Is the J-LEO Contract About to Change Everything for AST SpaceMobile?

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[00:00:55] Speaker D: This is the AST SpaceMobile Podcast. It will 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.
[00:01:23] Speaker B: Okay, good evening everyone. Hopefully the sound quality is going to be okay. I'm in a hotel and that's always a little bit dicey with the internet. Um, my wife would be happy if it failed too because she just went and hid in the bathroom so she doesn't have to listen to me. She was like, is this going to be an hour? I'm like, well, when you say it like that, it's going to be an hour and a half. So I will talk very Slowly so that my wife is in the bathroom forever. So last week was exciting. We had what looked to be a capitulation move in the stock, and a lot of us wanted to, you know, basically give up. Some did. And then on Friday, things started to rip back right at sort of the quarter end. We've been thinking a lot about some of the technicals of what's going on, whether it's SpaceX hedging, Really just SpaceX euphoria unwind. There's been obviously a big collapse in tech stocks and AI. We're probably caught up in that. So all sorts of things that just end up being just another day in the life of an AST shareholder. But as you've heard here many times before, you gotta focus on the fundamentals. And so that's what we will do. The fun thing to start with is Commissioner Brendan Carr. And so he is at a conference and he specifically calls out ASTS as one of the biggest advancements in telecom. He's very excited. And so glad Peter wrote this quote out, Peter Lundmark did. And he goes, if you step back, what ASTS is doing in significant part, or maybe really exclusively in the AST sector is working on direct-to-device technology. And we think that direct device, where you go straight from a LEO satellite right to smartphone, is one of the more significant technology advancements that's going to take place and is taking place now and over the next couple of years. And one of the things that we did when we came into leadership here is put a plan to make sure that the United States is in fact the— leads the world in direct-to-device technology. So here you have 2 important things come out, which sets the stage again for those people who are like, why is my stock down 50%? Is Kook a furu? I saw this meme that says Kook is an idiot. Oh my God, I thought it was a meme, but it might've been true. You'll never know. You know, as you question everything that you learned from anonymous parody accounts on the internet, It is a good idea to step back and listen to the chairman of the FCC, who, by the way, when Trump was elected, ASTS crashed because Brendan Carr was going to be the commissioner and people thought that he was going to be hostile to ASTS. Couldn't have been further from the truth. Here he is specifically saying that ASTS is the leader, point one, that DTC is one of the more significant technology advancements that that's going to take place. So that is a forward-looking statement. That's point 2. And point 3, FCC is focused on making sure that the United States is a leader in this area. Point 3. When you tie it all together, this is regulatory support that goes beyond the approvals that we currently have, but is going to almost certainly include approvals for things like Legato, which is our 45 megahertz of L-band spectrum. And I believe that there's going to be additional deals that take place, one of which will be T-Mobile getting approval to do something with them as part of a JV or get their spectrum approved. Other people who are going to try to upgrade their spectrum economics like Grain Management, SiriusXM, things like that. I believe you're going to have a full response of the government to make all of this happen. And so I find it, it's an exciting time and that the type of stuff I look to when I was getting pretty, pretty bummed out last week when we hit 68, I was like, oh no, are we going to be in the 50s? You know, when you just kind of go, oh no. And you know, it's hard to, it's hard to keep a positive attitude at times and it certainly pos— it's certainly hard to be a long-term investor. Because that red button is always staring at you, kind of tempting you. Like, do you want the morphine hit of just selling and making it go away? Now, a lot of people press that button, and I just keep telling myself about all the stocks I missed where the secular trend and the secular winner was very clear. I've done study after study to visualize the volatility of those examples for myself so I can just sort of vicariously put myself in the position of the people who had their own conviction tested. And that's really just helped galvanize me toward, you know, what we now call diamond hands, which is a term I'd never heard of before until 2020. But that's really kind of the mental training I've gone through. And so what is Brendan Carr amazed by? Well, at the end of the day, his amazement comes through a big technological advancement related to a never before size of an array. Trying to think of the right grammatical way to even say that. Never before has there been such a large commercial array. And so as Anpanman lists out, again, the size of the array is the breakthrough. There's effectively economies of scale of being able to efficiently fold Or furl, as I should say, that much array into a given size fairing. So the fairing being the constraint of a rocket, you want to put as many square feet of array, which includes the RF array, but then the solar arrays. We'll get to that in a second. But it's a function of basically how efficient can you be with tonnage to orbit. The reason why this is important is twofold. One, trying to figure out how to get the lowest cost per watt, thinking that energy is always, in my view, energy is the right way to measure capacity for these because energy is then just converted to RF signal capacity. But then having a large array is individually important in terms of being able to have very powerful beams. And those powerful beams are what are able to create the high spectral efficiency and the link budget and the control over potential interference to have a usable mobile broadband service. That's the amazing thing. So there's a technology solve of how do you actually have a useful beam that people want to use? And then secondly is how do you make it economic so that a business can be built around it? And Ampere Man's simple, Summary is really cool and just goes to show you that size matters, but quantity doesn't necessarily. And so Starlink, when you look at the version 1 D2C satellite, 650 satellites for them equates to 4,000 square meters of array. For ASTS, when they put up 200 and 43 of their Block 2 satellites, that will be 54,000, almost 55,000 square meters of array. And so we're talking roughly 13 times the scale of the thing that matters, which is square footage. So effectively think of like land reclamation. If you were to measure the success of, you know, like Hong Kong and Manhattan, it's how much land were they able to reclaim with fill. That's what matters in terms of how much usable square footage you can add to a city. And here we're, we're in the real estate business, and so we're putting up real estate in space and then we're using that real estate for power plants and then radio transmission towers. We're able to put up 13 times as much capacity as our other guy with roughly 1/3 the numerical count of satellites. This is what's amazing. So always good to take a step back and figure out sort of what's happening at a macro level with this company in terms of what they're achieving. And then it's also really useful to step back and figure out what have they accomplished. So there's a really nice thread by @Wave3Trades, and pointed out to our horror that ASTS was in fact red year to date as of last week. That sucks. And so then he went through and looked at what has happened year to date. So the company has generated $3.5 billion of liquidity sufficient to build out 100 satellites. That's good financial capacity to see through the vision. That is excellent news. We got regulatory approval, so FCC approved us. Also important. So now we have the license to do the thing. We have almost doubled our production capacity and have the ability to do 10 satellites per month. We don't need to do that yet because of other constraints, but there is the ability to do it. On May 14th, there was the JV between Verizon, AT&T, and T-Mobile, which sure looks like it was the Empire striking back against SpaceX. And unifying around ASTS. Time will tell. We haven't seen the JV agreement yet. And then on June 7th, we had the successful launch of Bluebirds 8 through 10, which showed the engineering accomplishment of stacking the composite satellites. And then the 3 satellites were basically instantly caught in terms of command and control. And now, of course, we're just going to be waiting for the unfurling event. and the operational commissioning of those satellites. And then looking forward, the market can see that we're going to have our next batch shipment very soon. Time will tell, not a lot of time required, but time will tell whether we get this JLEO contract, which we'll talk about in a second. And the negative parts of the year is really all Blue Origin related. And so Blue Origin didn't get us to the right orbit. In Bluebird 7, and then Blue Origin blew up their launchpad. And then the last thing is we just had a lot of technical noise from SpaceX IPO, which I believe will ultimately be a positive thing for AST SpaceMobile because it's going to force everyone to really analyze the industry very closely. And when you analyze SpaceX, you invariably are going to end up analyzing AST SpaceMobile. But just as importantly, AST SpaceMobile news, which we think there will be a lot of it, will be putting context relative to SpaceX. And so for example, if AST wins the JLEO contract, that will be put into contrast with why did Starlink not win it? And that will raise questions around data sovereignty and things like this. If and when T-Mobile signs up with AST SpaceMobile, the market will go, This episode is brought to you by Google Chrome.
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[00:13:30] Speaker B: Huh. Why did Starlink's foundational customer not renew and switch? That's not good. So people will then look at the implied valuations of Starlink and go, there seems to be a disparity between these things on sort of a ratio of maybe like 1 to 50. So these are the things that I think will ultimately happen because now there's a lot of eyes on the comparison. It's not like Starlink and SpaceX didn't exist before the IPO. And so normally you'd say, well, anyone, well, anyone that says competition is good is mentally slow. Competition is bad. And so you never wish there to be another competitor, quote unquote, so that there's, you know, more things for people to look at and things like that. That's silly. SpaceX was existing. SpaceX IPOing didn't really change much. It gave it some access to capital, but it already had access to capital. So I really don't know what it changed in a competitive dynamic for us other than just have now the world more likely to engage in price discovery for AST SpaceMobile than it would've previously. That's my personal view. So now let's move to JLEO. So there's a lot of pieces that we're finding. Let me just open up all these links. So there's a tweet here I have of 4 tweets with varying degrees of ED. Now let's go through some of them. So this week we had ASTS announce a JV with Rakuten. Rakuten is our Series B financing party. So M&L in Japan run by also an exciting entrepreneur, And so he's a real kind of Richard Branson of Japan and a large investor in ASTS. He's made a lot of money in the investment. He's done very well. So they announced that JP, which is seemingly in addition to the MNO contract they already have, and it looks like a public-private partnership and it will allow other MNOs to join similar to The surprise we all had when AT&T allowed Verizon to join, which is something I really was surprised to see, even though there had been hints in the FCC filings in advance of the FCC wanting it to happen. But then it did happen. And then the same thing happened in Europe where Vodafone had exclusivity and then decided to do Satellite Connect Europe as a way to then aggregate a lot of other MNOs. For, you know, not for charity. And so there's a reason these MNOs are doing it. It allows them to scale and monetize their ground assets. They're going to get a vig on the revenues and it frankly keeps SpaceX at bay. So there's a lot of reasons why Japan should do this. And the structure of how this is all coming gets to be pretty interesting. And so there's a component where Japan is going to give a billion-dollar subsidy and then Mickey's out there saying that, you know, this is something where Japanese capital should be used and they're going to inject capital into it. So let me just get through some more tweets and we'll get to some of my thoughts on this. But the 3 things that we see kind of coming together Is there's a Rakuten JV 0.1. Japan gave regulatory approval to the 700-band megahertz spectrum for ASTS, which is a frequency that only ASTS can use because of its large arrays. SpaceX is not designed to use it because it's too small. It can't handle such wide beams. Just a, it's a limitation of physics. And then you have the imminent award of Jaleo. All of these things happening at the same time seems like an unbelievable coincidence. And so the legal structure by which ASTS and Rakuten can own something together, right as the regulatory approval for the radio frequencies that they would use, right as The Jay O'Leary announcement's supposed to be made. You know, maybe I'm just being set up for massive disappointment, but it sure looks like you can read from the outside and put some pieces together for some reasonable speculation is how I would frame this. It seems like reasonable speculation. And importantly, this is something that really hadn't been on, you know, my bingo list. And there's other people that certainly have more subject matter expertise than I do, so I'm not going to say I know everything, but I would say that there's very few people in the world that know as much about this company as I do, seeing as I dedicate, you know, maybe 5 to 10 hours a week compiling a newsletter and doing a weekly Spaces. So I feel like I'm usually pretty on top of what's going on. This was not something I had talked about until about a week ago. So that one could probably, you know, say was not reflected in the stock price. If I didn't even talk about it, the probability that people were discounting some risk valuation in the stock for this strikes me as beyond plausible. And so this sets up as something that really could come out of left field. So when Golden Dome was announced, that was something we had been feverishly speculating on for a long time. That announcement last year drove us straight to $100 from roughly this, the same place. Now, of course, we've round-tripped it because that's what ASTS does, basically just tries to make you throw in the towel. But that's something that we really had been talking about heavily for a very long time, and that wasn't in the stock price. Jay Leo, is, you know, potentially a billion-dollar deal already stipulated with real commercial implications. This seems really exciting to me. And again, with the stock price in the mid-70s, doesn't look like it's priced in. I don't, I don't, you know, re— really ever truly want to bet on the direction of a stock price on any given news event, but this one seems like there's some real asymmetry to it. And so what I think is likely to happen when you piece everything together is the most elegant way I think that I would solve this equation if I were Scott is I would have the JV certainly have the legal structure so that Rakuten controls it and has all the power. So they have the buzzer on it to do the signal kills, all the things that a sovereign would want. And then let's just Make up some numbers. So if satellites cost us roughly $20-something million, they cost us more right now. We're not down the S-curve. Let's just assume that $50 million a satellite is reasonable right now. And so I could see a scenario where Japanese government gives the JV a subsidy of $1 billion, and then the JV puts in a purchase order of $1 billion to buy, call it, 20 satellites from AST SpaceMobile. ASTS is not in the business of selling satellites outright as a practical matter, but that is a way to make those satellites owned by the JV. I mean, I haven't done the math, but what we do know is that 25 satellites starts to get you some like pretty good coverage most of the time, and you don't need that much longitude because you're only really covering Japan with this shell. So then what I could see happen is when the satellites are flying over Japan, well, they're already going to be owned by a Japanese entity. Great. No problem. Whenever they're not over Japan, that capacity is leased back to AST SpaceMobile. And so the control of the satellite still rests with a Japanese sovereign entity, but then the economic control of the satellites when not needed by the sovereign reverts back to AST. And that to me would be an elegant way to do it. Maybe the JV gets back, you know, some lease payments, which would make sense to, you know, get some return on the capital, but ultimately it really just nets out such that ASTS is the beneficiary of a $1 billion subsidy. And then there's a sale leaseback effectively, which you could just disregard for economic purposes. that makes it so everyone's happy. So this is my view of how this would go down. Certainly gets to be pretty complicated in terms of how you read an SEC filing in the future, but who cares economically? I think everyone would really understand what's going on. So that's how I believe that this might create an economic entity To satisfy really the 3 stakeholders that are required, which is Japanese government, Rakuten, and AST SpaceMobile. And then it seems pretty clear that they want to have FirstNet capabilities, and so that other MNOs are going to be presumably getting integrated and getting set up so that they can participate in this. And then let's see if some of the big dogs like KDDI And Docomo, I actually forget all the names of Japanese MNOs. Let's see if they ditch Starlink. Would be exciting. So the JLEO stuff, I hope, you know, Japan runs stuff on time. So hopefully the people in charge of this subsidy announcement, you know, have taken note of the timeliness of their subway system and announced this, you know, exactly on June 30th, which would be awesome before, you quarter end, and that's when we could really burst the eyeballs of the shorts by dropping a little 4th of July gift in advance on them. So meanwhile, Tanner, well, the real question is, can we even really trust this Tanner guy? So here he is talking about how he participated in the SpaceX IPO. So I don't even know about this guy. I feel like he's probably like a Rocket Lab investor too, and just not telling us and just trolling us. And so he was in this MarketWatch article and they profiled Tanner as a SpaceX retail investor. But then to say, you know, to, to stay true to his deception to us apparently, that he brings it back to AST SpaceMobile. And so he says that, you know, this is going to bring more eyes to the company. And so we can take him at his word, and maybe he really is an ASTS bro after all. But he does really kind of outline what I think is going to happen with the SpaceX IPO impact is there's just a lot of eyes that are going to have to figure out AST space mobile that previously didn't have to. And the dynamic of SpaceX isn't going to change by being public. If anything, the MNOs are just now going to get a clearer picture of their problem, with SpaceX because SpaceX is going to be much more vocal about its plans and intentions as it sets guidance. And so we'll get to that in a second. But the dynamic that we've been speculating about is around hedging. And so, and Panman does a nice summary of the fact that SpaceX insiders can't sell, they're restricted from hedging, they can't buy puts, things like that. And so a lot of these people are likely shorting the space sector. And so when you're doing that, you're going to just short the most liquid things that are perceived to correlate. This is what you do. You're not going to go short a bunch of illiquid microcaps. That is not a good idea. And so the things that you would want to do are ASTS, Rocket Lab, SATS, things like that. Lo and behold, Goldman Sachs has a basket of this. And so what we do know is SpaceX employs it all pooled together to try to deal directly with investment banks to get, you know, some economies of scale, but also just sort of some institutional risk management and wealth management capabilities. And so this certainly seems like the type of thing that Goldman would be pitching their clients and then shorting this basket against it. And this could prove to be very costly for these people because there's something called basis risk. And so The things that drive a stock include many factors that are systemic, and then there's idiosyncratic risks, which are the things the company does itself. And when you're short a basket, you're trying to get rid of all that idiosyncratic risk and really just isolate sort of the things that move together, like sentiment towards space, growth, interest rates, things like that. So what happens if ASTS announces a JLEO contract? out of the blue, well, that basis, the idiosyncratic risk of ASTS SpaceMobile comes to bear. The true irony is if something like T-Mobile happens, this is truly your nightmare when you have what amounts to a pair trade, which is one company directly takes value from the other and you have the trade on backwards. So you lose on both sides. SpaceX goes down, ASTS goes up, For a common reason and literally just ASTS taking a contract and a customer from SpaceX. So I'm waiting with the popcorn for this to happen. It seems fully baked. I mean, I've, I watch the stock loan market very carefully as people know, because I am myself the stock loan market. And so I see what they're doing because they're borrowing the shares from me and I see them fully lent out. I have not seen something which you would want to see when things start to get dicey, really dicey for a short squeeze, which is what's called the rebate going special. Right now it is very, very cheap to buy, to borrow AST SpaceMobile. And the reason why it's very cheap is it's a big company. And the other thing, which is a good thing, is the shares are held by institutions. And so if the shares were all held held by a bunch of Muppets, it could be special. It could be hard to borrow because those shares wouldn't be in nice big blocks in the big stock lending pools. So if you have a stock that is all retail, it can be very hard to find stable stock loan, and then the cost to borrow it can be 5%, 50%. The cost to borrow HQ Horizon right now is 250%. And so That's crazy. So there's some people that are desperate to short that and they need that stock to go down real fast, which sadly for me it has. But that's a special stock. That means there is no available stock to borrow. ASTS is the opposite, which tells you that it's held by big guys now, which is great. And that's also why you've seen such high institutional ownership. It shows that people have done the work and they're buying massive chunks of the company. that's helped stabilize volatility. I know that's falling on deaf ears right now for the people that have just saw this thing draw down 40%, but I guess we could say it could have been worse. But we're going to see this hedging dynamic probably come to fruition, especially because as SpaceX lock restrictions come off, if it is true that this is what's happening, once people get their SpaceX stock and can sell it, then they unwind the hedge anyway. So something that could end up being a source of buying pressure starting in August when the first locks come undone, but we'll find out. Back to fundamentals, we had a big Antonov come and I saw today that we had the company show a video of unloading of more materials on Antonov. And so these guys are flying in Composite rings and presumably other equipment. And so we're seeing the supply chain pumping and we're also seeing that they're getting stuff there in a hurry, which, you know, I could be wrong on this, but if they had no launch capability, I don't know why they'd be airlifting stuff. Maybe they would, but it certainly seems like they're still in the mode of just in time. They are admittedly trying to catch up. Yeah, the supply chain is still being shaken out almost certainly, but these guys are pumping and we have batch 2 coming for August and we got a nice update from them first half of August. And I believe, I don't have the link open, but I believe they said they're now working on Bluebird 37. I think is what they said, which is consistent with the update that they gave the other day. And so things are happening. This is a lot of satellites, and I've been calling this the Model 3 moment this week, just sort of when I retweet people. And what I mean by that is I'd followed Tesla pretty carefully because they had a lot of convertible bonds. This is almost 10 years ago at this point. And I remember really thinking, you know, as the Model 3 was coming up, I remember when I saw my first Model 3, it was parked on the Upper West Side and I was like, oh cool, you know, it's happening. These things are out. And I was really torn. You know, one line I thought, well, you know, all of a sudden now these guys can't live in la-la land. These Model 3s are coming now. Now Tesla's a car company. Is this going to trade at 5 times EBITDA like other car companies? Like, is economic reality of being a car company going to hit? That was not the answer. The becoming of Tesla into a thing that makes cars made the stock go up a lot because it de-risked the market. When you actually look back at it with more clarity, the market understood the potential for a vertically integrated EV company and then where that could go in terms of moats and competitive advantage and margin structure because of the scale they're going to have. That was evidently clear in the market based on the starting point market cap. What the market didn't know is whether they're going to be able to scale efficiently and get to that big belly of the market for the mass market. That's what the Model 3 unlock was. And then the stock consolidated. So Tesla, I think, is a very good analog for ASTS because it's long periods of consolidation, rapid remarketing, long period of consolidation, rapid period of remarketing. The other remarketings were when they opened Shanghai, Boom, big market opened up. Didn't know if you could build a plant in China. Now we know. And then the next one was Germany. Didn't know if you could scale into Europe. Now we know, and so on and so forth. And so it's interesting when you look back with some calmness, you can kind of see, ah, this is the question the market was asking. And I always joke that if the market were a multiple choice exam, I'd be a trillionaire because I was always really good at school. And the hardest part of the market is simplifying it into a multiple choice exam so you really accurately understand literally the question. And so I was looking back the other day, our dear friend Kevin Mack, the More Metal in Orbit professor, had a huge position in the Sphere. We were kind of making fun of him. It's like, yo bro, like good luck with your movie theater. Well, joke's on us. That thing's been a beast of a stock. And so I was looking back at it just going like, what was it that caused this thing to triple or quadruple? As Kevin Mack expected, and there's a reason he's a professor at Stanford and why I am definitely not that thing. And it was as simple as, could they produce their own material to really expand the TAM and the margin structure with their Wizard of Oz special? And so, you know, I just sat back like, I didn't look at this fear initially. just didn't look at it. If I had looked at it, would I have been able to simplify it to the multiple choice exam of the market will unlock a multi-bag return if they can roll out one successful owned content? Yes, no. Because then you would've known what to research and you could've just sat there in Las Vegas and seen what the lines were for that. like that's something you could have done if you had simplified it down to the multiple choice. And so I've always found the, the hardest part with stocks is reducing it down to a simple multiple choice question, um, and get past the noise. And with ASTS, this is where I'm really trying not to make that mistake. And I think right now the multiple choice question is really, can they unlock the operational cadence, which includes launch? Yes, no. And so that's the thing we should be focused on. And so seeing the Antonov show up, seeing the increase in the number of birds they're working on, seeing birds ship, this all helps. We need to see more launch contracts. Of course, we'll get to that in a second. Or actually, that's something we should have talked about with JLEO. The other thing we just learned is that JLEO, or sorry, MHI is looking to increase their cadence of launches on the MHI H3 vehicle. Again, why, you know, why now? Why, why is this happening right at the confluence of ASTS getting the regulatory approval, the Rakuten JV, the JLEO contract, and now Japan is bolstering their launch capabilities? Well, to me, it's all very clear is that Rakuten is going to buy the satellites. And then MHI is going to be the vertically, you know, the sovereign integrated launcher so that Japan has a largely made-in-Japan system from their perspective. That's pretty cool. And so as these things happen again, I think that that Model 3 moment on a couple of vectors becomes more clear. And so what's cool with Tanner, there's this really neat little meme that just shows launch cadence acceleration. And so the time between launches has gone from 2 years to 15 months to 4 months to now 2 months. And we're going to soon probably be at a launch every month. That's the type of thing that's going to cause an unlock while the market holds other things constant. Other things constant are going to be ARPU assumptions, market size, things like that. And we think that batch 2 is going to be out the door pretty soon. And so we, we have, you know, people that live in Midland that camp out in their cars to monitor trucks, and we can see that the trucks are back. We've seen the containers moving around. We, we know, you know, some of these containers are new containers that are being built, and we're seeing them on the freeway headed up to Midland. Pretty crazy stuff that we're seeing. But then it shows us the ability to predict shipment dates, which will become decreasingly important pretty soon because they'll be taken for granted. But right now we're still in the phase where I think the stock's going to trade really nicely into these launch events because it's sort of this relief on like, yeah, yeah, they're going to do it. They're going to do it. And meanwhile, we're watching Dodge 1, And so people are looking at the TLE data, the 2-line-E data that help track the telemetry of the satellites. They're all looking really good. We, you know, could be up for unfurling these things maybe within weeks because it's already been 2 weeks since launch. And, you know, maybe by the end of July that's happening. And then we continue to have more acceleration on the commercial front. So European MNOs are signing up. Vodafone Spain, which is a separate company, joined, and they're talking about IoT applications as well as the normal hard-to-reach areas. So that's exciting, and it just shows that these JAV systems are working. It has turned out to be a successful contract acquisition vehicle, and probably by all accounts is setting the stage for what we're going to see in Japan. On the other side of the spectrum, SpaceX is doing everything possible to terrorize the MNOs. So we have SpaceX confirming that they're going to have a mobile service. We have TD Cowen saying that it thinks SpaceX is going to buy T-Mobile. To turn Starlink into a global connectivity platform. Now, I would find that surprising if if they do that. For one, Deutsche Telekom—I haven't studied the corporate governance—but Deutsche Telekom owns 51% of T-Mobile, so they would presumably have a final say in that. And you know, the MNOs must just be shaking in fear right now of. what they're going to have to deal with from SpaceX. SpaceX can offer triple play. They've got really interesting collection of assets with the Starlink terrestrial or fixed broadband service. They're burgeoning D2C capabilities, their media abilities with X. I mean, you can stream increasingly the things you want to watch. They could probably start bidding more on sports rights and things like that. Starts to become a little bit more real every day. And then SpaceX is now just flat out saying that they plan to push into the US consumer market. That's Bloomberg headline. And so they've told investors it plans to launch a new Starlink mobile service for US customers. Every MNO in the world is reading that article. And I can promise you, no MNO is reading that article and saying, we should go sign up with Starlink as our partner. Quite the opposite. And so as we gear up, as our satellites get launched, more good things are going to happen. But it's always a good reminder that not all the good things relate just simply to connecting the unconnected. The use cases for these satellites are many, which is also what's so exciting about the revenue potential. And so there's a really good list in this PDF that I've attached, goes through the civilian government use cases and the warfighter use cases. And when I really dug in, it was just amazing of how many useful applications 5G technology had. Whether it's just the typical things like supporting soldiers in the battlefield to jamming, to situational awareness, to IoTs, really the list goes on and on. And so this is all just future revenue opportunities as you get programs or records stacked and then presumably start to offer this to more and more partners around the world. I still think that the big kahuna is going to be when ASTS releases its product roadmap that includes AI data birds. And so this is going to, I think, be a big market. Qualcomm had a cool article out just talking about how AI agents are going to replace some apps. And they're working on 40 new AI-powered devices, including, you know, God forbid, jewelry, earbuds with cameras in them, pins that people wear, watches, all sorts of things. And so connectivity's going to be really important because these are small devices. The power of the satellite is going to have to be really high to connect to them. But AI applications, are going to drive a dramatic need for connectivity. And so that's really on the front end of what's going to drive revenue opportunities far beyond the, oh, this is a small market. This applies only to people camping in Yosemite. Pretty soon when the whole world has a different layer of connectivity on it that needs to be powered from everywhere, and a lot of things that might need positive control on them, which means you can't just have the terrestrial system as your sole system. So there's this backup layer. This really drives what the revenue opportunity looks like on the business that we know today. But then I'm going to jump the shark a little bit. The data birds that I'm talking about relate to the actual AI compute. And so this is something I really can't stop thinking about. And so I was starting to do some more calculations last week, around just thinking of different revenue models in my head that would make sense on where, what type of economic case would we need before these are just clearly going to happen? And the analog I think about is grid parity. And so back 20 years ago, solar and wind farms, these things existed. The tech was there to do a windmill and solar, but what What hadn't happened yet is it for it to be competitive on the grid. And so to deploy a solar farm required a subsidy. And so then there's a limit to how much solar that's going to be deployed if it effectively has negative value. But once you get to a certain scale, the cost became so low, it was competitive with all the prior existing power generation for a given point on the supply stack. that's where demand goes basically infinite. That's called grid parity. And so what I'm hunting around for is just some bridge to find what the equivalent of grid parity would be for AI data centers in space. And so something I can't stop thinking about. And so I started to do some calculations and, and really think about how this would happen. Think about some of the big questions in terms of the engineering that would relate to it. And so ultimately I was playing around with, you know, what would a DataBird cost? Making up a number, $20 million. My logic is simple. The solar remains the same. The overall frame of the satellite remains the same. You're replacing, you know, whatever it is, thousands of chips that are currently doing RF processing and radio elements with just AI ASICs and radiators. So if anything, it might be a net delete of costs. versus the net addition. And then I was just assuming satellites are in sun synchronous orbit so that we can just have a 24-hour duty cycle, which again, I don't know if that's right. And then I was looking at what my implied price per kilowatt hour is. And what I don't know is what the fully loaded price per kilowatt hour is inclusive of the chip, inclusive of the levelized cost of operations of a terrestrial data center, because it's really not right to compare power input to power input because a kilowatt of energy on Earth also then requires all the cooling, all the land, all the infrastructure, the ongoing maintenance and support, things like that. So there's going to be some equation which I haven't yet solved, but it's an interesting one to think about. And it, I believe it's the operative question that we really have to think about. And so I was really going over my calculations with Katzie and so we were talking about it and thank you making the point to me because I hadn't really thought about Well, I had thought, I just didn't know the answer of where, what was going to be happening on the Earth-facing side of the satellite. And so because you're not doing beamforming, you don't need the Earth side of the array to have elements spaced out. But as I was talking to Katzy, what you do need is chips spaced out so that you can radiate the heat out. And so our Micron sandwich would appear to be the ideal form for an AI satellite because you're not just having a big cluster of chips as a big cube with then a varying ability to radiate the heat out. You're having them all spaced out as well as having a huge solar array to generate the power. So a lot of questions, but this again, I think is the type of thing that we can be having a great business that's going in the right direction, but then the AI data birds hit People start to appreciate what could happen there, and that could be the liftoff for us from, call it like a $1,000 stock price to $2,000 stock price real fast. That's, that's the type of thing I'm thinking about. I'm putting what we'd say the cart ahead of the horse a little bit because I am fully aware that the stock price is, stock price is not $1,000 today. So thank you very much. I don't need any comments to get ratioed on that one. But I am thinking ahead because I want to have a plan. And what I don't believe in is having a fixed target price. Companies are dynamic. Things change. Sometimes things change far in far more magnitude than even a founder can appreciate. And so you got to think for yourself and really have views of a market of what's going to happen, because sometimes a market can take a company up far higher than a company would've ever itself imagined it could go. And I want to know what I own. So that's what I've been working on. So I presented Katsy's tweet on this Micron sandwich and why it's good, which is kind of an outgrowth of our conversation we were having as I was working through some calculations. And as I often do, I try to stir the pot on something I'm working on and get Katsy to then run with it and actually do a good job with it because his abilities to do that far exceed my own. Our penultimate topic is Blue Origin reminding us that they still intend to launch rockets, which is a nice update. Thank you, David Limp. And so they're showing the progress. They're putting up towers, they cleaned the site, you know, they are pumping. And so good for them. And a thought experiment I had is—
[00:48:56] Speaker D: I'm Arch Manning.
[00:48:58] Speaker A: I'm Madison Skinner.
[00:48:59] Speaker D: I'm Eva Jovic.
[00:49:00] Speaker F: I'm DeCorey Moore.
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[00:49:10] Speaker B: Think you have what it takes? While the market— let's just say the market's still hung up on Blue Origin because the stock price is, you know, still in the 70s. And so people are worried about how we're going to get birds to air, uh, to orbit. What I was thinking about is what you should think about, which is what is the market going to see in 6 months' time, but more importantly, what will the market be focused on in 6 months' time from that point? And so when you think it through, when we tack on 6 months to today, it's going to almost be New Year's. So happy New Year's in advance, future people, and we'll have likely put 12 to 15 more satellites in the air. That will be exciting. All of a sudden, sure, I understand that a total fleet of, you know, 21 satellites is less than 45. Thank you. I again also don't need to be ratioed on that. But you will have 21 satellites. That's pretty good. It's better than zero. And more importantly, that path to then 45 will no longer be a year, year-end litmus test that we will no longer care about because the year will already be over. It'll very shortly be a Q1, you know, mid-Q2 target, which starts to become hittable. And so this quote unquote delay, which will in fact be a delay, really won't matter 'cause you'll have already eaten the delay and then now be an expectant investor excited for the birth of your operational milestones. That's what's going to be happening pretty soon. And you could also be waking up and going, wait, I thought I was supposed to worry about Blue Origin. I sold all my stock in the '70s because Cook is an idiot. And then you're going to stand there before New Year's and all of a sudden you might have launch agreements with ULA. And then I still think it's possible that you might have some big multi-launch agreement with MHI, which is good for 15 to 25 satellites. And then people will go, hold on, we didn't have that dialed in. And so is the MHI vehicle as efficient as Blue Origin? No. Is it something people had on their list of things that was going to happen? No. When you couple that with potentially some slots from ULA, you've all of a sudden might have more launch capacity than you had previously been hoping for if Blue Origin does in fact come back. And then also the company can start buying Falcon 9 launches, which they almost certainly are in the process of doing. And so the thing that people are most worried about now, 6 months from today, could have a more than satisfactory resolution. And this just goes to the thing of always be a future worrier. Don't be a current worrier. Well, be a current warrior, but do not be a current worrier. Worrying about the present is a big mistake. You should only worry about the future. And worrying about the future is very different than worrying about the present because the company can also worry about the future and has the time, resources, and tools to change what is a present visible worry in the future to a future resolved issue. And then we'll have something else to worry about, which I'm sure we will. But at what stock price will we be worrying about that thing? That's always the question. And then lastly, we had Abel paid himself. And so I already did my emergency spaces. I believe that was Monday night or Tuesday night. And someone actually, it was funny, someone was like, well, this was the bottom I was looking for where Kook does an ad hoc midweek spaces, which I usually am pretty adamant that I won't do. So point taken. When I did that, that might've been a Kook bottom sign because now we're definitely up off that. But the only things to add to that discussion, which I'm not sure if people saw, is we now have the actual structure that was used. And so when I did that Spaces, I could have just guessed at the structure. I didn't know it, but you just have to go price out the puts and the calls. So we have a $60 floor and we have a $112 cap. So Abel really only sells stock at $112, but again, as we talked about, He still has the option to roll that structure at some future point as long as the stock isn't just at some crazy high number where rolling becomes sort of impractical because there's too much intrinsic value. But Abel's paying himself out of his own stock. He's not taking undue dilution by getting kind of crazy moonshot awards, which has really kind of been the trend of public companies is giving people these obnoxious, like hundreds of millions of dollars of compensation, which you pay for out of your return. He's not doing that. He's selling his own stock, which he got by founding the company with his money and his blood. And he's doing it in a way where he is not even selling the stock. He's collaring it and getting a loan against it. And he's not taking any money as a salary of any material amount. And he starts to look a lot like Jeff Bezos, which is interesting that he's modeling his compensation governance against Bezos, which would appear to also be one of his most important strategic partners, but also probably one of the most important strategic options he has to one day exit AST SpaceMobile because it really would be elegant for Kuiper, Blue Origin, AST SpaceMobile to combined. Not saying that will happen, but it really would be an elegant solution. And when you think about the distribution power via Amazon, it's pretty wild. And so it's good to see him taking some lessons from Jeff Bezos on comp because Jeff always viewed himself as had a big stake and didn't feel like he had to take it from shareholders via dilution and never paid himself more than, from what I can tell, $80,000 a year in cash. which is certainly not the going rate for someone like Jeff Bezos. So just always useful to see the great corporate governance at AST SpaceMobile continue. And Abel certainly has my respect by treating me as a partner and also treating you as a partner. But I really look carefully at this stuff. Incentives matter for me. I'll only ever have a big position like this if there's an owner-operator that is behaving like this with these types of incentives. Otherwise there's misalignment and I'm not going to put a big part of my net worth where there's misalignment. So this type of economic alignment is crucial to me. So it looks like a busy week is in store. The company's already, you know, putting out Sunday tweets about really scaling their operations. And so that might mean that we get a shipment sooner rather than later. And let's see if the Japanese run on schedule. I think the expectations on that should be appropriately low, and let's just be positively surprised.
[00:56:19] Speaker D: And, you know, it's going to—
[00:56:20] Speaker B: I hope it's going to be a big positive week. It's the 250th birthday of America. Everyone should be pretty excited that we have a country that's made it that long. And I'd imagine there's going to be a lot of positive energy as people gear up for the weekend and The seasonal is pretty awesome usually for the first, for, you know, July 4th weekend stock market, I think has like an 80% probability of being up. And we've had enough selling and enough pain in June. So I think we're high time for a nice, if not else, a relief rally. But ASTS specifically usually does really well in the summer. We usually have launch events. There's a lot of positive momentum happening in the company operationally. we might have totally poured gasoline on the fire with all these SpaceX hedgers, um, which could really prime the pump for us to have a really exciting summer. And I hope we do because I'm super long the stock. So have a great evening, everyone. Talk to you next week.
[00:57:18] Speaker D: 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.
[00:57:51] Speaker B: Listen. Mmm, waffles.
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