Kook's Weekly - December 21

[00:00:06] Speaker A: 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.
[00:00:27] Speaker B: Okay, good afternoon, good evening, good morning. Who the hell even knows at this point? Um, I wasn't gonna do a Spaces, but then that guy in the comments was giving me crap, and so I'm sitting here in Australia, and so I don't even really know where I am or what's going on in the world. Um, I got off the airplane and I'm just trying to make it, but The good news is I actually feel great. So I wanted to, but it is Sunday for me. So it's a Sunday 3:40 PM Spaces, which is a little earlier. And I was just trying to go watch sports with my son and we go to the hotel lounge and there's the Ashes cricket on. I'm like, no way I can watch this. I have no idea what's going on. And so now he's sitting there watching Tasmania versus Perth. Play basketball. Who knew? And I thought I'd bang out a Spaces to keep the streak alive and frankly just to piss off the shorts because I thought they were probably thinking, ah, Kook finally gave up. No, motherfucker, never. I haven't slept well in for a long time, but I'm still going to do a Spaces just to spite you and your short call. So let's kick off with what is happening. So FM-1 is set to be launched from India. So for me, I think it's actually a really easy launch to watch in terms of time zone. So that's exciting. But really, this is just the tip of what is about to happen. FM-1 is really the first sausage of the sausage machine getting made, where when you think about really what happened with FM-1 and FM-2 to some degree, although who knows if FM-2's ever going to launch, but FM-1 really is Not a breakthrough on micron assembly. It's a mechanical breakthrough in that they figured out a way to make the unfurling even more simple because there's just fewer moving pieces on the satellite. But the real big breakthrough here is the bigger bus. And so the control sat is something that was quite difficult for them to get done. But like all things, once you push the first one out, all the other ones are a lot easier. So this is really the tip, but the full shaft of the Constellation production is very large and apparently has throughput of 6 per month that has been reached. And that's really where the value is created is having gotten the first control sat done. Just because the first one is delayed has zero indication on whether the subsequent ones are delayed and I don't think they are. So now the company has officially announced the launch. It was kind of weird. ISRO announced the launch, they pulled it, so it almost seems like they were stealing SpaceMobile's thunder. And now it is East Coast time, it is December 23rd, 10:24 PM, and I have no idea what time that is for me, but I believe it's the 24th at around 4, but we'll figure it out. So very exciting. This launch vehicle has a 100% hit rate and hopefully it goes well. It is an SDA satellite, so I'd imagine they measured twice before cutting once on this one. And it does start the beginning of the next generation satellite launches, which is where the value creation for this company will occur. So now we step back at probably what was one of the funniest memes ever created by Anpanman. of Tim Ferriss in a bear suit surrounded by a bunch of Santa Clauses about to have their way with him. And so when we think about the events that we have in front of us, so Trump basically just signed into law the Make Space Stocks Go Up law. And it's really important. We'll get to this in a second, but this Space Superiority Executive Order, I think, is one of these things that people are going to look back at a year or two from now and go, it's not that hard in this world to make money if you just literally look at where the government is putting their thumb on the scale and do that thing. And so for me, it is a very powerful lesson looking back at, for me, things like when they signed in to allow Freddie and Fannie to basically subsidize housing that created kind of the epic bubble of all time. When China joined the WTO, if you had sat and thought about that, the investment implications of that were pretty clear. It's like, okay, go buy all the copper and oil you possibly can. And so there's many other ones. The IRA just signed a couple years ago, go buy all the utility and utility services stocks you can possibly buy, things like that. And so sometimes, you know, these stocks will move, you know, 5, 10% on the day, Law is signed and then everyone else is like, missed it, bro. We should have had that trade on. And then you look at these charts kind of over the next 1 to 2 years and they all triple and it's like, whoa, hold on. The magnitude of the move is very deceptive because so many people, especially hedge funds, you see something gap 15%, very few people can lift an offer and then stocks will churn. And it's the classic meme of Pops, they're like, oh, wish I owned it. It goes down 10%. Oh, I'm glad I don't own that piece of shit. And then it subsequently doubles and triples and people just kind of ignore it and pretend they had never even thought about it because it's so embarrassing. I think that's what's going to happen with space. This is a big mega trend. And then we had the Golden Dome NDAA signed on the 18th, which is still a lot I still need to study because I'm still actually quite confused how this works. There are some other people that have really helped us learn. On this, Tough for You is one that I've been retweeting his stuff, and he is really educating us a lot in terms of the difference between SDA, MDA, the process of being a prime, etc. I would be lying to you if I said I could articulate all these nuances clearly and accurately. I'm still learning as well. The other event we have is obviously the ISRO launch. We're going to have the Saudi Telecom prepayment hit. 12/31. Happy New Year. We think BB-7, which is FM2, we think is going to be a Blue Origin launch, and that could be shipping out really at any time. The FCC approval for SES coverage for ASTS could again happen at any time. And then we're going to have the first batch shipments. So we think that they're going to have 2, 3 satellite launches each on SpaceX launches is our best guess. And those could be shipping really at any point. And so this is really the near-term path to show execution for this stock. And obviously there, well, maybe it's not obvious to the market, but there's a lot of upside tail risk as we get into this high acuity period. And so Golden Dome developments, for example, other DAs getting signed, for example, proof that they're actually producing 6 satellites per month, which again, we'll get to the primary evidence on why we think that's happened. But that implies that then there's a lot of satellites piling up, which means that we're really at the XLAX phase of constellation constipation relief, which I think will happen eventually, and it could happen very soon. So one thing that came out is this interesting interview by Dr. Gurbartap of the USSDA, and he was explaining, uh, the HALO program and more specifically talked about how 2 SDA satellites that have been delayed are about to go up and just reaffirms that ASTS is working very closely with the SDA. But what he reveals is these 2 new satellites, which were, quote, delayed a little bit, are testing new waveforms. And so then people are going, what's a new waveform? Well, a new waveform, for example, could be 6G. It could be some of the crazy stuff that Cohere is doing, which then dramatically increases the efficiency of spectrum. It could be military waveforms, which are highly encrypted, which is more likely what they're trying to do. It could be all sorts of non-communication use cases of waveforms that do other things. So Just kind of proof that ASTS is at the bleeding edge of 5G technology and the government is eagerly awaiting the results. So now here is the tweet really just about investing behind the trend. And so to me, again, this is a big learning of my career. I've been actually working with another Space Mob member on figuring out ways to sort of increase the signal-to-noise ratio in the world of really understanding where these trends are, because I do think you could miss a lot of them, fine, but all you have to do is find one or a couple. And these megatrends, you know, to me it's really the embodiment of the phrase wood behind the arrow. And so we think about that a lot at my firm of really trying to invest so that there's a ton of wood behind an arrow, which is to say we'll make an investment and then really be able to go the distance and know what we own. And, you make sure we push through cycles, other challenges to kind of prosecute an investment. But as it relates to thematic investing, if you'll find a company you really believe in, don't just be a thematic investor, but once you find a really interesting value-creating company with a unique business model that also separately has a big megatrend behind it, understanding that and being patient enough is where I think you get the kind of abnormal return streams. And I'm, I'm very conscientious of this. And to show how long this stuff takes, if you rewind back to 2021, I thought space was going to be a big emerging theme. Turns out it was, but the path between 2021 and today was blood and guts. And I remember when, it must have been February 2021, Cathie Woods at ARK even set up an ETF for the space economy. And I thought, oh my God, I'm so Smart. Famous last words. Oh wow, I did something that Cathie Wood did. I'm so smart. It's like literally the definition of being an idiot. But you know, here I am. But I thought, look, other people see this. This is going to be this big megatrend. The space of the past, you know, 50 years, which was really sort of government initiatives paving the way. It's finally time for the privatization of space. The big trends around low Earth orbit, decreasing launch costs. Look at this. I'm so smart. And it's easy, and that was right, but the path between point A and point B has all sorts of A prime, A sub-score things along the way. And it takes a while to sometimes be revealed that you're right. But just look at where we are today. Look at the value creation among some of these stocks, ASTS for one, Rocket Lab for another. This is the beginning of a big trend. Another thing when you compare this trend to other sort of realities is the next tweet about China's Kuangfan LEO satellite constellation. I'm sure some people are going to be very impressed or appalled at my attempt to properly speak Chinese with Kuangfan, but it is 1,000 sails LEO. So China always has very dramatic, you know, satellites of great harmony for destruction of Terrible adversaries who are unharmonious, you know, would be another alternative name for their constellation when translated back into English. But rest assured, when China launches Kuangfang, the Pentagon is going, "Holy shit!" Because they don't want to get caught behind in the arms race, which includes everything now. Whatever China does, it's an arms race, so we have to do it too. And so nothing is going to focus the resolve of the. Pentagon like China doing these things. So that's also good. It's bad in that China's doing things, but it is good for us in that China doing things creates urgency for the US to do things and do them fast. And that's why Trump signed the executive order. So zooming out, our amigo Antonio Linares is back helping us understand the size of the market. So he gave a podcast, kind of came out of nowhere. I thought he gave up just to kind of lick his wounds on Hims. And Duolingo. And you know, there is a guy who I think also thinks very thematically, understands business models. And the problem with high multiple growth stocks is they can go down 60% really on minor business changes or perceived secular challenges and be brutal. But doesn't mean you're wrong. Doesn't mean he's wrong. I don't really have a strong view on either of those two things. But ASTS as a proxy for sort of the Antares investment ecosystem has proven time and time again, we can have 50-plus percent drawdowns on our path to greatness. So, you know, listen to him, he's making the point that this is really a dominant player in the physical AI market, which I also agree with, except when Oracle has its data center problems, and then I would like to not have ASTS become an AI stock. But, you know, under the pressure of a polygraph test, I would say that yes, ASTS is in fact a leverage AI play because I do think that edge AI is going to be incredibly important and connectivity is directly ASTS's strong suit. And then to the extent you have AI data centers in space, that too will become an important nexus for AST SpaceMobile, in particular as it relates to Department of War.
[00:14:21] Speaker A: Use cases.
[00:14:22] Speaker B: So Jennifer Manor, our senior vice president of regulatory affairs, was testifying and said that we are in fact already manufacturing 6 satellites. I'm sure she said per day, but it's obviously not per day, 6 satellites per month. That's exciting. And so she said that she didn't have to say that. We, you know, she didn't have to speak in the contemporary. And I, so I do think that this is a press release that Scott's holding back on. 'Cause if I were Scott, and thank God I'm not because of quality of life issues, that guy seems like he doesn't have time to do a lot of longevity healthcare protocols. But if I were he, I would want to have a big bang. I'd want to have FM1 out the door. It is. I'd want to be able to ship FM2 and finally rid myself of this albatross of delays. And then I'd want to show people my To lean out. Sorry, my wife just tried to call through. How dare she interrupt my spaces? At the same time, show my production rate because then, you know, obviously it's like, oh, we just shipped 2 batches of satellites. People are like, yay. And then they assume that the next batch of satellites is in the year 2032. And so what we want to have is them show that they're doing 6 satellites per month to get out the gate. So that is what I would do. It would be a dramatic press release. I think that's the type of thing that we're back kind of in a good stock market. That's the type of press release I think that could shoot us well above $100 because people will understand how to flow through what the earnings leverage of this company is as they execute. And some of these new numbers I have in my new DD doc that really just shows some estimates of what exit rate EBITDA could be for 2026 and 2027, putting a multiple on that. And just showing you, this isn't rocket science, but what the share price would be. And they're big numbers. And I think I'm being conservative on my revenue estimates, but it just provides a really simple way for people to understand sort of what is likely kind of discounted now, where could it go in the next 1 to 2 years, and what are the areas where this could deviate to the upside or downside. So that's stuff that'll be in the new DD doc. Which is done, but I thought I would instead just release a cartoon summary of it in the form of Calvin and Hobbes, which is sort of the preview and the mockery to the shorts as they can wonder what else is behind that cartoon. So Golden Dome, perplexing is a great way to describe Golden Dome. And so I looked to Quilty as my first sort of arbiter of truth here. And they said, you know, Quilty is a very respected investment firm consultancy, not like a Tim Ferriss. This guy is one of the original space research analysts. I think it was from Raymond James, very well-known investment banker, works with all the companies in a respectable fashion. And so they said, if you were surprised by who didn't show up in the missile defense shields, you're not alone. This isn't a list of companies building Golden Dome. It's a list of companies helping the government figure out how Golden Dome should work in the first place. Simulations, early sensors, software, and testing, not finished systems. The big names will show up later. This is the groundwork.
[00:17:43] Speaker A: Okay.
[00:17:43] Speaker B: That's a really interesting set of observations. That is identical what military people like Tough4U are saying. I have some other sources that are Interesting enough for me to mention here that have been telling me some very bullish things about ASTS's involvement in Golden Dome. And I don't know if they're right, but based on the track record of me kind of observing them over the past 4 years, I would say they seem to know what they're doing. And so we think that there is more to come on Golden Dome. It is unclear if ASTS actually already got some initial stuff as a sub, contractor to the initial primes, in particular AT&T, L3, and/or Lockheed. I just don't know, but it's heating up and there's a lot of reasons to believe that ASTS is going to have a very big role in all of this. And it is a labyrinth for sure. And so I gave a couple tweets just so people can also educate themselves. And one that's I would say certainly written with an expert audience in mind is the one from Tough for You, which has all sorts of new acronyms I had never been exposed to. I recommend reading those yourself. And then we have a really nice recap from Redrum, also known as Murder, who went and kind of did a forensic analysis of the history of everything ASTS has talked about with respect to Golden Dome. And I would just point out that this Cadence of communication has started with very suggestive and glancing to recently extremely direct and specific. And you wouldn't do that randomly from the company who has the most conservative guidance policy I've ever really encountered. So something is happening. I'll put it this way. Here's my ridiculous challenge to live up to my moniker of being a kook. If ASTS does not get Golden Dome, I will delete my account. There you have it. And then I will start a new account called something very similar, but I will delete the Kook Report and it will die. That's how confident I am that we got a Golden Dome contract. So I literally have the gun to my head and that is my ultimatum. So let's see what happens. Next we have FirstNet. And so just more talking about it. So we are definitely going to get FirstNet. So that's one where you know, the gun is already in my mouth. Like, if we don't get FirstNet, okay, no more Cook. Uh, in terms of my account physically, no, I will not be doing that. But my, uh, my avatar will, will be sacrificed if we don't get a FirstNet contract. 'Cause that I am 100% sure of because we already have the FCC testing, uh, documents and the spectrum licenses. And they're very clear that they have the dedicated band 14 spectrum connected in space. Well, that's us. So that's a done deal. The next tweet I have is really about the product roadmap. And so this is another thing where I've just increased my clarity in my DD doc around product roadmap is a really important thing. A lot of stock market investors really get stuck in the immediate and the current drama without really thinking about product roadmap. And so what does that mean? Think of, I like to use Nvidia as an example because it was a great outcome and leads me down path dependency of us also being a great outcome. So Nvidia would've said, oh, we have these like graphic chips and then, you know, we have these other things that can do more and more. And then on our product roadmap are these massive matrix processing things that can do AI. That shows you where you are, where you're going to go. And ASTS, they haven't really given us a Product roadmap that's more clear beyond the ASIC Bluebirds. And it's interesting, it's not clear that the product roadmap actually expands at this point beyond the Bluebirds in their simple form factor. But when you start to think of the nuances, they certainly do. So they go to the ASIC Bluebirds, then they have the low band, which is the current constellation. And then the next thing on the roadmap are the mid-band Bluebirds. These things work all together. This is a very great development for us as investors because of the capabilities it builds. But then we're starting to realize that all this capacity they're building, rapidly expanding, is for yet other products. And those seem to be for Golden Dome, for example. And we don't know if those are Powerbirds. We don't know if those are radar birds. We don't know if those are just Repurpose 5G birds, but there's other stuff going on here, which is going to mean that we're pumping out satellites at a cadence of at least 72 satellites a year, even when we no longer need that for communication purposes. And so then you go, well, huh, how do I think about that, Kook? Well, you always want to start with unit economics. Where are the economics from a satellite? And the answer is we don't know, but we can start to do some rough calculations, which are in the DD doc that show you that all else equal, the unit economics of an incremental satellite are super duper, which means that reinvesting capital is super duper, which is layman terms for positive net present value of growth. And so where you have positive net value of growth, you want to grow, grow, grow, grow, grow, reinvest, reinvest, reinvest, and that grows your enterprise value. And so my belief, we have the ability to reinvest much, much longer and much more capital than the market might presently give us credit to. People might not be looking beyond 243 satellites, which admittedly is already a lot. When you run that out, you have a share price of $500, $600, $700 to $1,000 plus. But things get super interesting when we start to think about the product roadmap. So pay attention to that. I know that's a theme I've emphasized for many spaces. And I'll continue to do it because I think it's very important. We next have an article Alden Vikstrand Iversen got us in Finansavisen, a newspaper I actually used to read and translate because of some of my interests that I had in Norway. And so it's nice that he's spreading the word that gets more Norwegians who are crazy capitalists to look at our company and you know just. more people joining the space mob is good. And now we get back to AI data centers. So our dear friend Katzi, who tends to be right about everything, drops his 10 cents on the subject. And the summary really is that when you segment a market, not all clients and customers are the same. And so does it make sense for my Nana Banana Pro usage to be to be met right now by space-based AI data centers? Probably not. My need state can be served in a cheaper way presently. However, other need states are not the same as my Nana Banana usage to make funny memes. So the Department of War might have many, many different use cases. For example, a closed-loop system between 2 Navy ships utilizing our system for communications, which itself is already an incredible solution to a very real war problem, to then also layer in AI compute could be a very interesting thing for the battlefield in terms of targeting and fire control and things like that. I'm just making it up on the spot, but the use cases are immediately obvious when you start to let your imagination run. And where are they going to pay? They're willing to pay a much different rate than my usage of Nano Banana Pro. At a retail level. So don't get lost in the AI data center space, the space center. Let me restart. Don't get lost in the AI space-based data center debate without understanding that the customer segmentation matters. So a very niche, small use case for this right now could still have economic justification in spades because the value at use to that segmented customer is extreme. And that's how I think this will play out. And then like all things, those use cases then help drive down the cost curve over time so that the use cases expand rapidly to some terminal state, which maybe it's ubiquitous AI compute in space is the end state. Maybe it's not. We don't really have to worry about that right now. You just have to worry about, is there initially sufficient TAM to make it happen so that this is a positive NPV growth project for us? And I think it, I think it'll end up will be the case. So next I just have the stats for the ISRO launches. Pretty exciting. And then no Spaces would be complete without highlighting some Starlink vaporware. And so we have that thanks to Ivan showed that the guy seemed to be fudging some demos with his SpaceX demonstration. What's new? SpaceX forging the results where AST SpaceMobile always has all of its testing and results verified and validated by its third-party partners. Big difference. And that's it. So quick hit, Spaces keep the trend alive. I know it's late and early at the same time. It's like Heisenberg's uncertainty principle for Spaces. For some people, this is both convenient and others it is inconvenient, but I see that quite a lot of people have joined. So thank you very much. And hopefully we'll have an exciting and successful launch next week. And who knows, maybe Scott will try to beat the buzzer and put out some big press releases before the end of the year, even when people are on vacation, which would be even funnier. for the shorts to literally have no chance to relax and to haunt them in all of their dreams all over the world at all times. That is my hope. Have a great evening, and I will try to do another Spaces next week, but I don't even know where I'll be. And so it'll be ad hoc again before resuming our normal schedule back when I am at home. Thank you everyone.
[00:27:59] Speaker A: Bye. Thanks for listening to the You've been 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. We're doing something very, very big, and I think with this technology we can really affect AST SpaceMobile is the only company that has proven technology to deliver cellular mobile connectivity directly from space to the everyday smartphone. People will just basically turn on their phone and be seamless regardless of where you are. We don't want the user even to know that it's connected by satellite. Our role is to bring this into reality, always in partnership with the MNOs.
[00:29:01] Speaker B: Listen.
[00:29:01] Speaker A: Mmm, waffles.