AST SpaceMobile: T-Mobile Deal Coming Next

[00:00:00] Speaker A: This episode is brought to you by Facebook. So you were scrolling on Marketplace, and there it was, the bike you'd been searching for. You sent a message, and it turned out the seller was super chatty, kind of funny, and an avid cyclist. The next thing you know, you're in a cycling crew. Well, a community cycling group. The thing about Facebook, you might find more than what you're looking for. From a browse to a bike ride, this summer find more on Facebook.
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[00:00:59] Speaker C: Everyone, thanks for joining. I thought I'd fire up a quick space. I wanted to just, uh, talk. I didn't have any particular agenda, but, uh, today I was tied up earlier and, uh, didn't— was unable to see what was going on in the market, which can be a good thing. I think for a lot of people, um, spending time away from staring at a screen is good. I think some of you, or some of the folks who aren't on here, but maybe on Reddit or other areas, probably stare at the stock price too much. So yeah, I just wanted to have a space and just remind people to just stay focused. I think Ted says it best, nothing drives sentiment more than stock price. So I There were some people who crashed out yesterday and today. It's just kind of funny to see. There was this one particular account who, when the stock had rallied to the low 70s, they were like, hey, we're going to 85 next. Then they tweeted today, they copied Elon Musk and they said, hey, why don't you buy us out for $100 billion? This was at the intraday low. I think the stock was at 64 and change. It's like, well, what happened? What happened from this call of, the stock going from $73 to this person saying $85 to all of a sudden, please Elon Musk, buy us out for, I think they were asking for $100 billion. I mean, I think it's important to remember that the stock has basically been flat for, let me see, going back to, I mean, we had hit $65 back in June. And so over the course of June, July, and August, the stock has essentially been flat. I mean, obviously we hit a low of 53. That was a closing 53 on the 29th of July, and now we're here at 66.5. So we've bumped along, we've chopped for the last 2 months, and nothing has really changed, but yet people are upset. They're calling for heads of management. By the way, if you have if you can't trust in management of any company that you're invested in, then you should sell the stock. Because if you have hard-earned dollars invested in any company and you don't have any trust in a management team or board and their execution, then you should probably not own that company. Because then otherwise, what are you doing? But I think it's important to have some perspective. I mean, we We have now launched 2 batches of satellites. We have another batch that's coming up. I think in terms of Falcon 9 schedule, there is a crewed Falcon 9 mission. And so there's kind of a period of time where we can't launch satellites, nor can anyone else until that crewed mission is done. But we are launching another batch soon. And I referred to it today. I looked at Moderna's stock price reaction, which is unbelievable. Unbelievable, right? The stock is up $108 from a closing price yesterday of— let me see here— closing price of $63. Now it's up to $172. Now I'm not calling for AST to make that type of move, but we've had that type of move before and we're on the cusp of that, right? Historically, whenever you look at analyzing stocks, you typically look at precedent, right? And so Moderna's up 111%, no, 177%. It's up $111. But when I looked back at ASC, we had a similar type of move. It wasn't all over the course of one day, but it was over the course of several days, right? So back in May of 2024, the stock went from $2 $5 after signing a definitive commercial agreement with AT&T, and then bringing Verizon on as a strategic investor and partner, and it wasn't a definitive agreement yet, but obviously the $100 million investment, which comprised of a $35 million investment in the convert and $65 million prepayment, that caused the stock to re-rate from $5 to eventually over the course of the next few weeks, it got to 12, and then of course it went to 39 or so. But we're on the cusp of some pretty big things. I think it's— while the last few weeks have been rough, and there was someone out there who had said, hey, to be fair, you've been positive about this year, and of course things haven't panned out. Well, yeah, I have been positive. I've been positive for the last 6 years. I haven't really changed my view on the company over those years. It's been volatile, right? It hasn't been a straight shot from point A to point B, but it's been volatile and there's been setbacks and there's been huge wins along the way, but that's investing. I think for some folks who lament stock price performance, even though underlying execution and milestones have been hit, Yeah, there's still a lot of uncertainties, but if you can see the forest from the trees and know what's coming, then you can sit pretty comfortably because you know what you own. In that case, I talked about how my wife had come in this morning and said, hey, AST stock price is down to $65. Before it was at $130. So what's been going on? I just explained very briefly Oh yeah, the market has pulled back. I didn't go into detail about situational blowing up, having the biggest blowup and unwind in financial history relative to Long-Term Capital or Amaranth or some of these other blowups of hedge funds. But yeah, the entire space sector got derated, which sometimes people conveniently forget that, oh yeah, today the entire space sector is down. But she's not there to hear that description. She was wondering, well, do you think everything's going to be okay? And I was like, yeah, I'm comfortable because I know that T-Mobile is coming. And then she was like, oh, okay. And then she walked out. And I explained to her what that— well, I briefly explained to her what that meant. I was like, do you remember when we signed Verizon and the stock more than tripled? Well, that's going to happen when we sign T-Mobile and the market's not ready for it. And so she was comfortable with that. And so for me, I've been totally fine with this drawdown. I've been adding here and there and just counting the days, because I think the company has been in talks with T-Mobile and apparently those talks are going well. We're testing with grain management on 800 megahertz spectrum. And in that disclosure with the FCC, it refers to some agreements with T-Mobile, which then got taken out in a follow-up filing, which I think they didn't want that to be out there, is my guess. I don't know that for sure, but it kind of hints at that, right? Where the FCC, when they put that STA approval, they referred to those agreements, which by the way, the original STA had all these redactions. So then the company attorneys were like, hey, can you take that condition out because maybe it's not relevant or it shouldn't be disclosed? But everything's pointing towards one direction. I think it's important to circle the joint venture. Now it's been— if I was a skeptic and a bear, I might say, well, this joint venture between AT&T, Verizon, and eventually T-Mobile, that could be an economic hindrance. Maybe it's a buying cartel. Maybe they'll put some pressure on AST SpaceMobile. So that's a valid concern. If you're someone who's coming to the sector for the first time and you don't really understand the dynamics, you might listen to a skeptic with that train of thought and think, well, maybe this company's not in a great position because then that JV could go buy services from Amazon or somebody else and displace you. But then I think it's important to actually read and hear what the executives are saying and read what was disclosed. And so this joint venture is pooling together resources, spectrum, infrastructure to make it easier for the deployment of these services across the MNOs. And then they emphasize that AST SpaceMobile, the agreements that— the exclusive agreements that AST has with AT&T, with Verizon, those are going to stay in place and survive the joint venture. And so the joint venture is a pooling of resources, and in some respects, they're going to work in a coordinated fashion to make this service better, but they are going to maintain their agreement with AST, each of AT&T and Verizon. And we know that originally AT&T had mutual exclusivity with AST, but because John Stankey saw the broader vision of providing a better service and then also seeing, he was a visionary, seeing the competitive threat, although we saw it, but the competitive threat from Starlink, he decided to then invite Verizon into a working relationship with AST. And so we gave up exclusivity in order to do that. And so we're seeing the same thing where here the company has pretty much said that they are in talks with T-Mobile. AT&T has acquiesced, they've blessed it. So there will be a definitive agreement, probably initially an MOU that outlines everything, and then eventually a definitive agreement with T-Mobile. So that's why people panic, they freak out, the stock goes down to $64 intraday, and they're calling for Elon Musk to buy the company. I'm not worried because I know what's coming with T-Mobile. You've seen it in Goldman's research yesterday. You see it in media and other channels where they talk about Starlink, and then of course Amazon is something else they talk about. I actually know one of the authors at Goldman who wrote that report, and they're being commercial. They actually bank SpaceX. They also bank Amazon. And so they're going to give those guys more talk time. They're not going to cover AST because AST is not banked by Goldman, although I'm sure that's going to change in the coming quarters. But that's kind of the perspective of Wall Street, where it's really, when people talk about direct-to-device, they talk about SpaceX and they talk about Amazon, even though it's buying Globalstar, it's coming into the game late. Of course, Globalstar is a very limited service and it will be for the foreseeable future, but no one really talks about AST. But when that joint venture gets put together and when people look closely and see that AT&T, Verizon, and T-Mobile are working with AST, that becomes very hard to ignore, especially when T-Mobile gets announced and let's say, I'm just making an numbers up, but let's say its stock price rallies to $100 that day, then that becomes hard to ignore. I mean, it's just like the first time when Verizon announced the investment and partnership with AST and the stock rallied. I put that headline from CNBC. It rallied 69% that day, but then it continued on. Then that becomes really hard to ignore. When you are on earnings calls, AT&T does this. They talk about AST in a very positive light, but when these other players are asked about Starlink, it's like, what are you doing to counter them? And they talk about AST, then that's when the Street really starts to understand the story where it's like, oh, this is the strategic counter, this small company out of Midland, Texas called AST SpaceMobile. And so they've got an entire lock on these large incumbents in the most profitable market. And then what else are these guys doing? And then they look in Japan, they look at— there'll be a headline at some point in the next few, let's see, in the next 2 to 3 quarters of, oh, AST has gotten a 10 by 10 allocation of S-band spectrum in Europe, Satellite Connect Europe, and they're going to be deploying or creating the equivalent of FirstNet there. People are going to wonder, who's doing that? And they're going to find out it's AST. And so Right now we're in this lull period. I mean, it's August. Most, just like the Europeans, a lot of folks who are in finance are away. They're not really doing much. And so that's why vol has been crunched too. There's just not a ton going on. But that's going to change. And I think it's making sure that you stay focused and keep your eye on the prize. I think that's paramount, right? And obviously, the day-to-day, people have sentiment. and for whatever reason, they view Twitter as like their, I guess, their therapist. I'd recommend like Twitter is not a good therapist. If you need to go shout out into the void, maybe it's better to use AI because AI knows you better and you can say, hey, AI, pretend that you're a therapist. Can you help me work through my issues? That might be a more productive way to do it than going on X and lashing out and whatever it is, if it's beating other people up, beating yourself up, I guess some things don't change. But yeah, and I understand, especially as being an individual investor, it can be tough. So sometimes it's good to be able to express yourself and get some level of support from people, which I do. I try to help others as much as I can. Someone was telling me today, well, it can't be all positive. It's like, I understand that. There's plenty of people who are negative, and when the stock price is down, they'll just get into this death spiral and just be really negative, but that's not my MO. That's not who I am. I've been bullish and I will continue to be bullish. I view myself as a character when shit's really hitting the fan, I'm the person who's standing up and slapping people out of it. It's like, hey, pull yourself together. Nothing has changed. The stock price is down as well as the entire space sector is down. There's nothing in particular that the company is doing wrong. So you just kind of have to ride through this volatility. I mean, today there was a huge factor swing where Moderna just really lit the entire biotech and healthcare sector up, and so all those stocks were up, and so you had liquidity drained from growth and momentum chasing those areas, and you also had, because of the Treasury Secretary Bessent said that he doubled the buying program on the long end of treasuries. So I think going from $2 billion to $4 billion and saying, hey, we're trying to support the market because for some of these illiquid issues, there's no bid. So effectively what this is, is kind of like the precursor to yield control and quantitative easing. So today, and this is why I was telling people to stay focused, Yes, you're having some rotation out of space, quantum, and a few other sectors, but then you're also seeing risk go into other areas, especially, for example, one sector that has not had risk in a long time, which is crypto. If truly you have quantitative easing coming, or to some extent, crypto was on fire today. I tweeted earlier about how there is this view that guess this coming October, there could be a bottoming in Bitcoin. The reason why I say this is that when crypto has a bid on risk, that's typically pretty good for other sectors, other growth sectors and momentum areas, of which one is, of course, space. So today, I had tweeted, I think the stock was down to like $64, $65, and I was like, hey, this rotation, it will end, and there will be a bid that comes back for space names. Today, AST was down 1%, which isn't bad. This is the other thing too. Yesterday, there were people who were saying, oh my God, AST is down more than other space stocks. What's wrong with our company? Yada, yada, yada. It's like, guys, one day a trend does not make. Yes, there are days when you could have an institution decide that they want to be out of AST or lighten up or maybe There's any host of reasons why one stock outperforms another or underperforms. And so the people yesterday who were complaining that AST was down more than Rocket Lab and Intuitive Machines and other Planet Labs, other space names, well, lo and behold, look, AST is down 1%, Planet is down 3%, Redwire is down 4%, Intuitive Machines is down 4%. BlackSky is down 3.6%. Rocket Lab is down 4%. SpaceX is down 2.6%. Who cares? The day-to-day stuff, who cares? So many people are focused on the noise and they lose sight of the long term, which is—
[00:19:31] Speaker A: This episode is brought to you by Facebook. So you were scrolling on Marketplace and there it was, The bike you'd been searching for! You sent a message, and it turned out the seller was super chatty, kind of funny, and an avid cyclist. The next thing you know, you're in a cycling crew. Well, a community cycling group. The thing about Facebook, you might find more than what you're looking for. From a browse to a bike ride, this summer find more on Facebook.
[00:19:59] Speaker B: When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications, and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a $75 sponsored job credit at indeed.com/podcast. That's indeed.com/podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored Jobs.
[00:20:30] Speaker C: In poker parlance, it's like you've got to recognize you hold the nuts. You have the winning hand, and you've got to wait for— we got to wait for people to make their moves around the table, and you're hoping that some clowns go all in with their shitty hand trying to bluff you out the pot, but you have the nuts. It's like, okay, good, good. Go try to bluff me out of this. Try to go all in. I'll be calling everybody. So that's kind of the state that we're in right now. I mean, there's a bunch of chop and of course the macro, you've got the Iran conflict flaring back up again. The big concern was inflation, which by the way, a month ago rates were going to go through the roof. The Fed was going to raise rates and it was going to be all hell breaking loose and game over for growth stocks. Well, now we're back we're back to this area where there is the possibility the Fed's going to cut rates. And so all this stuff is just noise. You've got to just be able to put this out of your mind and just focus on what's important. Now, obviously the macro is important. There was some concerns that the Fed was going to raise rates and maybe we'll face a 2022 type of situation. Well, the Fed raised rates by 500 basis points over that period of time, which was unprecedented. It's not anything similar to what we're facing today. And so yes, rates could go up, but are they going to go up 500 basis points over the course of a year, year and a half?
[00:22:11] Speaker D: No.
[00:22:11] Speaker C: But is there uncertainty? Yes. But just to counter that, is there going to be a tremendous amount of spending from the US government on space? Absolutely. I mean, that is a massive tailwind. Put aside the commercial aspects of space, which for commercial on the internet side, for example, Goldman yesterday, direct-to-cell was an unknown term, but one of the biggest growth drivers Goldman pointed to was like, oh, this new thing called direct-to-cell. Well, yeah, we're having our moment. It's going to be rolled out. The great thing about that report is it went beyond just mobile devices. It's talking about how direct-to-cell is going to be a connectivity layer for autonomous drones, robots, driving vehicles, whatever. I mean, just another layer of connectivity, right? Forget about the infrastructure that we have in place, but needing to connect more devices, those devices, whether they be in dead zones or be in urban areas, they're all gonna need some level of connectivity. And that's the thing, like this, what was it? There was an article recently talking about how Gosh, I'm going to butcher this, but how now maybe it's like a majority, for the first time, a majority of internet traffic is all agents versus humans. That's going to continue to grow exponentially, right? And so you're going to need connectivity beyond just what we have in place, but additional layers. It's not a matter of covering dead zones, but it's going to be, okay, L and S-band spectrum, MSS spectrum, that's all going to be deployed. You need additional connectivity for all this demand, right? I mean, imagine people talking about AI and the guys who were early and smart, which was not me, but they're like, hey, I'm going to look at the bottlenecks, and bottlenecks are processing, memory, you name it, right? At some point, connectivity is going to become a bottleneck. I mean, just think about all the traffic that is going to go over the network from not just AI compute, but also all these agents that if you— I think about my work stream about— and I'm not sophisticated, but I use AI now pretty intensively throughout the day just to do research and even mundane things, right? Or when optimizing things for our children, I've started to use AI, and it makes things a lot easier. It's not a matter of having to wait and talk to an expert, but it's like, hey, I'm gonna feed it some information and then see what it says. And of course, you gotta have judgment to discern what makes sense or not, but all those workflows demand connectivity. And I think that's, you know, if anything, that's probably something that people are not thinking about today, but eventually connectivity will become a bottleneck because you will have all these devices connected. This might be a time, for example, cable companies have gotten completely obliterated. At some point, those are going to be buys. Companies that own spectrum, that are providing connectivity services, ubiquitous connectivity services over 100% of the US or 100% of Europe, that's going to be very, very valuable. So Man, I'm going off on a tangent here, but I think it's important for people to stay focused. Going back to what I was saying before, the fact that the Fed is now looking at rates, long-term rates, and supporting the market, that's very conducive for risk. And so yes, we had a pullback in space stocks, and we've been in this malaise. It's not just AST, it's been all space stocks. But the US government continues to spend. The other big milestone that occurred yesterday was the fact that China Landspace is the second rocket launch provider in China to land a first-stage rocket, a first-stage orbital-class rocket. And so that is huge news because The space race is real. Going back to people poo-poo the Chinese space program, but I mean, they have the most modern working space lab out in space. So they went from 0 to 100 in just a matter of several years of doing that, and now they are getting to a point of reusability. which I think lights a fire under the US. I talked about this notion before of the fact that the space race is real and having superiority out in space determines the strength of your military. We've seen that in Iran where Earth observation— I'll be the first to admit, I always thought Earth observation was kind of a niche area, but it is becoming absolutely table stakes. It's critical. for strategic, in terms of your military. So Iran, with the ability to leverage Chinese or Russian Earth observation, they were able to conduct precision strikes with very cheap drones and they were able to take out multi-billion dollar US military assets. And so space is becoming increasingly more important in order to defend yourself and to have offensive capability. So these trends are not— they haven't changed. Stock prices have changed, but the fact that the US government is spending, what, $70— I think the budget was approved for $70-some-odd billion and Golden Dome. I mean, you name it. All of these different initiatives that are multi-billions of dollars, those are not going away. So I think the idea, and this is— There's pros and cons to this, but I do think perhaps in the next— just given China's rapid advancement in space, I do think that there will be some initiative from the US government to potentially take passive equity stakes in space names that are viewed as critical to national security. And so similar to what happened with MP or Intel, you could see the US government inject in some of these newer space companies some level of capital, in exchange for a passive stake. And this would just be financial support, right? Not getting a board seat or anything like that. But I do think having— if the US does decide to do that and lowering the cost of capital for these companies, I think it would go a very long way in terms of helping these programs develop. And so whether that's an alternative to SpaceX, and so that could be Rocket Lab, it could be AST SpaceMobile, any number of companies, you could see something like that happen. And so right now, I think most people are, when it comes to space, more and more folks are becoming aware of its strategic importance, but I think we are getting to that point of the aha moment, just like AI, where it's like, shit, this is a race that we can't lose. And for AI, Everybody, Silicon Valley, the US government, governments worldwide know that the AI race is on, and whoever is the master of that is going to have a huge strategic advantage. Similarly for space, that same dynamic exists. So anyway, that's my long-winded way of just saying that I think, yeah, while the market sentiment is bad, Folks obviously are not feeling good. Things have improved quite a bit. We've launched several batches of satellites. We have another one coming as well. Some folks are like, well, the company should PR, communicate more about JLEO or testing with grain management or T-Mobile. These things are not ripe yet. They're in process, Jay Leo, that joint venture is currently being negotiated. So when that is finalized, that will become a formal announcement, which by the way, the company has talked about the fact that they are in negotiations for that. They did it during the convertible offering. They did it in the most recent second quarter call. And the second quarter call, by the way, maybe I'll just post it again. Everyone should Set aside time, whether you're using the restroom or at night before you go to bed, or in the morning with a cup of coffee, you should read that call, the transcript word for word, because there is so much that was disclosed in that call, which I know a number of people who are on Twitter lamenting that the company hasn't PR'd anything or should be slam dancing, like going crazy with PR. Everything was disclosed in there. Now, some things, again, they're not ripe yet, and so they can't be formally PR'd, but everything you need to know is there. And so you just gotta have some patience. And yeah, and this company is not, they're not promotional. They're not as promotional as other companies out there. They're not gonna PR a ton of things until the time is ready, right? And some of these things, by the way, are for strategic reasons. If you're working on a strategic relationship with T-Mobile and there's quite a bit of sensitivity with SpaceX, the existing Starlink T-Satellite relationship, you're going to do everything under wraps. You're not going to be heavy-handed about how you're working together before that actually comes together. There's a risk. There's a risk that T-Mobile could ultimately decide to commit suicide and decide to work with Starlink and give them an MVNO. That's a real risk. That risk, by the way, is something that is a negative for the industry, for AT&T and Verizon, but it also is, in a perverse way, it deepens the need for AST, for those 2 players. They're like, okay, now that T-Mobile has decided to shoot themselves in the face, really need AST to be a strategic counter, but that's not where things are going. And T-Mobile is going to be working with AST, and so is AT&T and Verizon. And yes, we are a strategic key, tip of the spear in response to Starlink. And so that's a very good place to be. That's also a good place to be globally, right? So with any number of MNOs That is what you want to, strategically, that you want to be an important piece to counter the biggest threat to the wireless industry in decades, which is Elon Musk's ambitions to disrupt the wireless industry, which overall for consumers and for innovation and all the things that you would want is good. You need to have someone like Starlink come in and shake things up, and it forces the carriers to go full hog on doing hybrid connectivity, having a terrestrial and satellite network, fully committing to the 6G standard and NTN. And so that's massive, right? And so anyway, I've got to run. I've got to go pick up one of our kids from camp. And so I just wanted to fire up a space and talk some sense into people because, yeah, I mean, me just like anyone else, there are days when when my portfolio is down $2 million and it doesn't feel good. But at the same time, it's like, well, I mean, if I look out a month, 2 months, quarter, 2, 3 quarters from now, things are going to be cooking. So what does interim volatility matter? Now, if the company was having real strategic issues, then, then that would be a concern, right? And I wouldn't, I wouldn't like dismiss those. But given everything that we know, um, and how things are lining up, uh, yeah, I, I don't think anybody is bullish enough. So I'll leave it at that. Um, thanks everyone for joining, and we'll talk again soon. Take care. Bye.
[00:34:51] Speaker E: 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. again, and I'll see you next time.
[00:35:27] Speaker D: Listen. Mmm, waffles.