Anpanman - Navigating the Wall of Worry: Margin Calls, AI Tizzy, and the SpaceMobile Outlook

[00:00:12] Speaker A: This is the AST SpaceMobile Podcast.
[00:00:17] Speaker B: 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.
[00:00:34] Speaker C: Hey everyone, thanks for joining this midday space. I figured I'd fire it up because just seeing all the consternation out there, I figured it'd be good to just start a space and help people breathe a little bit, release. Because I think, yeah, I wanted to cover a few things and just remind people that Yeah, this is the market. It's a living, breathing thing, and you're going to have volatility. And when the market has to process new information or, you know, when it's faced with a wall of worry, you're going to have periods of volatility. And so this is why, you know, like I've been saying for many years now, don't be on margin. Use, you know, leverage and margin sparingly, only tactically for short periods of time. You don't want to be caught in situations where you have conviction in something and then, you know, a decision is made for you because you're overleveraged and you end up having to get tapped out. So, and I, it certainly, some of the moves in the market today are indicative of that, where I think there's quite a bit of degrossing that's going on. People might be getting margin calls. And so you're going to see some of these exaggerated moves. But yeah, today, you know, this week, we started off with some concerns around AI basically usurping every one of their jobs. And then that died down for a bit and, you know, the market rallied off of the back of that after digesting, I think it was a Citrini, you know, the piece that that person had put out envisioning a scenario of 2028 where AI disrupts a ton of white-collar jobs and unemployment goes to 10%. And as I guess as young people would say, they were doommaxing and that got the market in a tizzy. But yeah, today there's a whole host of other things for the market to worry about, including the aforementioned piece. But I did want to cover some of those things and just kind of go through why the market is having this big, you know, visceral reaction. And also just a reminder to people that stocks can go up and down for no reason. Like I've seen whether it's AST or T1 Energy or some of these other names, people like frantically trying to find a reason why the stock rises down, right? And so I think a first step for anyone who's who's planning to invest in the markets and be active and, you know, be invested in single names, you have to put together a watchlist of the sector that your particular companies are in. So if it's RASD, you should also be tracking Rocket Lab, Firefly, Intuitive Machines, Redwire, Carmin, some of these other names. Because when you have context, it gives you the ability to say, okay, well, my particular stock is down 5, 6, 7, 8%, but the entire sector is down the same amount. Maybe there's nothing going on with the company. It's just beta, which, you know, is market movement. Every stock has some level of beta co-movement with the market. And so it may not be something that's impacting your particular company, but it could be something that's impacting all the companies. And so for T1 Energy, that would include names like First Solar, Enphase, SEDG, CSIQ, some of these other names. But yeah, once you have the context, like, you know, in a given day, if the stock is up a lot and the entire sector is also up, then maybe it's not your brilliance that your stock picking brilliance that's causing the stock to be up, but it's actually the sector. Perhaps you've got macro guys or factor guys who are looking for exposure in that sector and they're buying that, that, you know, various names, or they might be buying ETFs which hold a basket of those names. And so you're going to have co-movement, right? And so today is no different. You know, there's been, I mean, T.1 Energy in particular, there are people who are using AI and trying to find, you know, different reasons why the stock is down. The stock is down because the sector's down. And I pointed this out earlier, the stock had outperformed over the last 2 days. And that was in the face of First Solar having a pretty bad— well, they had a good quarter, but they had bad guidance. And First Solar is kind of the proxy for the sector in particular, and I'll talk about it a bit more, but those were company-specific issues around international. And so T1 Energy did pull back a little bit, but it pretty much hung in there, which quite candidly was a bit of a surprise to me. But now you're seeing it kind of give back some of those that staying power. And now it's catching up with First Solar and CSIQ and some of these other names. And so it's not, you know, God hasn't chosen your stock to go shit on, or there's not something nefarious going on or some problem. It's the market. And sometimes it's hard to, from a psychological perspective, to accept that, that perhaps something's out of your control and you don't really know what's going on. I mean, as as any perfectly normal human being, you want to know exactly the reason and cause for things, right? I mean, it's just part of human nature to have an explanation for why something is happening in one way, or this, you know, this is why we pursue science and these other things. And so when a stock price is down, the first inclination for people that don't follow a sector will be like, well, why is it down? And You know, what's going on here? And oftentimes it's the market, right? And so I think it's something to keep in mind. And when we talk about high beta, beta is the movement that a stock price will have relative to the market. And so when a company has high-level beta, so, you know, Russell 2000 is down 2.2% right now, which is a really big move. When you have higher beta names, they'll move at a higher multiple of 2.2%. It might move, you know, three times that move or two times. But anyway, but I think it's you know something to keep in mind. But as I you know take a step back and look at the market, we've got this whole new wall of worry. So Iran, I'll just go through a list here. But you know Iran has been percolating a bit. You know it seemed like we were going to get some relief. It seemed like perhaps talks between the U.S. and Iran were going or were expected to go okay. I mean who knows what the ultimate Outcome is going to be, but obviously the U.S. is is gearing up for a potential attack, and you know there were some news today that IAEA inspectors have noticed you know different movements and work around the old facility in Iran that was bombed, and so there's some concerns that perhaps talks aren't going to resolve anything, that the U.S. is going to go in, the U.S. and and or Israel or. In combination, depending on sequencing. And there's even, there's a whole host of commentary and analysis of, you know, does Israel lead it? Does the US lead it? But yeah, that's a big concern going into this weekend. On top of that, you had PPI come in hotter than expected due to stickiness around services. And because of that, you know, the market started pulling back, especially high beta names, because the reason why high beta names pull back if inflation is hot is that in that scenario, you're not going to be looking forward to rate cuts. And at worst, you might have rate hikes. You might have increases in interest rates. And then on top of that, you know, when you are in a situation where rates are coming down and perhaps liquidity's being put into the market, that's generally supportive of higher valuations. It's also supportive of you know, companies that are dependent on funding going forward. So companies that don't make money currently will need to raise capital via equity. And so that's predicated on valuations being robust. And then of course, if they're borrowing money, being in a low-rate environment helps. And so with hot PPI, you know, that has you know, put the market on notice about potential rate cuts. And so, you know, sectors are reacting accordingly. And so whether, I mean, you pick the sector, if it's quantum names, if it's space names, if it's crypto, if it's any of these sectors, defense, next-generation defense names, they're all down. They're all down pretty big. And so yeah, that's just kind of the nature of the beast, right? Like the market adjusts to new information and it looks for a trend. And so if inflation starts to trend a little higher, then people are going to be concerned about potential rate cuts, which generally speaking are when you're in a low interest rate environment, of course for the right reasons. But if the economy's going strong and rates are coming down, then that's going to be very supportive for growth companies. But if rates are coming down, for example, and the economy's doing poorly, Then there's some offsetting balance there, right? You know, if you're in a financial crisis and rates are getting cut and liquidity is being pumped in the market, there is going to be some level of volatility and you know a pullback in valuations, of course, until things settle out. But but yeah, the hot PPI number—I mean, just throw that into the mix. The other thing, this whole idea about AI killing jobs—that. people kind of digested that and were able to process it. And you've got a, you had a number of people come out, whether it was like Citadel or some of these other experts. Well, you know, the Centrini analysis or the narrative that they put together, you know, there were all these different flaws, right? And so I guess that gave the market some level of comfort. And then of course, Block yesterday came out and said they were going to, what was it? They're going to remove, I think it was 40 or 50% of the workforce. And so, you know, then stock price like gapped up 20% on that news. And then of course, this whole narrative around AI replacing jobs came back to the, came back front and center. And the whole idea there is that, you know, white collar jobs will get disrupted and then, you know, it causes this cascading effect. where if you don't need humans and for these jobs and, you know, corporates, corporations will extract a lot of profits, but then for what, to what end, right? Because then those white-collar jobs that are lost, you know, you don't have that income being spent and it basically loses, you know, housing values come down, you know, restaurants, you know, any number of things, cars, it all kind of cascades, right? So if you get to a point of, unemployment of 10%, that's not good for the economy. But I think there's some nuances to it. And of course, people with this whole AI scare, people are trying to price in everything immediately. But I think, me personally, I think there's going to be winners and losers in that situation where perhaps some white-collar knowledge workers are going to lose jobs, but then people become more productive. But I also think that for a number of these jobs, there's a certain element of human experience and judgment that can't be replaced, right? And so maybe I'll do another space about this in the future, but I do think there will be kind of the pendulum, the pendulum swinging right now to AI everything. But I think eventually it will go too far and people will realize the limits of that and the pendulum will swing the other way where people are going to pursue Human expertise, human judgment. You know, I talked about this with my wife earlier today about how sports is one area that's not going to be disrupted by AI because the fact that who wants to watch a soccer game with robots playing each other? You want to watch humans and the whole enjoyment of sports or music performances or any of these things is that you have a great level of empathy and understand the achievement that these humans have obtained. And so having robots do it, it's kind of, it makes you indifferent. 'Cause like, I think when I look at AI slop that gets posted on Twitter, you immediately tell like that's AI driven. And then I've mentioned this before, like I've gotten into this mode where I just gloss over it 'cause it doesn't really add anything. Whereas for me, having Real, like, human perspective and opinions matters more. And so I think, you know, in the future you might end up in this, this bifurcation where people will go seek human content and some, you know, like people talk about like movies are going to be totally AI generated. That's fine. But then, you know, when I go to the theater or when I watch something, I will want to know that a human made something because like, there's this connection in value in that. It's just like when I think about like, what is it like food, you know, people put a premium on organic food versus, you know, food that was not, that's not organic or it's processed. And so I think there's going to be this bifurcation where people are going to pursue things that are human generated or whatever it is, right? But anyway, but yeah, I mean, I didn't mean to go off on a tangent, but that's another thing to throw in there. Another area of concern for the markets is private credit. And so, you know, I have a small position in a company called Pagaya, which has been getting absolutely demolished. And that company is, you know, is exposed to private credit, although they generate private credit, you know, ABS vehicles and the like. But Overall, for those people that aren't following the news closely in capital markets, private credit is this kind of area that has ballooned in size, and it's versus public credit where these credit securities are traded. Private credit are closely held securities. There's no public market for them. And so this is an area that's exploded over the last few years. And so within, whether it's private or public credit for that matter, there has been concerns around a few high-profile bankruptcies. For example, there's a new bankruptcy out in the UK of a mortgage lender that is, that I believe there was fraud there. There's been like 2 big frauds here in the US. One is First Brands and the other one is Tricolor. And so, but adding on top of that, the skittishness You also have, for example, these industries that are perceived to be being disrupted by AI, their credit has started to underperform pretty significantly, right? So software credit, for example, software has been, you know, whether it's like private equity firms like Vista or Thoma Bravo, you've got a number of, you know, for the last, I guess, 3 decades, software has been a very attractive area for private equity to go in. you do a leveraged buyout, you take out a lot of costs, you cut development costs, and you basically run these things for profits. And this is typically for like, you know, legacy software where an enterprise is using some old software, they pay for maintenance and they keep it going. And so, and then you've got these PE guys who come in, they buy it, they might improve it to a degree, they might, you know, merge it with other things. And then they raise prices, right? And so, however, with the advent of AI, and if you think about like what Anthropic is doing with Claude. It's like, hey, we can develop our own tools. We don't need to use some of these, whether it's legacy software or it's newer stuff like software as a service. We're just going to like do our own thing, right? And, and so that's been a huge hit to the credit markets because then people, what's been going on software, people are trying to extrapolate that to other areas that might get disrupted by AI. And so with a few of these like credit blowups, and then you've got sectors that are under pressure from the potential of AI. You've got like banks, business development corporations, and private equity firms that are taking pretty big marks this past quarter. And so that's been weighing on the markets. And so yeah, I mean, I just listed off one, let's see, 1, 2, 3, 4 different things, right? That's getting the market into that system today. And then you've got, of course, February month end. Today's the last trading day for February. And so hedge funds, which are portfolio managers, and also the hedge fund in total, like portfolio managers are judged by month-to-month performance, and then those numbers are reported to LPs. And so the moves today are being further exasperated by people wanting to Either cut risk or clean up their books, and you know have the ability to explain why they either had well most likely had like a bad February. So so all these things are kind of playing into it, and I think you know it's again it's important to understand like what's going on at the macro level if you're going to be an investor in single names because I think you know for ASD Space Mobile for example today they announced. The satellite satellite or SACO JV, the new name, and they released a you know Vodafone put out a press release and they put up a website, which is great news. And you've got the quarterly update, which is coming on Monday. And so I think there's a bunch of positive stuff that's about to come. But that said, the macro is too strong, right? Like yesterday, I guess I'll talk specifically about the space sector. Yesterday you had Rocket Lab report earnings, which. You know, I think their earnings were okay, and and they also revealed like some new areas of business for them, which typically would excite the market. But of course, you know, everyone was focused on Neutron getting delayed to I believe the fourth quarter of this year for launch. But but yeah, I mean, the market, you know, Rocket Lab wasn't down that much. You know, it was maybe down two percent or so. But then, you know, you have this selling on top of selling due to these market concerns. And of course, you know, for high beta names, it's going to be. um, it's gonna exacerbate that, right? And so in particular, why I've mentioned Rocket Lab is that it is a, you know, a proxy for the space sector. And, you know, I've talked about this before, but AST and Rocket Lab kind of trade in tandem. And so if one is up, the other one typically will go up. If one goes down, the other one will typically kind of move down with it. And so, um, in this case, you know, Rocket Lab was off today based on results. And so AST naturally is going to follow it, right? And so we'll see what the Monday update brings for the 4th quarter, which, you know, some people have asked, you know, what do I expect? I mean, so AST already pre-announced the Q4 results, so that shouldn't be a surprise. They already announced revenues, the operating expenses, CapEx, and that was on the back of doing the most recent convertible, which for those that remember, of course you remember, the stock was at $96 and they, with the conversion premium, they effectively raised at And I will say, like, the company has been good about timing their raises. They've actually raised capital at high levels right before things kind of, you know, outside of just company-specific stuff, but when the sector has tended to have a drawdown. But yeah, that quarter, the update on Monday shouldn't be a surprise in terms of financials. Things that I would be looking for, of course, is an update on production, launch cadence. Um, you know, will we get some information about the batches of satellites that they're working on, and will those get down to the Cape? You know, when is that going to happen? Um, when are they going to launch on Falcon 9? And then of course, um, I would expect that, uh, for that update we'll probably get a firm launch date for Blue Origin New Glenn, um, Bluebird 7, which, um, someone at least on Twitter had mentioned like March 6th as a potential date, which I know is aggressive, but then There has been some, I guess, data points that have corroborated not March 6th, but perhaps March 8th or sometime thereafter. So that's why I'd gone out there and said that, I think that data point, it looks aggressive, but it seems pretty close. But we'll find out on Monday. But I think as I mentioned before, it's important to understand that space, all the space sector is down. A lot today, and you know, AST Space Mobile is like no different. And yeah, I'm expecting to get a good update on Monday. I will say though that you know for going back to expectations, was it Redwire reported yesterday? And I was actually surprised to see that company you know rebound quite a bit, even though the results were mixed. I'll say, but. you know, that's again, that, you know, the sector had sold off into that print and then had rallied. And so I think Redwire kind of followed the sector as well. But yeah, it's, as I said before, I think it's important to take a step back, look at all the names in the sector. It's always good to have a watchlist. And so instead of beating yourself up over, you know, why the stock is down, that gives you some perspective that it's something bigger than just your name. It's actually, you know, macro factors. And so I'm going to move on to T1 Energy. There are some people I think who pointed out EOS as potentially impacting the company. And to be fair, like, or to be candid, I've never really understood that, you know, the investment interest in that name. And this is not to like knock on anybody, but I've just, just wasn't something that kind of fit my profile in terms of investing. But I did, in the interest, and this is kind of an exercise that I do normally, I did listen to the management call yesterday because I was thinking, oh, it's down quite a bit, you know, over 30%. Maybe there's, you know, some timing issues, maybe there's some hiccups here, but they can get through it. And so I listened to the call and it seemed like the company And I don't know the full context, but it seems like the company had given or reiterated Q4 guidance. I think it was like in the middle of the 4th quarter. And then of course, when they announced results yesterday, they missed very significantly, right? And so the amount of trust that people had with the company, and, you know, they, to their credit, they took ownership of it and said they needed to do better and all these different things. But I mean, the magnitude of this was huge, right? So the company, I think the analysts were, the consensus estimate was for $94 million. They came in at $58 million. And the gross margins, this is where I don't quite understand the company, but the analysts were predicting negative 24% gross margins and the company came in at negative 94%. And this is an improvement from, I guess it was like a few quarters ago where they were down at Negative 340% gross margins, which to me, like in terms of the business model and for longevity, you know, I think the street had looked at potentially in the out years at like 20 to 30% gross margins. And so maybe people were hanging their hats on that. But then now, you know, the street, let's see, where does the street now think long-term gross? Yeah, long-term gross margins maybe in 27. 16%, 33%, and 28%. So still pretty good, I guess. But for margin to be that negative, I don't know, that was a bit of a head-scratcher for me in terms of, you know, can this, you know, when people talk about like valuing companies based off of revenue multiples, yeah, you can value companies on revenue multiples as long as like that growth, their gross margins are pretty high. But when they're negative, I'd argue that I mean, obviously, like, somebody has to get to scale, but at the gross margin level per unit, like, if it's going to be negative, I don't think using revenue multiples is the right metric. But yeah, when I listened to the call, it seemed like management, it was all self-inflicted wounds. Like, they had execution issues and they pretty much fumbled the ball. And so they had to cut guidance. And, you know, it's, it's unclear like how much of this, or it seemed like it was solely execution. I don't know about like customer demand or anything like that, but for EOS, like it's a very, like what they're doing is, is brand new. It's like something unique, right? They're doing like stored some type of battery storage systems at the, at an enterprise scale for data centers. But then when people are conflating that with like, well, you know, maybe that's the reason why TE1 Energy is down. These are 2 very different things. And the reason why I say that is that T1 Energy already has a solar module plant that's up and running, that's generating revenues and profits. They're building a new solar cell fab, which there's some risk there, of course, but then both of those, the module plant, which is already up and running, and then the solar cell fab, they're based off of tried and true designs. from Trina Solar. And so it's not as if they're like reinventing the wheel, it's they're actually leveraging existing technology. And so it's a very different level of execution risk and risk reward, right? And so they're very different. That said, you know, there could be some cross-ownership. For example, I know a lot of retail investors who own T1 Energy, some of them might own EOS, which I've seen people like post about it. And so to the extent like there's some cross-ownership and, you know, people are de-risking, then that can certainly impact stock price, right? And that's something that you see in the space sector too, where people have cross-holdings in a number of names. And so that's why you have co-movement or any— and it's just like at a higher level, an ETF owns a group of names and you've got people selling the ETF and the ETF as a result because people are selling it, you've got market makers who then redeem. They'll actually shrink the number of ETF shares that are traded out there because during the arbitrage process, they will buy the basket of securities and then they'll redeem the ETF and make a spread. And I won't go into the mechanics of that, but yeah, you might have some co-movement because of similar ownership between the two. I looked at the institutional ownership and there is some overlap, but not really that much. But, um, but yeah, I think people conflating like EOS's results to T1 Energy on the one hand, yeah, they're both like earlier stage companies, uh, in the energy sector. And so that's maybe the 2 things they might have in common, but outside of that, they're very different, right? And, um, very different in terms of execution risks and, you know, what, what level they are at. Because I think EOS, for example, um, Let me just look here. So this 4th quarter for EOS, they reported, yeah, $58 million revenue, negative EBITDA of $71 million. For this coming quarter that, let's see, T1 Energy is reporting, they're projected to do about $369 million of revenue, you know, gross margin of 21% and EBITDA of $40 million. And, you know, we've gone through A few people have posted about this before, but I think the company, you know, has already kind of indicated that they are— the amount of revenue that they're going to generate in the 4th quarter is more than the entire year. And obviously, you know, people will be focused on guidance as well, which, let's see, for 2026, the Street at least has $1.1 billion of revenue in guidance, or that's what they're expecting. and $105 million of EBITDA. And that compares to 2025, which should end at $774 million in revenue and $21 to $22 million of EBITDA. So yeah, very different company than EOS, which as I mentioned before, has very negative gross margins and is losing money hand over fist, right? And they're trying to do something that's hard and something new, but with that comes execution risk. And it seems like listening to that management team, they've got, it's, they need help, right? Like there's, they've got to bring in real operators to get that company back on track. But yeah, so that's, I guess that's my view on it. But if you look at the solar names, I mean, you know, whether it's CSIQ, it's down 13%, SolarEdge down 15%, Enphase down 10%. You know, a number of these companies are down quite a bit. I mentioned First Solar earlier, you know, the stock was off. I think it was down, let's see, you know, they reported results earlier this week and the stock was at, let me look here, no, $245. And then when they reported results, like, you know, it dropped down to the $200s and now it's at $196. There were some company-specific issues there. They They have a big plant in Malaysia and Vietnam, which they basically have had to mothball due to tariff issues, but they're also upgrading those plants as well. And so guidance for the company came down pretty significantly. And then they also have big exposure in India where they manufacture modules and cells, and in normal days they would export those to the US in addition to the ones from Malaysia and Vietnam. But due to tariffs, they've had to pull back on that. And so now the company's like trying to sell those products into the Indian market, which you know is a protected market like the U.S. However, I think there's like some competitive issues there. I quite candidly haven't followed First Solar that closely, but but yeah, those seem to be company-specific issues which caused them to cut guidance. Whereas if you looked at their numbers, their U.S. Their expectation for US demand is up pretty markedly, or is up pretty decent in 2026. And so yeah, I think as I pointed out before, when First Solar reported the results and it came off, I was actually quite surprised that T1 Energy hung in there pretty well because I think people were able to digest that news and understand that it was international exposure for First Solar. And, you know, T.1 Energy did come back a bit, but over the last 2 days it's outperformed the rest of the sector. And then of course today, you know, it's hard to overcome all this macro stuff, right? And so it's been selling off. And that's on top of, you know, T.1 Energy being a big winner for retail investors, hedge funds, you know, since last year. And so, you know, when you are in a position, in a situation where you have to deleverage or you're trying to protect profits, you typically will try to focus, or sometimes you try, you know, the tendency is to focus on winners. And so you're seeing some of that unfold today. But yeah, I think the key thing for people is to make sure, as I've mentioned before, you know, don't be overleveraged, don't be on a tremendous amount of margin. If you are like sweating every tick of a stock price move, that probably means that you're too big. right? Or you have too much exposure. And so it's in days like this where you want to have dry powder and be able to go on the offense. And if not, like, it's okay to do nothing, right? As long as you understand what you own and you have confidence in it. And, you know, right now for me, like, my perspective is there's, yeah, there's a lot of worry that's being priced into the market, whether it's AI disruption, the credit markets. I mean, I think Out of everything, of course, Iran is big too. I think inflation is probably cooling. I think Iran, it will resolve itself. We'll figure that out. AI, I think, is like, it's probably a bit overdone in terms of the pendulum of expectations have gone too far. But in terms of credit, I think that's something to keep an eye on, right? I think if we have additional blowups in credit and you start seeing some real stress in the credit markets that spills over into the equity markets, that can be a potential big thing to overcome where you've got the Fed who's solely focused on inflation and of course the job market as well. But if there is a credit event, and so the last big one we had was, if you guys will recall, when Silicon Valley Bank and Republic Bank First Republic and a few of these others went under, you know, that was a situation where, you know, the Fed had to step in and arrange the marriages of these failed banks and provide liquidity to the markets. You know, you could have some type of event like that in the coming weeks or months. And so that's something to keep an eye on, right? Because in those types of situations where there's market uncertainty and people don't know how bad things are on the credit side, and, you know, if there's one cockroach, maybe there's more. more failures of companies that are widely known in terms of credit, then that can obviously bring in a high level of volatility and market uncertainty. But again, this is why you don't go out on margin. You don't have too much leverage because if that type of event happens and you have a situation where the Fed has to step in, which is like there's a lot of volatility in the regulators have to step in and the Fed comes in, they lower rates, they like put liquidity into the market, then you want to be positioned for that, right? Like you want to be able to ride into that and then there will be bargains because then when you have those type of events where like, you know, VIX goes up really high, you know, I've talked about in the past where typically when VIX goes to 50 or 60, like those are huge buying events, like in terms of deploying risk, you want to have room to do that, Right? And that's— you can't do that when you're over— when you have too much margin or you're overleveraged and you're being tapped out. So anyway, yeah, that— those are some of my thoughts. I don't know if people had questions. I'm going to look at any comments. But yeah, I think the most important thing is like, take a deep breath. If you are concerned about your particular company, it probably— the moves right moves today probably have nothing to do with your company. It has more to do with the macro environment. And yeah, just think about why you are invested. You know, we always talk about like this idea of re-underwriting your thesis. You know, has anything changed? And you know, one thing that has changed is the fact that markets have sold off and higher beta names are down. And so from a relative valuation perspective, If the entire sector is sold off and your company has followed it too, then perhaps like the fundamental value is not going to be as high as it was yesterday, right? And so it's not as if these things are etched in stone. Like you could have a company that's executing and generating a tremendous amount of cash flow, but if market sentiment is really bad, like no one's going to care or they're not going to care to a certain extent. However, if the company continues to execute, like that will ultimately get priced in. And of course that will depend on, you know, do— is the interest rate environment supportive? Like if interest rates are low, that means valuation multiples are high, or if interest rates are high, that means valuation multiples are low. And so all these things kind of play together. And so just keep that in mind, like when you do have days like this where, you know, not everything can be Not everything is particularly up to a company or executives, right? Like I've seen people lament that, you know, this company's executives, they should have, ahead of the earnings results, like they should put out an update, right? They should talk about this or that. And it's like, no, that's what the quarterly update is for. And unless it's like very material news that has to go out right now, typically companies will wait. and they'll announce the order. And so yeah, just take a deep breath. If you're having a hard time kind of dealing with volatility, again, perhaps you might have too much risk on maybe, and it's okay to degross because you always want to be in the right state of mind in markets, whether they're in good times or bad times. And when I say right state of mind, like in good times, sometimes people take you know, good performance as a, as a, um, as basically like a command to go take more risk, or like, hey, things are going so well, I'm going to leverage up more. And I, I will say, like, um, there's this one guy I saw on Twitter. I feel pretty bad, and I was sharing it with a few other people, but, um, there's this one guy who, um, I think he's long PATH, which I don't really know that well, but This guy, I think, had made a lot of money on Tesla and Lemonade, I think. And, you know, he had done that on margin. And so I guess as of last, a few months ago, he was like, this guy, I mean, he really big account. Like he, I think he had like $19 million, but he was margined for another $20 and he was long this one company. And, you know, I think it had worked out initially and then it's just been a complete ride down and he's had to meet margin calls, sell his position, meet margin calls, sell his position. And I think he's down to like $1 million, which is absolutely brutal for someone who has a portfolio of $90 million, right? And so, and that's like the double-edged sword, right? Like you, when you use margin, as I said before, like use it tactically, use it sparingly. It's something that's temporary if you are lucky. Then count your blessings and call it a day and get out of margin, right? Because sooner or later, if you're heavily in margin, it's going to come back to bite you and you're going to get taken out to the woodshed at the wrong, exact wrong time. And this goes for, you know, people who are selling volatility as well. You know, there's people today, I think, who are selling puts, cash secured puts. Hey, it's free money. It's not free money. Like, I think there, EOS, there was like there were a few posts yesterday where people had sold way out-of-the-money puts thinking it was free money heading into earnings. And then of course the company comes out with a big surprise and it's down 30, 40%. And what I've told people in the past, which is, you know, this whole notion of I'm going to sell a put at a lower strike and I'll be happy to take delivery of that stock because then my average cost goes down. That depends, right? Like it depends on why the stock is down. Like if the stock is down for bad reasons, you're not going to want to take delivery of that stock at that price or perhaps any price. And so I saw a few people who got tagged pretty hard on that. And so especially for these, you know, earlier stage companies, that's not something you want to do because things happen, right? And if you truly believe in a company, you want to be able to ride the volatility. And when you sell puts, that's selling insurance. And yeah, it works until it doesn't. And then What sometimes people don't recognize is that when you sell puts, you might have enough cash for the initial exercise, but if it continues to go down, you pick up a ton of deltas, then you're going to have to put in more money. And that's where margin calls come. So yeah, just keep that in mind. Like, it's not— there's no free lunch. And that goes, you know, if you're long stock and you're shorting puts, you're basically increasing risk exponentially. 'Cause you're gonna get long even more stock if the stock craters and you're losing money from your long position. And so yeah, just be aware, like it's not, I know a lot of people on Twitter say, hey, I'm selling puts, it's a great strategy. It is until it isn't. And when it's not, it can be really bad. So yeah. Anyway, let me see here. There's, I don't think there's any comments. But anyway, but yeah, that's pretty much it. I just wanted to catch up and give people something to listen to and just take a pause. Like I think as I said before, it's important to take a deep breath and know what you own and volatility at the macro level when stuff like this happens. There's not much you can do about it, right? Like there's not much you can do in terms of the company. that you hold, there's not anything going on with it unless of course there is news. But yeah, that's not indicative of, you know, if the thesis hasn't changed and the company hasn't announced anything material, then nothing has changed, right? The environment has changed and that can impact your holdings. And there's a whole confluence of factors, whether people are overleveraged or a longer name and they're getting liquidated. That can all play into it. But yeah, I think Cook had it right where he's like, today sucks, I'm going to go out surfing. And so sometimes that's a good thing to do. And if you are in a position where maybe you've got yourself in a bad position and you're down and maybe you are on margin, it's also okay to take some losses, right? I remember when I was working in the hedge fund industry and there were periods when things don't go right and things go the exact opposite ways. Like if you're long things and you're short things, then they go the opposite way. Sometimes you take losses, you degross, and you get your mindset right and you live on and fight another day, right? And so I think this idea of people holding on for dear life, like if you're overextended, that's not good. Or if you're overinvested, that's not good either. Like, you want to make sure that from a mental perspective, you're making the right decisions. And so I think key thing is, you know, you want to be in the game, don't be overleveraged. You know, the market, the Russell is down 2.3%. I mean, the market, S&P's only down 0.8% and NASDAQ's down 0.7%, but yet these high beta names are down, you know, many multiples of that. And that's just part of, that's just part of, you know, the market, right? Where these names will, in good environments, they'll outperform significantly. And then in bad environments, you know, today people are buying healthcare names, are buying like Dow, you know, energy names, a lot of, you know, dividend, you know, consumer staples, what have you, anything that's defensive. And so, yeah, but when, if things kind of blow over and, and the, maybe there's no like conflict in Iran and then people kind of come to their senses on AI, these things will blow over, right? And you'll see continued outperformance from these higher beta names and of course lower beta names reverting back to where they were. So anyway, now I'm rambling, so I'm going to cut it there, but hopefully this was helpful for people to hear. And Yeah, I'll maybe I'll do another space this weekend once we, you know, once I guess some more of this news comes out and maybe the market stabilizes a bit. But yeah, as a reminder, we've got a number of earnings coming up. AC SpaceMobile is going to report after the market on Monday. A few other names that I'm involved in, Bridger Aerospace, Strata Critical, are also reporting next week. And then for those, and this was This is kind of the funny thing. There was like a number of people on Twitter saying T1 Energy was reporting earnings, was it yesterday? And then the day before. But yeah, officially the company has not set an earnings date. They typically have announced earnings later in March. So I think it's like last year they announced March 17th. And so I think Bloomberg has them reporting for this around the same time. And so yeah, they'll set their earnings date and we'll hear from the company. Which I think is going to be chock-full of a lot of interesting news, whether around monetization of 45X tax credits, you know, their perspective on the buildout of Austin, G2 Austin, which is their new solar fab, solar cell fab. And then of course, any color around offtake agreements. There's a whole host of things for them to cover. So anyway, that's it. And we'll catch up again soon, everyone. Take it easy. Have a great weekend. Uh, if you're feeling stressed, go out for a walk, uh, do something relaxing because, um, the market's still going to be here when you come back. Take care.
[00:46:33] Speaker A: Thanks for listening to the AST SpaceMobile Podcast. If you enjoyed this episode and you'd like to help support the podcast, please share it with others, post about it on social media, or leave a rating and review. To catch all the latest news about AST SpaceMobile, Make sure to subscribe. Thanks again, and I'll see you next time.
[00:46:58] Speaker B: We're doing something very, very big, and I think with this technology we can really affect a billion lives. 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 don't 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.
[00:47:31] Speaker A: Listen.
[00:47:39] Speaker B: Mmm, waffles.