as a way to try to prevent one of the guys from doing an MVNO deal with Starlink. So the anti-Elon social club is what it was all about. And so then Leo Edge did a good tweet on this too of this Tesla. Tesla analog and what the MNOs are trying to prevent, at least in the US. Meanwhile, T-Mobile is not being subtle. They're coming out and specifically Chris Sambar, who we know well, he's the AT&T leader back in the day that is the reason why ASTS has that deal. And now he's at T-Mobile. It's nice to have friends. And Chris Sambar is a legit nice guy. He's a very tall guy too, and he could absolutely kick your ass. He was in the Forget if he went to West Point or not, but yeah, don't mess with this guy. And he's a great leader, seems like a genuinely nice guy, and he's now at T-Mobile. And he said, and I quote, seeing T-Mobile, AT&T, and Verizon come together around a shared goal of helping close connectivity gaps through direct-to-satellite service technology. Well, I don't know, that seems like that closes the uncertainty band around who T-Mobile is working with. And then there's articles about T-Mobile, quote, T-Mobile wants some space from SpaceX. Subtitle is T-Mobile's most important relationship is showing cracks. They've erased the Starlink logo from their satellite offering. No one should be surprised about T-Mobile joining with ASTS. And now, if people think all the MNOs are going out of business, then fine. But if you believe the MNOs are going to be around to fight the fight, which I certainly do, I thought about it. Are the US MNOs akin to ULA? Well, ULA was a government-granted monopoly where you had collusion between Boeing and Lockheed to have a launch market with no competition. It was created because there was not enough demand for launch. And so, you actually couldn't have competition because there wasn't enough of a market to support it. So, they put Boeing and Lockheed together, and what'd you get? You got a very reliable rocket, but you also got a very expensive one. It set a crazy price ceiling for someone like SpaceX to come in and undercut. So, then I look at the US M&O market. Do T-Mobile, Verizon, And AT&T collude? Absolutely not. These guys are in a knife fight every single day, and they hate each other viscerally. And they compete nonstop, spending infinite amount of money on promotions, device deals, advertising, triple-play bundling, every trick known to man they deploy in their blood feud against each other. They don't make great money. They're not particularly high-return businesses. This is not Boeing and Lockheed colluding to keep prices high. This is a street fight to the death. This is the market Starlink is going to come into. And so then even when I thought about it, well, what if you woke up tomorrow and Starlink got an MVNO deal? Well, that implies that they're paying one of the other MNOs. The cost plus return required to access that network then Starlink has to mark it up. So then how is the end user going to be getting a good deal? You're going to be having a more expensive solution than what you would get from one of the MNOs if this is offered at scale. Now, there's a reason why some MVNOs can offer some cheaper products, either through subsidizing other deals or some capacity games they play, blah, blah, blah. But at scale, those things would go away. And then you look and go, well, Starlink itself is not cheap. But then to think that Starlink Mobile is going to be economic starts to become very laughable. How are they going to undercut the US MNOs? How are they going to offer better device deals or even offer the devices that all of us know and love? Maybe they come out with a Starlink phone, which is just so astronomically better that it breaks all of the other ecosystem moats that everyone else has. Maybe, maybe, maybe. But that's a really tough putt. And so then as I thought about those things more in details, I was going over it with a friend, he went, why do you think that Starlink is economic? And I was like, well, yeah, good point. And so then why would I think that Starlink Mobile is economic? He thinks that people might wake up on SpaceX and realize that they have hung themselves on a lot of pretty questionable businesses. Makes a lot of sense to me. And again, gave me some of the mental space to have time for some arts and crafts projects this weekend. And then we continue to see more proof that the MNOs are leaving Starlink, which is the expected result. And so there's a JV in New Zealand where it looks like One New Zealand is going to flip from Starlink to AST SpaceMobile. We should expect more of that. And then with Abel tweeting, it's possible to read too much into this, but Abel tweeted about the aggregate spectrum of the US operators. And saying that ASTS has access to it.
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[00:48:23] Speaker C: It looks like there might have been a little bit of a slip, which implies that they're doing a deal with T-Mobile, which of course we believe that they are, so it wouldn't be much of a slip at all. But these are the things that starts to get pretty interesting. And then we just go back to the basic physics, and for that we go back to CATS-i, and we can see that just we're playing a different game. With their V1 satellites, they just cannot do the beamforming. They have to fly low because they don't have the gain, which means that they don't have the reach, means they need way more satellites, and their array just doesn't support the power of a beam to give a really good service. Meanwhile, the FCC keeps knocking down the barriers to make these businesses scale. The FCC opened up a bunch more spectrum specifically for supplemental coverage from space, which is what ASTS does. And then they also nuked the continuous coverage requirement for spectrum, which allows ASTS to get access to much more of the spectrum held by its current partners. And so, lots of good things happening for this industry motivated by the FCC. The FCC is going to make it happen. And they're also going to make it happen and let Elon take his shot because he wants to add some fire to the US MNOs, which again, do I like competition? No. But in this instance, I truly believe that Brendan Carr shaking up the US MNO picture by having Starlink Mobile terrorize the 3 MNOs causes the 3 MNOs to galvanize around ASTS in ways they would never have, which overall drives an opportunity for us that we wouldn't have had. That's my view about that. Meanwhile, the company's focused. While everyone's complaining on Twitter about more disclosure and all these things, We have Justin Barrett who stays focused, of course, because Justin Barrett is a winner and reminds us that we just got another STA to test in the 902-928 band with the STA for our advanced radar capabilities. So now is the company gonna go start press releasing a lot of things of the things they hope to do with Golden Dome and disclose a lot of things that are specifically prohibited to be talked about by the Department of War? I sure hope not. Talk about a fast way to get kicked out of a government program. And so the information is available to you as a research analyst to understand what is likely to happen. Some people respond in the comments to me, they're like, why do you always have to speculate? It's like, hey, Fool, that's literally how you make money on stocks. There's a difference between speculate on future outcomes and speculative behavior as an investor. Buying short-term options is speculative behavior. Putting pieces together to understand the future of a company is speculating on future activity of a company. Here, we have yet more proof of the non-communication use cases this company is pursuing, and it's really exciting. I'll just say again, read the book, The Kill Chain. It starts to become very, very clear about how these opportunities will work. And so lastly, we have New Guts Return to the Pad. I'm probably gonna have to experiment with moderate off-label anesthetic usage when this launches. Like, I don't know how I'm going to calm my nerves when New Glenn launches again, but I would imagine that New Glenn's going to have like a little bit different quality control culture after New Glenn 3, basically everything worked except for a stupid valve on the second stage. And then New Glenn 4 blew up on the pad because of a liquid oxygen valve, which again just seems like dopey type of mistakes. But overall, the fully integrated system seems like it's 99% there. It's just with rockets, that 1% causes a nuclear explosion on the pad. So it really is like one of those things you got to be careful with, but they're trucking. They're aiming really big, and you can see the market is believing in it. I got invited to invest in Blue Origin in this round, and it looks— I don't know if it's closed, but it looks like there's a lot of interest. They're raising big dog money at a big dog price, and it's an exciting investment. Blue Origin is stacking up their first stage boosters, and they have 20 second stages in production. They are really getting ready to let it rip. If they do, that materially changes the pace with which ASTS can deploy, and I hope it all works out. So that's what I have. We'll navigate each weekend based on whatever sports games are going on, so might continue to be a little bit later, um, just to accommodate everyone. So I hope everyone has a great night. I would just focus on the diligence, you know, to calm your nerves. Or just sell. That's the other way to calm your nerves is just make it go away. I decided to, again, put the pull-ups on and eat some solid food. Didn't take a nap, but I did do yoga and get back to basics, review my diligence. I was updating it, and just remember the patterns we've had in the past. Sometimes the market just gets it wrong. And this is where Anfan Man and Cathie and I had a lot of experience. We'd be sitting there going like, wait, this is good. This is right. This is happening. And back then, it was going to be much less efficient because really no one covered this stock, didn't have an institutional base. In this instance, I think the market could come around pretty quickly because now a lot of people are going to look at this thing. It's much more relevant than it was a couple years ago when it was just this crew of the village idiots. But sometimes the market just gets it wrong on the break. It's overwhelmed by a correlation trade, and it can all reverse really quickly. And then you can feel like an idiot being like, wait, but I knew it was good, but I got scared, and so I didn't do that thing. And then you look back, it's shoulda, coulda, woulda. And one example Anpanman uses with me is one time he woke me up, and he was like, hey, Coop, they got Verizon. I was in the bathroom, and I was like, how much is it up? He's like, 5%. I went, oh my God. It's a $5 stock, and they got Verizon, it's only up 5%. That means they have a monopoly in the most valuable telecom market in the world. I'm buying this shit. I alone apparently saw that because I alone set the price in the market that day because I lifted the offer and then started bidding for stock way above the offer to generate the liquidity I wanted at that moment. I have no problem paying whatever price I want to pay to get it done. I just did that the other day with StablecoinX. I really wanted to buy a lot of warrants. I went in there and I paid way above the ask. People thought I was a total dope. I was talking to the CEO the other day, and he was like, oh, yeah, I had these hedge funds who were trying to buy warrants, but then they just ripped and they felt like they missed it. I was like, that was me. He laughed. Who's laughing now? They went from $0.70 till— now, the stock's down a little bit. They went from like $0.70 to $7. So me paying up 10 cents in hindsight was the right thing to do. And so it just goes— you have to know what you own so that you can look at an auction, decide the market is wrong, and do what you got to do. And that's how I roll. So with that, I'm going to sign out. Have a great night. Bye. Thanks for listening to the AST SpaceMobile Podcast. If you enjoyed this episode and you'd like to help support the podcast, please share it with others, post about it on social media, or leave a rating and review. To catch all the latest episodes, please visit ast.spacemobile.com. latest news about AST SpaceMobile, make sure to subscribe. Thanks again, and I'll see you next time. Listen, waffles.
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