Anpanman - SpaceX Secondary Sale Value at $800B + 2H 2026 IPO? Implications for the sector

[00:00:06] Speaker A: This is the AST SpaceMobile Podcast.
[00:00:09] 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.
[00:00:25] Speaker A: Hey everyone.
[00:00:29] Speaker C: I guess I'm going to be doing multiple, multiple Spaces a day because there's just all kinds of news coming out. It seems like there's never a dull day in space. Um, yeah, so, so actually there's an update here from Wall Street Journal. Let me look here. Let's see if there's any new news here. Actually, I'm gonna just read this Wall Street Journal update. It looks like, so it's weird. Bloomberg has, they haven't been able to confirm the $800 billion number. I think Bloomberg's still on the old valuation of $500 billion, but then Wall Street Journal, they just updated their story saying that The secondary share sale is at $800 billion, and this is the SpaceX CFO Brett Johnson has told investors about in recent days, the people said. So it's multiple sources. Let's see here. So that's basically double the value that they had back in October for a secondary share sale. So I guess for any insiders that sold shares back in October, they're probably gnashing their teeth, upset that they didn't get Double the price. Let me just see here, screening through this. It also talks about like how his business empire is facing growth challenges, but the rocket and satellite company remains stronger than ever with its dominant position in launch. And then Starlink is doing well, has like more than 8 million active customers, which is driving up the valuation. So just a reminder for people, this is a secondary share sale. So it's not, the company's not raising what we call a primary sale. They're not raising, the company's not raising money on its behalf. It's not selling a piece of the company. It's actually insiders selling out. So imagine that it says it's a tender. So it's an opportunity for employees and investors to monetize Their shares. And this is pretty common for tech companies that have gone, that haven't gone public for a really long time. And you have insiders that want some level of liquidity and to keep people happy, you present them with opportunities to sell stock periodically. And so that's what this tender is. Let's see here. One of the things it says here, I'm just going through this Wall Street Journal update and I'll tweet this out. Okay, I'm going to tweet this out. But yeah, I wanted to talk about what this means for AST, but also Rocket Lab and the rest of the sector. I'm going to just post this so people can see what they wrote. The weird thing is like when you copy stuff from Bloomberg, it doesn't format it properly for you when you put it into a tweet. So you got to format, which is a pain in the ass. Let's see. So I think that's the entire article. So I'm going to tweet this out. You know, it's kind of funny when you, um, this is kind of minutia, but whenever you tweet things, you, you tend to get better engagement if you put a picture, a picture along with it. Uh, so I'm going to find a picture. But yeah, this, this is pretty big news. I mean, of course, the other big news, you know, the information not to be one-upped, um, disclosed, and, you know, the, the information depending on who the journalist is. They've been somewhat spotty in terms of their record, but they're claiming that SpaceX is looking or has told investors that it's looking to go public in the second half of 2026, which is a big deal for the sector. And I'll talk about why that is, but let me just put this out there. So yeah, Wall Street Journal, they updated the article as I mentioned before, Bloomberg, they put out a basically a refutation piece. They're refuting it. They're saying, yeah, they're going to do a tender, but we have no indication that it's going to be at double the price that what they were talking about before. Just so people know, Bloomberg put out an article and said that the share sale could be could value it at $560 billion, which in of itself is still pretty crazy, right? Because the company. Did a tender in October that was valued at $400 billion. And now, depending on who you believe, either it's going to be at $560 billion from Bloomberg or $800 billion with the Wall Street Journal, $800 billion being basically double the valuation in, I guess, a month and a half's time. So anyway, that's pretty big. I mean, that just shows you the level of interest in the space sector and I think to see, you know, SpaceX's progress around launch, obviously they're still pushing forward with Starship and they, they, they were, you know, they, they still have a lot of milestones to hit before that thing can be fully commercial. But Starlink, for all intents and purposes, have been quite successful on the fixed wireless side. And then the direct-to-cell efforts, you know, they picked up some additional MNOs. I actually need to update my my sheet, like they picked up KDDI and SoftBank in Japan on top of NTT Docomo. So they pretty much have a lock on Japan, which makes sense because we have a mutually exclusive agreement with Rakuten or Rakuten has exclusivity in Japan. So even if SoftBank or NTT Docomo or KDDI wanted to work with us, we just can't. Rakuten, by the way, was an early seed investor and they were not seed investor, but they were right after some of the earliest investors in AST SpaceMobile. And without them, we wouldn't be here today. So they're an important customer and Miki Mikitani sits on the board of the company and we utilize some of their O-RAN software. But anyway, But yeah, this is big news. I mean, Starlink has been making good progress and so has SpaceX. A big part of Starlink's growth story, if you look at, there's a few research analysts that do cover SpaceX and when they break out some of the numbers between Starlink fixed wireless and Starlink direct-to-cell, a vast majority of growth for Starlink is going to come from direct-to-cell. I mean, in particular, number of subscribers, which is obvious because there's a lot of devices, but then in terms of ARPU, there's going to be a pretty big level of contribution. I think I forgot, like, when I looked at it last, I think direct-to-cell is going to account for like 2/3 of Starlink's growth and maybe profitability, you know, in the out years. But anyway, with the company potentially going public, that's going to draw a lot more interest to the space sector. And so Someone had a question when I was kind of going through this information. They were questioning whether or not perhaps SpaceX going public might suck capital out and cause other names in the sector to go down. I guess it's possible, like some people who are invested in Rocket Lab or AST SpaceMobile might sell part of their position and buy SpaceX. But I think the opposite's actually going to happen because I think You know, we're at this point where space is kind of like this backwater, this like cottage industry. I mean, it was like this, certainly like this, like a few years ago, like 2023, 2024. If you went to a hedge fund and asked them like, hey, do you have any specialists that cover the sector? There wouldn't be anyone because there's not enough market cap and not enough companies to have industry specialists covering space. But now you've got pretty big sizable companies, chunky companies to invest in. Rocket Lab is, let's see, Rocket Lab is $28 billion in size. AST SpaceMobile is $27 billion. Obviously not all of that is tradable because Abel owns a bunch of Class C shares, which are included in that calculation. But It's a big company and we've raised dSpace Mobile, what used to be basically a small cap company when it was like $600 or $700 million, would trade like some days it would trade 100,000 shares. Now it trades 10 million shares. And so that's a very liquid company that you can invest in. And so the sector has matured quite a bit. I mean, not only do you have these companies that grew up from being a SPAC, but you have these other players, whether it's Voyager, which is like $1.4 billion in market cap. Let's see, I guess Redwire after they closed Edge Autonomy is about a billion. And then you've got, let me see here, BlackSky. BlackSky is like $670, no, $660. And then of course you've got like some of the legacy guys. I mean, of course EchoStar is now trading at a pretty Nice valuation of $23.6 billion. Obviously a big chunk of that is the private SpaceX shares that it owns, but it also has $31 billion of debt. So EchoStar is like $51 billion enterprise value, which is pretty nuts. But what this does though is when SpaceX comes public going into the second half of next year, there's going to be this mad scramble. I mean, actually this news in and of itself is going to get people interested in the sector. And so you're going to have growth investors, generalists, tech investors, aerospace defense guys, they're all going to get a bit smarter about the public companies that are out there. And so you're just going to draw more interest. And then eventually there's going to be formation of groups that are specifically focused on the space sector. Because I think if you're doing long-short fundamental investing, You want to have specialists who really understand the underlying dynamics of the industry and all the different companies and how they're all intertwined, which in space, that's the case. Like there's companies that are in competition with each other. They also service each other. I mean, SpaceX is a prime example of that where they provide launch and they compete with other launch providers, but they also send up other people's satellites, right? And so understanding, having a deep understanding of all that, which quite frankly, if you've been following the sector and have been an investor in AST or Rocket Lab, you actually know these dynamics quite well. And so I don't know, maybe some of you guys will get a job at a hedge fund being their expert. But anyway, but yeah, as you approach the IPO, there's going to be people doing work and they're going to learn about some some of these other companies. And the thing that happens is like you're going to get more dollars into the sector and it's going to become a standalone investable area. And then, you know, there's going to be, whether it's ETFs, you know, sector mutual funds, there's going to be people focusing dollars in this area and it's just going to help the entire ecosystem. And the good thing about SpaceX going public is that Then you're going to have this transparency into what SpaceX is doing. Like at this point, everybody kind of speculates and just depends, I mean, on what, you know, what the company's comments are from time to time to the public or Elon Musk. And it's funny, even if, you know, I've had 3 or 4 chances, I mean, pretty much probably most investors of some size have had some chance to take a look at SpaceX and invest. But taking a look, that's like a very loose term. Um, 'cause oftentimes when you invest, it has to be through a special purpose vehicle, um, which then pools money, then invests in SpaceX shares. And that, you know, SPV will take some fee upfront and, or, you know, some management fee on an ongoing basis of maybe 1 to 2%, and then it'll take 15 to 20% of the ups. And so that's not really a great way to invest, but if you want access, you know, there's, there's a whole cottage industry around firms that are, that are big enough and have relationships where they get access to private shares and then they create these SPVs and then they basically, you know, sell off pieces of that SPV. But when they do that, oftentimes the only information you get is like very high level. This is what SpaceX does and this is what they're planning to do, but there's really no, I mean, depending on your level of access, but even private investors, like they don't get access to full financials, which is pretty crazy. And this isn't just for SpaceX, it's for other hot private companies that are doing these types of private play, I mean, secondary sales or sales through SPVs. And so even over my years, and maybe I'll post this actually, because I, there was a Goldman Sachs offering document that I had to look at for SpaceX shares and There was basically like no financial information. And that's just kind of how private investing is when you're not an institutional VC, right? But even some of those guys don't get full access to financials. But the great thing about SpaceX going public is like, we're going to get full transparency on how the rocket business is doing, you know, launch, how Starlink is doing, I mean, depending on how much the SEC pushes them, and then of course what they want to disclose as KPIs, then we might see, get some level of granularity of like, you know, how much of the businesses is being driven by fixed wireless versus direct-to-cell. Maybe they will disclose some level of detail, probably not, but some level of detail of how their contracts are structured, like with T-Mobile, for example. I mean, we know that the exclusivity with T-Mobile is going to end in 2026. And then, you know, at that point, T-Mobile is free to go do something else or add somebody else, or, you know, SpaceX could also try to, you know, try to pursue AT&T or Verizon. Um, but we know how that story ends. But, um, what's, what's good though, is that people are going to get a better sense for, you know, what is the, the proxy for space, um, SpaceX. They're going to have a better sense of how the company's performing. And for competitors, it's going to be very eye-opening and helpful, right? Because then competitors are going to, and this is why some companies stay private for as long as they can, because they don't want this stuff out in the public. But SpaceX is at that point when they go public, they're going to be also exposed to public scrutiny. And so for a company that had talked about Starship landing on the moon when it was first announced, that they were planning to land on the moon by 2022, this whole level of scrutiny, they're going to basically come under the same pressure that the rest of these public companies in space face, right? And so what I mean by that is obviously space is really hard. We harp about this over and over again and delays are inevitable. And so that's going to be a pretty big reminder as a public company. And it's also I think public investors in SpaceX are going to have to get used to, you know, when you're a private investor, you don't, there's no volatility. Whatever the shares, some small portion of shares that were transacted in a given month, like that sets the valuation for the company for until the next time.
[00:16:34] Speaker A: Right.
[00:16:35] Speaker C: And so if you blow up a few rockets, like no one really cares because they don't feel the visceral movement of the stock price reacting to that versus You know, when you have, when you're public and let's say Starship goes up and maybe there's, you know, like this last Starship test, like on the launch pad, you know, they had a static fire and then the thing blew up. Public investors will probably react to that. Right. And so that's going to be something to get used to. And so I think, you know, for the sector, as I was saying before, it'll be good For folks to see what the economics are for SpaceX on the launch side and on the communication side, because these are 2 businesses that are relatively scaled. And so if you're a Rocket Lab holder, you might try to do some comparisons and see if gross margins are similar, operating margins, maybe once Rocket Lab gets to medium launch and it's on a regular cadence, then Maybe SpaceX, if those margins are pretty attractive, that's kind of the target that you want to go achieve, or at least that's best in class. And on the flip side for Starlink, you know, obviously fixed wireless is a pretty profitable business, but then the direct-to-cell, you know, that will be something that AST SpaceMobile investors can cop against. You know, hey, we're outperforming them or we're underperforming them. And then as a public company, they'll disclose or need to disclose you know, which MNOs they're working with. And, you know, investor or sell-side analysts are going to ask them on calls like, you know, what's your win rate against AST SpaceMobile for MNOs? And why haven't you guys gotten more MNOs? Or who, you know, how are you different from AST? And there's going to be like this whole deluge of research coverage that comes in that are going to have to, I mean, and you know, there's going to be like every firm on the street, you know, 20, 30 research analysts are going to cover SpaceX. And all those are going to have initiations of coverage. And as part of those initiations of coverage, they'll talk about the space industry and the competitive landscape and who the players are. And so it's going to be a big coming out party for the sector. And so for names like, you know, AST SpaceMobile or, you know, some of these others, Rocket Lab, Firefly, you name it, like people are going to become they're going to become more household names, right? Because then for these like crazy space companies that people ignored, like they're going to have to focus, not by choice necessarily, but they're going to focus. And so yeah, it's going to be a big positive for the sector. It's going to bring more awareness. You're going to have a juggernaut that's trading, that's going to bring a tremendous amount of investing dollars and it's going to cause different dynamics. Like people are going to look at SpaceX and if it trades at a big premium evaluation relative to its growth, then people are going to extrapolate that into some of these other companies and say, oh, you know, AST SpaceMobile is actually like, from a valuation multiple perspective, it's really cheap. So I'm going to own some SpaceX, but I'm also going to buy some AST as well. And, you know, the same for Rocket Lab maybe. And then the other thing that's going to happen, of course, is you're going to get some people that are going to short space companies because they're going to say, I own SpaceX and I need to hedge it. Like if you run, if you, if you're at like a fund that requires, you know, it's market neutral, then they might go long SpaceX and they short some AST and Rocket Lab and a basket of others, depending on how they want to manage their exposures. Although I would argue that that probably is already happening and that, that probably accounts for some of the short interest in all these names, like people who are long SpaceX on the private side, and then they actually hedge some of these space names that are public. So that probably is happening to a degree, but yeah, there'll be all these interesting dynamics, right? And I think by having SpaceX public, you know, it's overall, it's just going to be a huge net positive. And then of course, like people are going to turn their eyes toward Blue Origin and say, okay, well, when's Blue Origin going to go public or is it going to go public? And of course there's no valuation metrics around that company because pretty much it's fully funded by Jeff Bezos. And so they haven't, I actually, I'm not sure if they've taken any outside money or if they've sold any or if he sold any of that company aside from just giving stock to employees who, just given how long Blue Origin has been private, there's probably some employees itching to monetize some of their shares. So But yeah, I think heading into the first half of 2026, I mean, this is, you couldn't ask for more bullish news for the sector because you've got Golden Dome, which, you know, it's the big awards are probably coming in the next few weeks to probably, you know, the end of January. And so that's a huge catalyst. Then you've got SpaceX, if they actually get this secondary share sale off and some employees are able to tender their shares at an $800 billion valuation, which, you know, I'd remind people that, and this is why I tweeted before, but SpaceX, you know, if you look at current financial contribution in terms of revenue and operating income, you know, it's probably around 65, 70%. And so if you just did just a simple math of, let's say it's 65% of 800, that implies $520 billion valuation for Starlink. And then of course, the remainder of that is launch. And so if you're a SpaceX, or sorry, if you're an AST SpaceMobile shareholder or Rocket Lab shareholder, that's very relevant to you because that, you know, companies to a degree will trade at Within ranges of, you know, we call comparable valuations. And so if it turns out when research analysts initiate coverage and when we look at the proxy, when they file the IPO prospectus, I mean, when they file it and you get to see some of the historical financials, people are immediately going to start looking, doing comparisons of valuations of existing companies to SpaceX. And, you know, SpaceX arguably should trade at a decent premium, right? Because it's a one-of-a-kind company. It's at scale. It's the juggernaut industry leader. And so it should trade at some premium valuation relative to the others. But then the balance to that, of course, is that these smaller companies probably have much more rapid growth prospects because for a company as big as SpaceX, if it's at an $800 billion valuation, how much upside is there, right? And versus for some of these smaller companies that where they could 10x Over the same period or who knows, right? So yeah, that's a big positive. And I think the other thing is the valuation uplift. They're probably— what SpaceX is trying to do in doing these tenders at ever-increasing values is, as a private company, you want to see a step up in valuation and in a steady cadence of that until you go public. 'Cause then it supports, or it's supposed to support a high valuation when you go public. So if they're targeting $800 billion now, the second half of 2026, they're probably going to go public at a trillion, right? And they're hoping that through the progression of these subsequent valuation data points that people will be comfortable with the company trading at north of a trillion, right? Because the company, They'll probably, you know, value coming into Troyan, they'll price it at a discount, you know, maybe 10% discount to entice IPO investors. And then, you know, you'll get that pop on the first day and then hopefully it trades there until the lockup expiry comes and then you start having some insider selling. But yeah, this is big news. And I think as we set up for 2026, just having this backdrop, you know, you've got a very accommodative rate environment and hopefully, knock on wood, inflation continues to be held in check and it's moderate. And then you've got this huge event of SpaceX going public. It's just going to bring more excitement. And then of course, you know, as I mentioned before, Golden Dome and any number of other catalysts. So this is good news. I think, you know, when I saw the news, uh, it, I immediately bought a little bit of AST and then of course it popped a little. And then of course, you know, for the people who are playing some of the parts story for EchoStar, you know, there's that, that stock is up because obviously they own some SpaceX shares. But, um, yeah, I think, I think, um, let's see here. Just reading this. Um, yeah, it's, this is I'm sure we're going to see more stories and then there'll be this catalyst around whether or not those shares do get sold. And yeah, it's, I'm about as bullish as can be on AST just given all the catalysts that are coming up. I actually need to update my catalyst tracker or whatever catalyst season post that I normally do because there's quite a bit that's already happened. But Anyway, I just wanted to hop on and just talk about this and again, you know, test this microphone, which I think is working now. But yeah, this is good. This is good for the sector. It's going to draw more eyeballs and the valuation, my guess is SpaceX is trading at a really hefty valuation relative to its growth prospects. And so that's going to be really good when you translate into What is T-Space Mobile, Rocket Lab? You know, some of these other companies, what they're doing. But anyway, let me see. I'm just looking to see some questions here. Oh, there are no questions. All right. Well, that's my space. It's short and sweet. Just wanted to comment on this and we'll talk again at some point in the future. I'm sure maybe this evening if some more news comes out. Anyway, take care everyone.
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[00:27:22] Speaker B: We're doing something very, very big. Our team needs to know that we. AST SpaceMobile is the only company that has proven technology to deliver cellular broadband 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. barbecue with the animals.
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[00:28:03] Speaker B: Mmm, waffles.