Anpanm - Why the SpaceX IPO Changes Everything for ASTS

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[00:01:04] Speaker C: This is the AST SpaceMobile Podcast. We just basically come to your phone and be seamless regardless of where you are. We don't want the user even to know that it's connected by satellite. Listen, the opportunity that we have is very, very, very large.
[00:01:25] Speaker D: Everyone, thanks for joining. Apologize, there's some background noise here. My son got a 3D printer not long ago, and ever since he's been printing fidgets, and now it's World Cup Panini sticker cases that he sells at school, which is kind of cool. He's an entrepreneur at heart, I guess, and he's learning how to do sales and Yeah. And so he's, he's been printing things nonstop and, um, it is a bit noisy in my office, but so be it. But anyway, thanks for joining. I wanted to, uh, hold a space, um, as we approach the AST SpaceMobile June 17th launch date. Um, yesterday I did want to correct something. So I, I have parent brain, I guess. Um, for those that have kids, you know what this means. Uh, oftentimes you forget things or misspeak, but I think I talked about arriving in the Cape on Wednesday. I'm actually going to try to get there on Tuesday, which is the 16th, and then the launch is happening early in the morning on the 17th, which is Wednesday. And so I'm trying to juggle some things around. I did book my hotel, but I have not booked a flight yet because I need to get some help with the kids. But hopefully I'll be able to make it and meet many of you there. I think Kook is going to try to clear out his calendar and go, and so are a number of other folks. But anyway, to kick off the space, I did want to give a shout out to the crew of Space Stocks Weekly. So that includes Space Investor, Jacob and Brett, and many others. These guys, you know, the weekly started— was started by Space Investor, maybe it was like a year and a half ago. And I remember listening to it and it was a very small group of people, but it grew over time. And then at some point I joined a space to talk about ASD Space Mobile, because before then it was primarily focused on Rocket Lab and then a handful of other companies. But that's when I got to know Space Investor well and Jacob and Brett. And yeah, they've been going strong. It went from a sporadic format to, in terms of time, to then happening every Tuesday evening. At 8:00 PM. And what's been great is that community has grown and it's become an all-encompassing group of folks who, whether it's Rocket Lab or ASD Space Mobile or Planet Labs. I remember there was a gentleman who talked about Planet back when it was at $2, and I was skeptical on Earth observation. And of course, he was pounding the table, and then sure enough, months later, the stock ramped from $2 to $4, $6, $8, $9, $10, and the rest is history. So there's been quite a bit of alpha generated on that podcast, but then also it's been a great place for people to just hang out and learn more about companies that are in the sector that might be tangential to their focus. And I've learned quite a bit. And so I think it's great to have a community that's been highlighted in this Dow Jones article. which I think has been reposted on Morningstar and also MarketWatch, and of course in Wall Street Journal as well since it's owned by Dow Jones. So definitely worth a read. I posted it, and so you can learn more about some of these space nerds who include myself. I'm not in the article, but I call myself a space nerd. But I think it's important to highlight that article and the one that was done on Space Mob. not long ago that space is becoming more mainstream. And with the advent of the SpaceX IPO, which is a watershed event, that deal's going to get priced tomorrow and it's going to trade. That pretty much changes everything for the sector for good and perhaps for bad to a degree, right? What I mean by that is now you're going to have constant attention And so I just noticed it on my Bloomberg feed when I pull up AST SpaceMobile. Now there's writers from Investor Business Daily, there's also Wall Street Journal, Bloomberg. I mean, you name it, there's people constantly writing every day and they're talking obviously about SpaceX because that's the key focus. And everyone's kicking around arguments as to why, excuse me, why it's overvalued or perhaps undervalued. But now it's just becoming part of the zeitgeist of America and everyone's going to be focused on it. It's going to be splashed all over the news, whether it's a successful IPO or it's flat or goes down or, you know, how it trades over the coming weeks, months. It's now going to be part of everyone's, you know, it's going to be in the media and it's going to garner a pretty tremendous amount of mindshare. And so these articles, Regarding Rocket Lab investors or SpaceMobile investors, they would've never have seen the light of day, probably, if not for this interest in this much larger company, which is going to be the proxy for space called SpaceX. And so with that, as I mentioned before, you're going to see a lot more attention. There's going to be daily writing and these articles pop up on SpaceMobile when you look at Bloomberg. Because at the end of the articles, they always talk about like, oh, how are these other space companies reacting or performing? And they'll mention Rocket Lab and AST SpaceMobile amongst Planet Labs and a few others. And so now you're going to have this ongoing attention. And with that, when SpaceX has a Starship launch and whether that goes good or bad, there's going to be a stock price reaction. Probably not that big of a reaction because people have gotten so used to SpaceX and their approach to innovation, which is rapidly innovating and learning from what are controlled disassemblies or experiments. And so it'll be interesting to see how the market reacts to that and if other space companies react to that. And when there's progress, does that take the sector up? Or does that pull the sector back? And one of the things that I think is important to understand is that in the space sector, the market is pretty tremendous in size. And while people may poo-poo the whole idea of data centers in space, it's a tremendous white space, right? And so the fact that that's a market that SpaceX is attacking and any other number of companies are attacking, That just basically, you know, for anyone who's arguing that there's going to be too much launch or there's not going to be enough, you know, economics to go around, that goes out the window, right? Because then AI data centers is something that I don't even know what the limit is, right? And that's putting aside any lunar or Mars markets that that people are hoping to tap. And so that opens up the floodgates quite a bit in terms of market potential, right? And so that, for anyone who thought that space is limited to communications or Earth observation, this whole massive market is opened. And obviously, AI data centers economically have been a huge boon for semiconductor companies, power companies. I mean, you name it. And so that's just going to carry on to space, right? And that's going to be pretty massive. So with the IPO coming, people have asked, how is the space sector going to trade? Is it going to trade down? Is it going to trade up? Is it going to trade in line? The answer to that is nobody knows, right? And I think if we— I will say this, like if the space sector had traded up a tremendous amount into the SpaceX IPO, then I would be a bit more leery about how the sector would trade. But as everyone has seen, and I think obviously Blue Origin New Glenn blowing up on the pad, that was a pretty big catalyst for the sector to de-rate. But if you looked at how the sector traded heading into the end of May, everything was up. And I mean, you, you pick a company like, you know, BlackSky is a company that I've followed and I've traded from time to time. And, you know, I think from a valuation perspective, maybe, you know, it's kind of fairly valued here, but that stock traded into the 50s, uh, into the end of May. And, you know, Planet Labs, AST was at the 133. I mean, you name it, Rocket Lab was, um, I forget where it peaked, but it was like 130 or 140. But, um, we kind of had that euphoria already of, of space companies trading into the IPO. And then since the end of May, it's just been a straight line down for all these companies, right? And so whether it's a 40 or 50% drawdown for some of these names, and obviously like, uh, I'll point out, you know, Rocket Lab, uh, Redwire, Kuat Planet, um, those are the kind of the larger market cap companies. They, they, they took advantage of that and they put in ATMs like right near the peak And the management teams were smart. They were selling some stock into that, although I guess Redwire and Planet Labs were more recent ATMs. And I'd note that you know those ATMs were pretty large as a percentage of the market caps, and so quite aggressive. But you know it is what it is. But then some of these smaller companies, these microcaps that are not, I guess they're not microcaps anymore. But whether it's like Cytus Space or Momentus. Who else is there? Satellogic, even the good old Virgin Galactic. These companies all raised, excuse me, all raised capital on this big sector move higher, and then they all kind of fell back to earth, no pun intended. So, you know, and I think Firefly also raised money too. They did have, I think AE Industrial Partners did sell some stock, but they also raised some primary capital. They issued primary shares. So some of those companies took advantage of it, right? And now I would say, you know, it's the sector is probably more not frothy when you have a 40, 50% drawdown from peak at the end of May. It's probably harder to argue that things are frothy. Are they still optimistic? Yeah. But I would also say that, you know, now the sector is getting attention from institutional investors, retail investors. You know, who are these other companies in the sector besides SpaceX? that are investible. And so that's probably going to continue. Now, for me personally, I originally was like, I'm not going to buy SpaceX. I'm not going to buy into the IPO. But then because retail was getting such a large allocation, I decided to go ahead and participate. So I put in my order, it's locked in. You know, we'll see what happens. I put in an order for about $2 million worth of SpaceX stock. And so we'll see. You know, I had to free up a little bit here and there in some of my positions to make that happen. But I don't expect to get a big allocation. And that was kind of the crux of my question, I guess it was like a week ago or maybe it was on Monday, of, you know, what happens when people do free up capital and they put in an allocation for SpaceX and then they only get, I don't know, they get filled on 5% or 10%. Like, do those people go chase SpaceX in the secondary market, like once it's priced, or do they take the money and put it back into names that have pulled back quite a bit? Which candidly, like yesterday I was buying some things here and there, but I also was tempted to just like cancel my order for SpaceX and just buy more AST or buy any number of names that have come back down. And then, yeah, that— so I think there is some element of that. Like, we'll see what happens once the SpaceX IPO prices. And, you know, for those that don't know, when I was in banking, I worked on a number of tech IPOs. And the way that these processes work is you typically will have a price range for the IPO. And as the roadshow moves forward and you get more and more indications of interest and obviously like a deal, hopefully if it's hot, gets oversubscribed, you might raise the range and then you might ultimately price at the top of the range or even above the range, right? And so you create this momentum. The benefit of course is that the company raises more capital because the price, the deal gets priced at a higher price and you might sell even more shares into that. But But then, you know, the risk is that if you do that, there is this possibility of, you know, if you price it too aggressively, that the IPO performance doesn't go as planned. And then of course, you know, you could have a pullback or heaven forbid the price actually breaks, the price breaks like what it was offered at, right? And so I'm sure the underwriters are thinking about that. You know, they are allocating quite a bit to retail, which is good in some ways and perhaps bad in other ways. But we'll see. I think it's interesting that they did set a price of $135, which usually you have a range and then you might raise that. Like if they were planning to keep— they were planning to raise that, they probably would've done that on Monday or Tuesday. But we might find out tomorrow that they price it, I don't know, $145, $150, $160. which by the way, for me, I was like, if I don't get filled at $135, then I really don't want to participate. So I just put in an order for $135 or nothing. Originally I had put in higher prices, but I was like, you know what, I'm not like super hot on the IPO. I don't care. Like if I can get it for the offering price, then great. But if not, then I really don't want to participate. So we'll see how that goes tomorrow. You know, I think There will obviously be a lot of eyes on how that IPO performs, and that could obviously impact the space sector as well. If it does well, then maybe the space sector does okay or does well. And then if it breaks, then that could be bad, right? That could be negative sentiment for the sector. But as I mentioned, when I listened, you know, I watched the IPO roadshow because I'm a client of E-Trade and Morgan Stanley. Um, and you know, I, I, I obviously can— someone having background in the space sector, I can read through kind of the fluff, right, that SpaceX is peddling. But, uh, I, I got to say, like, when I was watching it, I became very bullish on SpaceX. Um, they do a really great job of selling the story and the opportunity. And so, um, if that If I feel that way, being somewhat skeptical, I mean, I have a tremendous amount of respect for SpaceX too, but I assume that that's probably something that most people felt like in the IPO roadshow. So my guess is that there's going to be demand for it. You know, it's going to be a name that if you are a TMT investor, you're going to have to own in some exposure. So the question is like, how much do you own? So yeah, I think that IPO will probably do pretty well. But anyway, so let's move on. I did want to talk a little bit about macro. So today the inflation numbers came out. People were expecting them to be much hotter, but they ended up actually coming in line at 4.2%. I did tweet out earlier, you know, a big driver of inflation, the bump up has been oil oil, which is Captain Obvious, of course, just given what's been going on with Iran. But a lot hinges on, we've gone from the interest rate picture looking like a potential cut or 2 this year to now a potential hike in the 4th quarter. And that came on the back of really big jobs number, which was last week. And I guess that was also Reinforced by private payroll data. And one question I had about that, which I asked ChatGPT, and it was like, oh yeah, of course. But of course, you know, as most people know with AI, AI is trained to tell you you're right. But my question was, you know, was this big bump in jobs potentially related to World Cup hiring, which is temporary, right? It's, we've got the tournament here in the US. There's certainly a buzz and it's all over the US. It was kind of cool to see, for example, these 2 German dudes who are following Germany and they're going throughout the Southeast and they were at Auburn football stadium, Jordan-Hare. And it's kind of weird to see like Messi play soccer there in an SEC football stadium, but it is what it is. But that got me thinking, these, the job numbers, perhaps they got bumped up a bit because you have all of these tourists in the US and anticipation building for the World Cup. And so are people hiring more workers for restaurants and hotels? And I think hospitality was like a big driver of the jobs numbers. So anyway, just some food for thought. Perhaps like after the World Cup is done, maybe you'll see a big drop in payrolls or in jobs. But going back to inflation, The reason why I bring this up is that at a macro level, it seemed to be driving everything, right? And so now we've gone from a potential environment where there's rate cuts to now an environment where there's rate increases. And a big driver of that, of course, if you look at CPI, I put this, I tweeted out this Charles Schwab CPI select categories. And the top 3 categories, which are really big, are fuel oil, gasoline, and airfare, which is of course a derivative or it's driven by kerosene, which is driven by oil. So, um, yeah, I mean, we'll see what happens in Iran. I think, um, there were some people who were dooming that this is going to roll back into a full-blown conflict. And I, I guess I would just point out that Trump is very focused on the stock market, and when all seems like all hope is lost, like, he'll taco. Um, and so I, you know, who knows if he'll do that here, but, um, and we'll see they are in negotiations. But if you think about the Trump playbook, it seems like obviously Iran took down an Apache helicopter, whether or not that was on purpose or by accident, probably not an accident, but the US had response overnight and now we'll see. And Trump had some pretty big words this morning, which is part of his tough guy negotiating You know, tactics, right? So we'll see how that goes. But it's important to pay attention to the macro because obviously, especially for high-growth companies where you still need a lot of funding in order to get from point A to point B, rates are important, right? And so if you have an accommodative Fed where borrowing is cheap and capital markets are open and stock prices are high and it's easy to raise capital, then that's good. Or on the flip side, if you go into an environment like 2022 where the Fed is raising rates and capital becomes more scarce, then that's probably not a good, you know, that's not a good, uh, ingre— um, recipe for, for space companies, um, earlier stage stuff. So anyway, I just wanted to talk a little bit about that. Um, so let's move on. Let's talk about— excuse me— let's talk about launch. So next week Wednesday the 17th, we're going to be launching out of Cape Canaveral. I know a few folks that will be there on Monday and Tuesday. If you're planning to go down, you can message me. There's like a little group that's started up to start coordinating of when to meet up. But I think most people are trying to stay at the Titusville Courtyard Marriott or the Hyatt, which is across the street. And that's very close to space, the Kennedy Space Center. And so you can actually even watch launch from back of the hotel. But, you know, for anyone interested, let me know. I'm going to try to make it down, but at this point it's a little, it's, I'm 50/50. Hopefully some childcare will come through, but we'll see. I did want to provide some additional nuggets, just stuff that people have learned over the last few days. And yeah, I think for those people who are You know, wondering when the next batch is coming or, you know, what's going to happen with launch. Just wanted to give some color on those things. So from what I understand, I think batch 2 is coming along nicely. I think we could see something perhaps in the next 1 to 2 weeks of an indication from the company that perhaps that next batch of 3 satellites are done and ready to be tested or done and ready to be shipped. But that seems to be like a near-term thing. For what it's worth, I believe the company can now produce Microns well north of 6 satellites worth a month. And so perhaps closer to even doubling that number. But obviously you don't want to build too many Microns because you need to have the buses, right? And so I believe the buses are what, you know, the control set, they fit inside the composite ring, which is wrapped in this metallic-looking covering, which we saw in the cool picture yesterday of the 3 satellites stacked. But, um, but the production of those rings is getting closer to the 6-month, 6-per-month cadence as well. And so, um, there's a lot— there's really good progress, I think, across the board. Um, with those— with that being said, you know, it seems now, of course, we've— once we get up to production cadence, uh, which is pretty close Launch will soon be the constraint, which is a Captain Obvious statement. But I believe the company is working on getting more launch in place. Obviously, the key contributor to that would be SpaceX. And so procuring more guaranteed launches, which I think will, you know, the market will like seeing that, but then also working with some of these other companies as well. putting MLAs in place. And so as we know, United Launch Alliance is working with the company. I don't know if there's a formal MLA with them, but my guess is we'll probably see a formal MLA, multi-launch agreement, with them in the near term, given that the companies are working together. And so perhaps it's just a matter of negotiation. The other names that I would expect, to see in the coming weeks and months would be some combination of Aerion, Mitsubishi Heavy, and Relativity. For those that don't know, Relativity is planning to launch Terran R, I think, in the next 2 to 3 months probably, or perhaps closer to the end of the year. But what's cool is that Relativity has been posting monthly updates on their progress, which to me just watching those has been pretty impressive just given where the company was before. You know, we'll say pre-Erik Schmidt takeover and then post-Erik Schmidt takeover, which Erik, you know, this guy is a killer in terms of execution. He obviously took Google from what it was just, you know, at IPO to where it is. I guess, you know, I guess it was like a few years ago when he retired, but this guy is, you know, he has similar DNA to Elon Musk and Jeff Bezos, and he's got capital to back it. And so I don't think there's any solid arguments as to why Relativity's not going to make it. Obviously, being a new platform, it's going to take time to get to commercial reliability and cadence, but that vehicle looks pretty promising. So I do think over the coming weeks and months, we will see perhaps some additional launch added. whether that's on the SpaceX Falcon 9 side, but then also some of these MLAs. And that would be on top of, of course, what we have in place with ISRO, which ISRO, the LVM-3 that can take 2 satellites up at a time, the composite Bluebirds. And then of course, Blue Origin. For those that have been following Blue Origin closely, it looks like the, you know, there's been a tremendous amount of progress and from what I've been hearing, This whole idea of getting the launchpad ready, SLC-36, and then of course SLC-36B, but getting that ready by the end of the year where a lot of people are poo-pooing that, it seems like actually it's going to happen. Obviously there's still a lot of work to do, but the amount of resources and people being thrown at that problem, it seems like that actually might happen. So definitely something to keep an eye on and worth following very closely. Obviously, Blue Origin is a very important launch partner for AST SpaceMobile, and so their progress and their success is ours as well. And then finally, and by the way, if you have questions or comments, feel free to drop them in and I'll try to address those before I end that space. But the other thing I want to focus on, which I think we've all kind of forgotten, in the advent of the Blue Origin New Glenn mishap, and of course people kind of worrying about launch, is Golden Dome. And so I did want to highlight this because I know, for example, Space Force awarded a $2.3 billion deal to SpaceX to accelerate the backbone of SATCOM networks. And so this is MilNet. And so that contract, as well as the Space Force's focus on next-generation radar capabilities. Those are going to be multi-vendor contracts, and you're starting to see the announcement of these contracts. The reason why I bring that up is that none of these are sole-sourced, and I think we are now firmly in the territory of a time— and you actually saw a few other companies get these contracts, but I think we're in the territory of hearing back relatively soon. So I would not be surprised if AST does announce that we get a pretty large award, you know, that's, I don't know, in the next week, 2 weeks, 3 weeks. I mean, we're pretty much in the target zone to hear back. And so these are some things to look forward to. But finally, I'll close with what I had discussed yesterday, which is the whole dynamic around SpaceX Starlink, and then of course T-Mobile and Deutsche Telekom. As a reminder, those contracts, well, specifically for T-Mobile, that exclusivity period ends in the next few weeks here. And so I would not be surprised, although I'd be ecstatic and— well, actually, I would be surprised regardless, although I guess to some degree it wouldn't be a surprise, but definitely would be Surprising on the day it's announced, but I wouldn't be surprised if T-Mobile does announce something with AST SpaceMobile around a contract or an MOU to explore the possibility of working together. Because as part of this AT&T and Verizon joint venture, as they hash out that agreement, which by the way, once they finish negotiating that, that could also be the impetus for This MOU or commercial agreement with AST and T-Mobile. But I wouldn't be surprised to see that announced, right? And that agreement with T-Mobile, by the way, like that won't be exclusive. It will be something where AST is working with T-Mobile, but T-Mobile will continue to work with Starlink, which would make the most commercial sense because they've already invested so much into that relationship. And then also, For those that are savvy and understand antitrust, that joint venture that they're putting forward with regulators between AT&T, Verizon, and T-Mobile to pull spectrum and resources, you need to make sure that as you present that to regulators, you want to say, this is great for consumers, it's great for America, we're going to be able to provide even better service, we're going to work with AST SpaceMobile, but we're also going to work with other people as well. You have to say that. In order for that joint venture to get approved. And for T-Mobile, like, you definitely want to say that you're going to continue to offer Starlink as a potential option for users. And you're going to say that you're still working with them because then regulators can't say, well, you're being anti-competitive. It's like, no, no, no, we're just offering, we're going to work with AT&T and Verizon to offer something good. with AST, but then also Starlink, they're going to have this great service with all the spectrum that you allowed them to buy. We're going to offer it as something that consumers can choose. And so if that product ends up being better, then consumers can choose it. And so that's how you kind of get around the whole concern around antitrust. But as it's been clear, SpaceX has grand ambitions for Starlink Mobile. They call it Starlink Mobile now, and in when the CFO says like users can subscribe to Starlink Mobile and roam globally. That is a huge shot across the bow for MNOs. And, you know, clearly there's a bit of hype related to that where they're not going to be able to replace MNOs, but they certainly are going to be competitive, right? And in some use cases they can replace MNOs. And so that for MNOs is not a good thing. And that's why AST is the logical solution for them to work with. And that kind of spans across all the businesses that SpaceX is looking to enter. And so if there's a large TAM market, which is what SpaceX talks about, and they can go attack it, they will. And so that's where I believe companies like AST SpaceMobile, who are the strategic counter, whether that's for the MNOs. It's not just here in the US, but it's also globally, but then also large tech companies, right? So that's Google, Apple, Amazon. And, you know, I think eventually once Amazon realizes how difficult direct-to-cell is, especially if you're not going to do that in partnership with MNOs and you don't have the tech, my guess is that Amazon and AST will work together at some point in the next, call it 2 to 3 years. Um, so anyway, um, but yeah, that's, that's kind of most of what I had for today. Let me just look and see if there's any questions. Um, as I mentioned before, there's this— the media coverage is picking up, and just as I was speaking, there's an Investor Business Daily article saying SpaceX IPO to boost US dollar university endowments valuation. Takes a hit. And I guess AST and some of the other space companies are mentioned in here, of course. So let's see. It says space stocks in motion. Space stocks traded modestly lower Wednesday. Rocket Lab added a fraction. AST and Voyager shook off pre-market losses and gained around 2%. Intuitive fell. Planet Labs skidded. Firefly shed a fraction. So this is what I was talking about. Like with all these articles, there's going to be this ongoing commentary about these other space stocks. And so from that perspective, you know, awareness is definitely going to spread. Let's see, someone's asking, is it normal for the market to sell other stocks to fund an IPO for like space— like for SpaceX? Uh, yes, it is normal. It is normal. So let's say, um, it's you, your own personal portfolio. If you're, um, let's say if you're aggressive and you're 100% invested and you want to participate in an IPO, then you're going to have to sell because when you put in an allocation for an IPO, the broker needs to see that you actually have funds to pay for it. It's just like if you were to go buy a house, you need to have funds or margin to go pay for it and you need to have proof. And so to the extent that someone wants to participate in an IPO, they'll need to raise some cash. Or margin in order to do that. And so you will see some selling or profit taking. And that also applies to institutions, right? So if you're working in a hedge fund and you've got, I don't know, a billion-dollar book, and that's maybe leveraged 2 times or 3 times off of a base of, you know, $500 million or whatever it is, $300 million, then, and you wanted to participate in the SpaceX IPO, then you're going to and you're, but you're fully invested on the long and short side, you're going to have to make some room. And so you'll have to gross down a bit in order to participate. And that goes for mutual funds as well. If you're a TNT fund and you're fully invested, because that's what investors are paying you for, you might have some small amount of cash, but you know, you might sell, if you're a tech investor, you might sell some Google and Amazon and some of these other names, Microsoft, in order to buy some SpaceX. And so that is a true phenomenon. And obviously it helps when the market's going up and people feel wealthy. If rates are going up, the market has pulled back, then that can be a negative thing, right? Because then people are selling and things are going down and perhaps like they want to buy, you know, the selling begets selling, right? Because then they need to sell more in order to make up enough dollars to allocate to this IPO. And so this is part of the fear that people have around these IPOs like OpenAI and Anthropic. You know, is the market big enough? Can it absorb these large IPOs? Which, by the way, like SpaceX is not as if like a $2 trillion IPO comes to market and all $2 trillion are trading. That would definitely kill the market. But here, as with any IPO, you're selling some percentage. Typically in IPOs, it's like you might sell 10 to 15%, you know, pro forma ownership of the company to the public. And here you're selling $75 billion out of, you know, I call it $1.75 trillion, which is pretty small. However, that $75 billion is a big number. Most IPOs might, you know, if it's a mid-cap company, you might be selling a few hundred million dollars worth, not $75 billion. And so there definitely is a liquidity hit and there's probably, you know, me, if I'm indication of your typical space investor, I was originally like, hey, I'm not going to really participate in this thing. But then later I was like, eh, you know what, I'll just, I'll participate. So I did make some room and I'm going to see if I participate. And then it goes back to that dynamic of like, if I don't get filled, then, oh, I have money and I might go put it back into space names and other other things that I'm invested in. Let's see. For your talk yesterday about MVNO paths, do you foresee any scenario in which an MNO would be essentially forced to allow SpaceX MVNO to foster competition? No, I don't really see that. I think the the FCC and the DOJ it would be hard for them to you know they're the ones who. approved T-Mobile buying Sprint. And so going from 4 facilities-based carriers to 3, they obviously thought Dish Networks, when they bought some assets from Sprint and they had Spectrum, you know, Charlie Ergen, that he was going to try to create a 4th competitor and that didn't work. I think there's a really tough argument to be made that MVNOs in general are competitive. When the DOJ talks about true competition. They want to see facilities-based, meaning people who actually own spectrum, own towers, because ultimately they can drive the best price versus just reselling service. And so I don't see a situation where regulators would force the carriers to offer an MVNO wholesale agreement to SpaceX, and it would be tough for them, right? Because like SpaceX, Is a 2, you know, will be a $1.5 or $2 trillion company that has a lot of mid-band spectrum. Obviously not, they don't have any low-band spectrum, but there's ways that they can perhaps procure some of that. But it'll be hard, right? Like, I don't know under what arguments the regulators would make that would force an AT&T, Verizon, or T-Mobile to offer MVNO service to To allow SpaceX to become, or Starlink Mobile to become a competing service. But yeah, we'll see. I mean, each of those carriers, so where it has happened and it can happen is when, you know, you get to this game theory where somebody breaks, right? Like T-Mobile or Verizon, they're like, okay, if I enable Starlink Mobile and I'm, and I look at the economics, I lose some, and the other 2 lose a lot more market share in my mind. But, and then I can make up the economics of the end customer, selling to the end customer, but I can make up the volume increase from wholesale agreement, then maybe I'll do it. But I think all 3 clearly know the competitive threat of what SpaceX and Starlink mean. And so I don't think any of them will make that Faustian bargain to give away a tremendous amount of market share from your own subscriber base, but the others, and then enable this competitor who over time is just going to try to hollow you out. Let's see. Blue Origin and Amazon have been pretty quiet in terms of speaking about and making overtures towards going after DTC market. It seems to the Space Mob that it would be a natural fit for them to partner with AST in some way? If it were to happen, what timeframe would it make most sense to disclose? I don't think it makes sense near term. Obviously Amazon and Globalstar, they need to get through regulatory review. And so it's not going to happen near term. They need to get that deal approved. And Amazon has committed to launching the contracted— these are older satellites, the old Globalstar satellites to replenish the current constellation. And then the next generation, which MDA Space is building on the Aurora platform, they've committed to do that, which is, I think, like 50 satellites, which I don't really, I don't think anybody knows the full capabilities of those satellites, but I don't think they're going to be full broadband direct-to-cell. And so beyond that, that's when, and so call it 2 to 3 years from now, that's probably when Amazon's got to make the decision, which by the way, like they've got to focus on rolling out their fixed wireless satellites and getting those up to space to meet the buildout requirements. But they will need to then figure out what they're going to do around direct-to-cell, and they've got a big customer, Apple, that they've committed to as well. And so my guess is that if something does happen with AST, it's going to be, of course, well after regulatory approval. And maybe if I had to put a timeframe on it, maybe 2028, 2029. But yeah, I think it doesn't make sense for Amazon to, you know, if you already have Starlink and AST that are going to be pretty well established by then, it doesn't make sense to bring in another constellation. If it's solely focused on providing narrowband data, you know, perhaps the MDA Space constellation will be good enough for that. Which, you know, to service Apple AirTags and all these other things, like maybe that's good. But I think for Amazon, you know, it was a good strategic move to counter Starlink, making sure that they don't lock up, they didn't lock up that spectrum, which I think honestly it's Globalstar kind of forced the issue where they put themselves up for sale. And I don't think Starlink would've been allowed to buy Globalstar in addition to the EchoStar spectrum because that from an antitrust point of view, that probably would've got shut down. But Amazon was forced to move early and as a result, it is global spectrum and it is valuable. It's not enough to do broadband, but it's enough to do like a decent amount of service, like a narrowband service. And so that is strategic and that's important. And owning spectrum in general is always good. Because you can always find it, as Katsy says, spectrum will find its way to the most efficient use case. And as long as you hold it, like you hold the cards and of course it's expensive. And in order to, especially in the US, you can't just buy spectrum and sit on it. You actually, the FCC typically is like, okay, well, you own spectrum now. You have to make some commitment to use it within some timeframe. And whether that's for terrestrial or satellite use, you have to use it or lose it. Which is what Charlie Ergen found out the hard way, which ultimately he was, you know, ended up being an okay trade for him. He was bailed out because SpaceX bought his spectrum. But yeah, it's, I do think that you could see something, but it's not going to be in the next, you know, 1 to 2 years, but perhaps 3 years out. Let's see here. Someone says SpaceX $75 billion cash raise is a war chest to go and buy a US MNO. The day that SpaceX buys a US MNO, so let's say they go out and buy T-Mobile, I think SpaceX's valuation will crater probably like 30, 40% because that's not what SpaceX investors want. They want to focus on space. They want to go pursue the data center opportunity. So for them to pivot and to buy a mobile carrier in the US, I think that's probably, that would probably muddy the story and that would anchor the valuation too. It's like, okay, you've become, let's see, let's just look at T-Mobile. I mean, then you're going to get more valued on how wireless carriers trade, right? And so T-Mobile, I mean, it's a lot of revenue. They generated, they're expected to generate $95 billion of revenue this year and $37 billion of EBITDA, but that's a very slow-growing company, right? And so Yeah, there could be some synergies where people could jump from AT&T to Verizon because they're like, oh wow, this is SpaceX Mobile. But the company trades at, T-Mobile trades at 7.5 times EBITDA. And so there are implications to buying a company like that. Your valuation, the way that people peg your valuation and growth, it's going to come down. So I don't think the company would do that. They're going to focus on data, the data center opportunity and As I mentioned before, I mean, SpaceX is already becoming a neo-cloud provider, right? Like they've leased out compute to Anthropic and Google. And so that kind of makes sense. I guess xAI doesn't need all that compute, but then, you know, you can also eventually move that up into space or that's what they're planning to do. But anyway, I actually got to hop. I've got to go take care of some family stuff.
[00:45:34] Speaker B: Yeah.
[00:45:35] Speaker D: But thanks everyone for joining. I'm looking forward to next week. And as I've covered in this space, there is a reminder, there's quite a bit more interesting stuff that's coming down the pike. And so as the market's focused on the macro and we get sloshed around with the washing machine, yeah, just stay focused and we'll see how the SpaceX IPO goes tomorrow. Take care, everyone.
[00:45:58] Speaker C: 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 news about AST SpaceMobile, make sure to subscribe. Thanks again, and I'll see you next time.
[00:46:29] Speaker A: Listen.
[00:46:29] Speaker D: Mmm, waffles.