Pain Before Gain: Why Anpanman Is Still Buying the Dip on $ASTS

[00:00:01] Speaker A: This episode is brought to you by Google Chrome. You think you know a browser, but Gemini in Chrome? That's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration blog, or finally break down that long article you've had open for weeks. Gemini in Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses, set up required compatibility and availability varies, 18+.
[00:00:24] Speaker B: When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job posts the boost it needs to be seen and helps reach people with the right skills, certifications, and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a $75 sponsored job credit at indeed.com/podcast. That's indeed.com/podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored Jobs.
[00:00:55] Speaker C: This is the AST SpaceMobile Podcast. It will just basically come to your phone and be seamless regardless of where you are. We don't want the user even to know that it's connected by satellite. Listen, the opportunity that we have is very, very, very large.
[00:01:21] Speaker D: Hey everyone, thanks for joining. Rough day, rough few weeks, rough, rough month and a half, um, since the end of May. It's been absolutely brutal. And so obviously people are upset, stock price is down, completely understand. And, um, of course there's trolls taking potshots at me and Kook and whoever else, um, laying blame on on us or me. I'll just talk about myself, but laying blame on me for this convert, I guess, and the stock price performance. Um, I guess people are saying that perhaps I'm too easy on management. Um, no, I'm not easy on management. I, when I have conversations with them, I ask tough questions and I push them hopefully to do what I think are the right things. But, um, it's up to them ultimately because they are, they are the ones who manage the company, right? And so I think an important thing that everybody should understand is that if you do not trust management, if you don't believe that they're going to be good stewards of your capital and the company that you're invested in, then you should vote with your feet and you should sell the stock. You should not own any company where you don't trust the management team. And so I think that's a very important fact. If you're a newer AST SpaceMobile shareholder and perhaps I guess you bought at higher prices and are upset, you have every right to be upset. That's just part of investing though, where you are going to have periods of volatility. And if you look at AST SpaceMobile, it's not a company, it's not something related only to the company, but if you look at the entire space sector, the sector is derated anywhere between 50 to 60%. Now, obviously with this convert, the stock price is down even further, but Um, but yeah, it's, it's a, it's, it sucks. I mean, I mentioned this on the other space yesterday that I'm down low double, low, um, 8-digit figures. And so, um, that doesn't feel good. But at the same time, I'm not, um, I'm not— I haven't crystallized those losses, and it's just part of the game. I mean, I can tell you how painful it was when the stock was at $2. And the warrants were at 35 cents being down, I think, yeah, somewhere around 80% or so on my warrants. That was no fun either. But that's part of investing in high volatility, risky type of investments. You're not investing in Berkshire Hathaway or invested in the S&P 500 index. You're taking a shot on a company that you believe has game-changing technology and it's created a new market and is disrupting wireless connectivity defense. And along with that comes uncertainty and periods of where a company, a growth company, is going to have to raise capital, right? And in order to fund initiatives where I think an important thing to take away is that the company has, if we look back a few months ago and then compare to where we are today. I know there's been a few people who post, well, you know, a lot of things, a lot of positive things have happened and the stock price is down. Well, yes, um, a lot of positive things happen and quite frankly some negatives too, right? Where Bluebird 7 was not placed in the proper orbit and that satellite, you know, had to, uh, get deorbited. And then Blue Origin, a key launch partner, um, blew up on the launch pad, a what I thought was going to be a routine static fire blew up that vehicle and took it offline for the remainder of the year. And so that was a very key pillar of our launch campaign. And so yes, a lot of positive things have happened for AST, but then some of these, some of the, you know, with space, there were some setbacks as well. And so the stock price has reflected that, or more than reflected that. And of course you can look at any number of companies Planet Labs, Rocket Lab, Intuitive Machines, any number of them are all down significantly. So it's not necessarily— some part of it is, of course, the SpaceX IPO impact on the sector, but then also it's macro as well, which I'll talk a bit more as part of this. But yeah, it sucks, right? And there's no sugarcoating it. The stock price is down. after hours it hit $58. It's been very low volumes recently where we've traded 7, 8, 10 million shares, whereas more recently we were trading kind of in the 20 to 25 million shares average daily. And so yeah, the moves with the market being not as liquid, I guess as institutional investors are perhaps out in the Hamptons, the moves tended to be a bit more exaggerated. But Going back to this convert, and so just a few things, maybe I'll just get this out of the way. It sounds like the price talk is the coupon is 1.625%, which is very low, the 7.5-year maturity, the initial conversion premium, which let me just look at where AST closed. The initial conversion premium is 20%. So that's, let's see, 1.2 times 66.3 close. So the initial conversion price or strike price is 79.557. So I know some people are like, well, why didn't they raise money closer to the all-time highs? I think some things may have changed. I think for any company, obviously you want, if you could go back in time, you would raise money at the tops and you would if you were buying back stock, you'd buy back stock at the bottom, but circumstances change, right? Companies are dynamic things and the markets change too. I think since we hit that all-time high, and then of course when Blue Origin blew up, we're all of a sudden in this war again with Iran and who knows how that's going to play out. And so there's a whole host of things that have changed since then. But the interesting thing about this convert is that the capped call, so you basically buy back the call that's sold to the investor and you sell an upper call and you end up paying some amount of the proceeds to do that. The price talk I'm hearing is that that strike could actually get raised well above the all-time high of $133. So if that's the case, if they raise the strike price to $140 or $150, then you could be looking at potential dilution if those converts do go into the money of call it 1.5%. And so in terms of dilution, that's very low. And so I think from the company's perspective, if there were bankers pitching them this deal by bringing forward a very low coupon and a very high capped call strike of call it $140 or $150, the potential dilution is pretty de minimis. And so Low coupon, de minimis dilution, you know, that seems like a pretty good deal to do even with the stock price down here. That said, obviously, you know, ConvertArbs will have to go out and hedge their positions. And depending on how much of the issue they buy, if they buy 80% or 70%, you know, you could be looking at hedging somewhere in the 5 to 7 million share range, which by the way, like I think we've already traded that after hours, although I'm not sure. how many converted ARBs would be hedging their entire position after today. So there probably is going to be more ongoing hedging probably the next 2 or 3 days. But as we've seen in the past, the company has had this cadence where after these raises, they do it typically in front of good news as opposed to after good news or as part of good news. And so we've talked about a number of different catalysts that are coming up. And one of the things that they disclosed in the press release or the 8-K today for Reg FD purposes, I think they told this to convert investors, one, which is something that we all knew, is that the 45 satellites by year-end, that's pushed out to early 2027. So when they say early 2027, that means Q1. So who knows exactly where in Q1 that will land, but But that, you know, obviously they needed to update the market on that. So not a surprise. And then for those folks who've been following the JLEO project, they actually did disclose formally that they are in advanced discussions with Rakuten in forming the joint venture in order to execute on that $1 billion project. And so that was a good update. But anyway, I do want to address some questions and then talk a little bit about what Why is the company raising money and what changed? And I know there's been a number of people online who called management liars. They're like, hey, these guys said at the Q1 earnings call that they wouldn't need to do another convert and they were going to try to lean towards commercial prepayments. And then they didn't take an ATM off the table, by the way. And so there was always that possibility that they would eventually put that in. So what changed since Q1? Well, the biggest thing that changed, which changed, you know, which would've adjusted their view on the need for capital is the fact that Blue Origin was taken offline. Right. And so if you think about the launch program, being able to put 45 satellites up into orbit by the end of the year, if that gets pushed out to call it Q1, then that's another quarter of operating burn, right? So you have to account for that. And so another thing that they disclosed today is that cash is now down to $2.7 billion from the previous quarter, which was around $3 billion. And so they burned about $300 million of cash. And then that's an update and the company's in growth mode. So you would expect that. But the other thing that happened with the explosion of Blue Origin and the destruction of the SLC-A launch pad is that they're offline until at best early next year, but then beyond that, there's been this question of like, well, who's going to replace them? And so one of the potential folks to step in is ULA, and then there's Relativity, there's Mitsubishi Heavy, but then also of course there's SpaceX. I know I myself had asked management after the Blue Origin incident, and I know a number of other people as well had told management, hey, if you guys are able to procure additional SpaceX Falcon 9 launches, I wouldn't mind you doing that. And if it requires upfront prepayments, which of course they do, if you have to raise capital for that, then do it. Because I think the market wants certainty. And so If you can build this program where, let's say you add an additional 5 Falcon 9 launches, and then you layer in some additional Mitsubishi Heavy, ISRO, Relativity, ULA, you do that until you feel very confident that Blue Origin has, maybe it has 3, 4 commercial launches that are successful, and then you bring them back into the program, then I would be fine with that.
[00:13:00] Speaker C: Right. Right?
[00:13:01] Speaker D: And I know that there were other institutional investors that had indicated, you know, if you have to raise money to bring forward launches, then do so. Um, and some people might say, well, I thought they were fully funded. Why do they need to spend money to buy additional launches? Well, so I think it's important to note that the $3 billion of cash that we had last quarter, which is now $2.7 billion as of June 30th, um, that is to fully fund 100 satellites, right? And do everything within the scope of what the company's plans were at the time. However, with Blue Origin blowing up, you would expect if you're going to go procure additional Falcon 9 launches or ULA launches, you're going to have to put forward some prepayments, right? And so what percentage of that $50, $70, $80 million launch you have to prepay, it's going to be some portion of that, right? And so you're going to need some additional capital on top of what you're already going to pay Blue Origin, because ultimately we do want to get 200 satellites. You know, that first 45, um, 45 to 60 was going to be the multi-launch campaign of 13 launches, you know, originally. Hopefully that, that was supposed to be by the end of this year, and obviously that got pushed back because of Blue Origin. But, um, but in addition to that, so if you have a particular plan to put the constellation up, and then all of a sudden you win this thing that was out there, we didn't know about it, but JLEO, where it's like, okay, the Japanese government's going to give you a billion dollars. You can probably raise some debt against that, but you're going to have to cap— you're going to have to contribute some amount of cash too. Well, that wasn't foreseen before. And so now, on the one hand, it's great because you're getting a billion dollars to spend on infrastructure and satellites, but on the other hand, you do need to raise capital, uh, and contribute that. And so that's something that was not foreseen. The other thing that I think, um, was an important, uh, thing that we learned this past week is this big expansion in Midland. And so I, I, uh, I saw the press release, um, or folks who had dug this up and then had tweeted it, and, uh, candidly, I haven't dug into it enough yet. But for those that don't know, we actually are getting some tax incentives, and the project that we're looking to expand is, I think it's about, it's going to cost about $150 million, and we're looking to expand production. So we currently have about 500,000 square feet of production facilities globally, and this expansion in Midland, which is near headquarters is another 400,000 square feet. And so I don't typically look at Tim Ferriss stuff, but it was funny. He had tweeted that, well, I guess production's not going well. They have to expand the facilities in order to get to their original ramp of 6 satellites a month. But no, that's not how you should be reading it. What I think it was, Now I'm trying to remember which conference it was, but there was a conference where Scott had talked about the need to potentially go above 6 satellites a month. And if that were the case, that would be, call it 10 to 12 satellites a month. And the requirement of that would be government applications. And so I think here the company saw, or is now getting some indications or maybe we'll learn in the coming days or weeks, but that there is government work that is coming. And so there is this need to ramp up production beyond the 6 satellites a month. And so they're making these moves where they're looking to expand production facilities and almost effectively doubling what we have currently. And so yeah, when you kind of piece all these things together, I'm just talking about a few things. So JLEO, the expansion of production facilities in Midland. There's a lot going on and a lot of this stuff needs capital. And so I think Cook did a great post where unfortunately I was rooting for England today, but they lost to Argentina and Harry Kane in particular. Let me just look here. When interviewed after the game, he said, once we went up 1-0 or once we went 1-0 up, we seem to just try to hold on, which at this level is not enough to get to a World Cup final. And so I think the company is in that position right now where, yes, the company is ahead in terms of technology. They obviously need to get the satellites up, but there's also all these pressing opportunities that they could and should fund, right? Um, and so It's not as if the company is static and, hey, just like years ago, we all thought it was just— I mean, there were some inklings about the defense business, but everyone was just focused on the commercial business. And it's like, okay, well, they're just going to carve out a nice business with AT&T here in the US and then with select carriers globally, MNOs globally, and then they should just be happy with that. No, they pressed their advantage. They moved into military applications. Uh, they brought on Verizon. Uh, here, here's like a good, uh, example of pain before gain, um, which this, this example really, um— So good, so good, so good.
[00:18:32] Speaker E: New summer arrivals are at Nordstrom Rack stores now. Get ready to save big with up to 60% off brands like Rag Bone, Levi's, Adidas, and Free People. Join the Nordy Club to unlock Exclusive discounts, shop new arrivals first, and more. Plus, buy online and pick up at your favorite Rack store for free. Great brands, great prices. That's why you Rack.
[00:18:54] Speaker D: You know, it was the first thing that I thought about when, when people were upset about this convert, uh, because I remember vividly when the company did their January 2024 strategic raise, um, they did a convert with Vodafone, Google, and AT&T. And as part of that, they were required to raise $100 million alongside that convert. And so as those of you who recall, I think there was a snafu in the press release for the convert went out and people were ecstatic and the stock went from, I think it was like $3 to $5.56. And then the other press release came out that they were doing an equity offering for $100 million, which back then, $100 million was a lot of money. because the stock price was at $5, which then ultimately cratered to, I think it was like $3.50 where it got priced. But if you could imagine, that was absolutely painful. And it was something that the company and of course we as shareholders, that was brutal to live through because ultimately they had to issue over 30 million shares, which was like over 30% dilution in order to raise that which looks now very paltry, I mean, very tiny, but $100 million. But that $100 million was absolutely necessary to get them across the finish line for the next 5 to 6 months, which then ultimately led to Verizon joining. And of course, the rest is history. The stock went from $6 to $8, $9, $10, and then to a high of $39, and here we are. So this convert, yeah, it's painful. It's painful, but I think once people figure out what the pricing is, which the capped call gets you to a strike of above $133 and the effective dilution is 1.5%, and they're doing this opportunistically with all these things in the hopper that are about to pop off, this is just smart management. It's not smart in terms of, should they have done it a week ago or 2 weeks ago or 3 weeks ago? Yeah, sure. They absolutely should have. I mean, if I could go back in time and make all the right decisions in my life, I guess I'd be in a much better place. But at the same time, you have to make decisions based off of what's in front of you. And so I don't— going back to the SpaceX IPO, I don't think anyone foresaw SpaceX, the IPO having such a negative effect on the sector. And some people did make their points of view known that the SpaceX IPO, it might drain liquidity from the sector and everything would de-rate. And I thought like, yeah, maybe the stock would trade down 10, 20%, but I don't think anyone foresaw the de-rating that we've seen recently. And of course, SpaceX itself has now broken IPO price. And part of that, of course, is some of the macro backdrop, which if you had asked me about where rates were going to be and if the Fed was going to raise rates back in May, I would've said, ah, no, no, I couldn't see that. Whereas now people are talking about, well, maybe they'll raise rates in this upcoming July meeting. And of course, we've got this this conflict with Iran, which could be spiraling. So quite a few things changed. And of course, Blue Origin, that blew up, but then there's all these other positive things too, kind of mitigating the negative stuff, which the market isn't pricing. I think if you look at T-Mobile and of course the JV, that didn't exist until May. And so that is a very specific positive strategic potential outcome for the company, which I've written extensively about. But yeah, I think the company at this point is focused on doing what they can to execute, which is buying more launches. And so for what it's worth, I did briefly talk with the company. I had about 5 minutes Uh, to talk with them. And, um, I'm pretty certain they're not buying a launch— they're not buying launchers. Uh, there, there perhaps there could be some investments around there, but— and I think, uh, Cook had mentioned, you know, maybe there could be investment with Blue Origin. That actually kind of makes sense to me. Um, I didn't ask him about that, but, but the fact that Blue Origin is raising $10 billion and, you know, if AST was a strategic investor there, um, that would be good. I would view that pretty positively. But I think one of the things that they talked about is vertical integration. So you could see some tuck-ins where there's interesting assets out there that could be strategic for them that they would tuck in. One of the examples I think that the company has talked about to investors is the fact that Legato, that transaction, which economically they paid roughly, call it $2 billion, has now turned into about $20 billion of value. And that was the first step of what kind of kicked off the whole frenzy around MSS spectrum. And so after they did that deal, of course, SpaceX bought EchoStar, and then Amazon bought Globalstar, and then of course Rocket Lab bought Iridium. And so the company was first to create the direct-to-device market, was the first to pounce on MSS spectrum, kicking off an entire consolidation of the sector. And so key question is, what are they going to do next? And so I don't think they're looking to do transformatory type of transactions to the chagrin of Tim Ferriss. Someone had said, hey, you should go check out his tweet. And then Tim was like, yeah, how are they going to buy a launch company for $1 billion? They aren't. That's not what they're doing. They increased their coffers to go attack growth opportunities and potentially do opportunistic acquisitions, which by the way, Rocket Lab has done several great acquisitions outside of Iridium. They've done small tuck-ins, which have been very, I think, strategically smart. And so I think AST is probably going to do some of those. But yeah, I think going back to what Kuk was saying before, you want to be on the front foot. And so by raising this billion-dollar convert with the green shoe, that gets them to $1.15 billion. And then if you net out the cost of the capped call, I think that's probably going to get them approximately to about a billion in proceeds. And so I think it was a smart deal for them to do if indeed they're seeing these opportunities ahead of them. And I think as we've seen in the past, once the company has raised capital, it's usually followed by positive news. And so there was a hint of, of course, Jay Liao, where they disclosed it, but there's a number of things that are kind of on the burner right now, which could all pop off. Let me see here. Yeah, I think one of the things that that it kind of— that I was thinking about after the Blue Origin mishap was the fact that the timeline was going to get extended and that they were going to have to buy some, some level of launches outside of Blue Origin. And so, um, so yeah, this kind of coincides with that. And so for me, um, as an owner of the company, a long-term shareholder, um, you know, I'm not someone who's focused on the short term, um, this is a smart deal for them to do. Now again, going back, could they have done it a week ago, 2 weeks ago, 3 weeks ago? Yeah, sure, they should have done it. But I think based off of what they're seeing and I guess pricing for the convert, which I've talked about, I think they, they decided to pull the trigger. Um, but anyway, let me just— I've typed up a few brief notes here. Oh, um, I guess another thing is that So some of these countries like Brazil that have given us spectrum, I, I did, um, there was a Bloomberg article that was published today around AST Space, well, it was around Starlink and the EU, but then in particular, um, Satellite Connect Europe was called out as being well positioned to receive, uh, an allocation of 2 GHz MSS spectrum from Europe. Um, those reporters are generally pretty good about snuffing stuff out before it happens, and so I think that's positive. And going back to Brazil, Anatel has allocated us 10 by 10 megahertz of S-band spectrum. It seems like there are going to be additional grants of spectrum globally, and so perhaps in several other markets that we'll learn about in the coming weeks and months. And so yeah, I think the company's well positioned. From what I understand, MNOs globally are very are very attuned and aligned with the company in terms of using AST as a strategic counter to Starlink, 'cause I think now everyone's starting to realize, as they should, that Starlink is a competitive threat. And so yeah, for me personally, this drawdown has been painful. This markdown as of tonight for this convert is painful, but for me it's temporary. I mean, I think as I was saying before, I was buying after the market and we'll see how the next few days go, but I do think, yeah, I am optimistic about the company's future, just given all the things that we know, whether it's T-Mobile eventually coming over. I'm not sure exactly when that's going to happen, but I think sometimes you have to remind yourself of these things where Chris Anbar, he was just hired at T-Mobile. They formed this joint venture with AT&T and Verizon. That entity is pooling resources and pulling more spectrum together and infrastructure and is planning to work with supposedly multiple partners, but there's clearly one that they are working with. And so when that materializes, when the J-Liwa project, when you have more formal details that come out about that, of course we have our launch coming up in August. Yeah, I'm very optimistic. And so when these capital raises happen and the stock price sells off, you get people that are upset and angry. And of course, when the company raised money at $96 and they did the conversion price was in the low $120s or so, I think, for the previous convert, people were upset about that one. And of course, they're upset about this one. But I will, like, said this before, I'll take my hat off to Rocket Lab shareholders. When the company has raised money there, people don't lambast management. They're like, oh, management is raising money, and so I wonder what interesting growth opportunities or acquisitions they'll pursue, which is a bit different than I think the mentality of some of the AST SpaceMobile shareholders. But anyway, that's mostly what I had. I'm going to I'm going to take a look and see if there's any questions here, which I'm sure there are. Maybe there's like some trolling going on too. Let's see. Uh, the emotional reaction today is repulsive. How do these degens live with themselves? If you're crying about lies and trust today, you deserve to be poor with that mindset. Um, look, I understand some people are emotional. It's money, and they— the stock is down. Um, But yeah, I think it's important to note that people like Hook, myself, Cathie, and others, Tanner, people are doing this due diligence and sharing information without compensation, nor would I expect compensation. This is really just me sharing my own ideas and things that I invest in. There are some people who have claimed over the last 6 years that I'm a paid pumper the company somehow. No, I'm not. I'm just like any investor, but yeah, I happen to be, and I've talked about this, I believe in the company's mission. I'm bullish. I'm a permabull. It's really hard to— maybe there was a handful of times where I was pretty negative and in a bad place being an investor, but other than that, I don't know. It's just part of who I am in terms of in particular for this company where I believe what they're doing. So far, management hasn't given me any reasons not to trust them. And that's an important thing. If you personally— it's okay if I'm okay with management and how they're running the company and the opportunities they're pursuing, you don't have to be that way. You can have your own criticisms of management. You can be upset. And if it doesn't fit your risk tolerance or framework for an investment, then no one's holding you hostage here. You can sell, you can move on, you can go buy a different company, you can go put your money under a mattress, you can invest in treasuries, you can do whatever you want. This is an open forum and people are— if you want to lash out at people and that's how you want to live your life, then that's that's, that's up to you. But, uh, I do think it's important that, you know, for, for mental health reasons, like, if, if I end up blocking you or muting you, it's because, um, life is short and I don't want to deal with some people. And I think that's also true for other people as well on X. Um, and I— the reason why I say this is that I remember very vividly back in 2022, 2023, 2024, there were these accounts that just relished in the fact that our investment was not doing well and people had lost money. They loved to dance on people's graves and do all kinds of stuff and they were just ugly. Yeah, there were a few people that I knew over that period of time who rode the investment down and then sold at the bottom because they just had enough. So yeah, I felt pretty awful about that. I personally felt bad having talked about the investment and had been being an advocate. And then of course these people lost money. And so I felt pretty awful about it, but lo and behold, things turned and the stock went from a low of $2 to, I guess the reason I was $1.33, now it's at like $58 after hours. But yeah, that's part of a high-risk investment and you've got to do your own work. You've got to decide what your risk tolerance is and you got to be able to weather the storm. Unfortunately, there's some people out there who have invested on margin, who I guess maybe a significant portion of their position are options. So yeah, that's one way to blow yourself up eventually. It's not a good way to have longevity or or to maintain some level of sanity. So I think it's important to take stock of what investments fit you and also not be overextended. And if a space company that's doing something transformational but has a high degree of volatility, if that doesn't fit your profile, then maybe it's not for you and that's okay. Let's see. So What are the actual launch provider options? Invest in ULA, presently prohibitively expensive for launch unless government is paying. JAV Mitsubishi heavy launch business and accelerate launch cadence. Maybe invest in Blue Origin. What does it get AST near term? So yeah, these are some options. Someone had mentioned perhaps that AST could buy ULA. I want to make sure that people understand AST is not Their view is that launch will be, you know, abundant in the coming years. And so there's no— being long launch is not a strategy or a plan for them. However, mitigating launch risk is. And so making an investment in ULA, that can make sense. For those that would recall, I think Sierra Space was rumored back in 2024 potentially buying ULA, and then Blue Origin also was rumored to buy ULA as well. And I think the price back then was like $2 to $3 billion, although I think the price for ULA is probably higher now. It's probably $3 to $5 billion given some additional government work that they've received. But I don't see AST buying ULA, but if someone were to acquire ULA, let's say Sierra Space or Blue Origin, Blue Origin is raising $10 billion, so that could be part of the reason why they're raising the money. Then I could see AST making an investment into that acquisition in order to get some guaranteed launch and perhaps some equity. So that could be a potential structure. Heavy Mitsubishi, heavy launch. I mean, I don't think Mitsubishi doesn't need capital. Now, would we put equity into the Rakuten JV? And then will that JV, then contract launch? Yeah, absolutely. I think that's actually a high probability. So that's probably something that they would do. Invest in Blue Origin near term, what does that get? Well, an investment in Blue Origin would— I mean, we already are an important customer. Obviously, they've got to work through their issues, but by making a strategic investment in Blue Origin, that would raise our profile with them and perhaps move us higher up the queue, I guess. But yeah, I'm not sure how much of the capital that we just raised is actually going to go into any investment in a launch provider. I think it's really more investing in launch, meaning we're going to buy more launches and then possibly we might look at buying some tuck-in acquisitions. Let's see. I told my daughter our shares dropped to $57. She wants to buy more. Who am I to argue with a smart kid? Yes, she's a smart kid. Let's see. Thesis didn't change except for having to push launches forward and match Jay Liao investment. Yeah, I think that's right. I think if we buy 4, 5, 6 more SpaceX Falcon 9 launches, I think most people would be quite happy with That use of proceeds, and then matching Jay Leo investment—that's a good. That seems like a very good return on investment, given that the government's giving you money. Let's see. Stay strong, Antman, and disregard the insults. There are a lot of investors who are very grateful for your contributions as a community. Thanks. Yeah, I'm not. The insults are fine. I mean, I—I've been at this for what is it? I guess I've been online for six years. I'm used to people. trolling, and that's fine. If anything, from all the stories that people have sent me of having invested in AST and it's changed their life, that's been very— those stories are pretty cool to read. I know Kuk and Katzi get them as well, and so I'm sure that's something that adds a little extra something for what we do, but let's see. 400— okay, this person's saying 400,000 square foot of space. Could it be a requirement for classified manufacturing space for government? Separate building built as secure facility. Oh, okay. So yeah, I didn't think about this. This— I guess that's possible. Like, you might need a secure facility, um, in order to build for government programs. So yeah, that's a good point. I didn't think about it. Um, perhaps like some of the people who are— who know government programs might have a better perspective, but That is a possibility, but then also just having additional manufacturing space in order to get to 10 to 12 satellites a month. And as I said before, Scott specifically said we wouldn't need to get there unless we were doing work for the government, which it sounds like that's cooking and doing quite well, for what it's worth. But I guess another point is that there is going to be an eventual shift. where we are going to start making Block 3 mid-band Bluebird satellites. And so I believe the manufacturing of those satellites will probably start sometime towards the end of this year. And so we'll be building 2 shells at the same time. And so adding the space, potentially accelerating that or working on this government project, our 3rd shell, that seems like a very Um, that seems like a very good use of capital. Let's see. Look at the bright side, when the volume— okay, look at the bright side, when the stock's here, I can handle this number of push-ups a night. Okay, that's actually pretty funny. Um, let's see. Okay, someone's saying, but you can't say that this is good management move, they, they are not transparent on the need for $1 billion. So, um, it's important when you raise capital like this, you cannot say very specifically what it's for unless it is tied specifically to something. So like when you have a, um, MDA Space recently did a deal, they acquired a company and they did a capital raise specifically for that acquisition. Um, then you can do that. But when you do something like this where it's going to be for potentially a number of different things, but you haven't committed, um, Then the language that we got today is what is actually usually for companies when they raise capital like this. They'll just say for general working, you know, general working capital and corporate purposes. But here, you know, the company updated the disclosure and, you know, it sounds like very specifically they are applying this to buy launches. Um, they're looking at acquisition opportunities not to buy a launch provider, um, and to fund growth initiatives. So, uh, let's see. Someone's saying thanks for therapy, helps contextualize things. Yeah, okay. Yeah, yeah, I think it's important. I mean, if this helps people, you, you gotta, you gotta remember that it takes money to make money. And for growth companies, you know, whether you're raising at the top of the market or you're raising at the bottom, um, Oftentimes they will have to raise capital and it's for reasons that perhaps they didn't know a month ago or 2 months ago. And so I think the key question for investors is, and for you is like, why, if you trust this company and if you trust Abel and Scott and the team, and you look at what they've done in terms of execution, what has changed since their last earnings call, which was mid-May, what has transpired over the last 2 months, right? And a lot has transpired, whether it's on the negative side, which is Blue Origin, that rocket blowing up and then the program coming offline, or the Iran war starting up. But then on the positive side, it's like J.Leo, the US MNO JV, AT&T, Verizon, T-Mobile, Chris Ambar joining T-Mobile, There's a whole host of things, you know, grain management, the 800 MHz getting approved for use for direct-to-device, and AST is testing with them, or AST is testing with the SDA for 900 MHz for military applications. There's a whole host of things, right? And so when people say, well, management lied, no, they made a statement that they believed at the time they wouldn't need to raise another convert, but but circumstances changed over the last 2 months. And I think just, I guess, talking about it, it's kind of like if you were invested in a company and the management said, hey, you know what? We've raised enough money. We don't need to do anything else, at least for the foreseeable future, and we feel good where we are. And then tomorrow or the day after, there's like 3 new opportunities that come up. for investment. One is an acquisition, one is to buy spectrum cheaply, and then the third one is some kind of growth initiative. For you as an investor, if those are 3 highly accretive opportunities that require capital, would you rather the company just stick to their knitting and just stay within their sandbox, or would you give them the money happily and say, yeah, go pursue those 3 opportunities? And I think, at least for me, I can't speak for everybody, I would hand the management team money and I would say, go pursue those 3 things, like press your advantage. And that's what this company is doing in a nutshell, right? This $1 billion is helping them press their advantage. Now the detractors will say, well, the company, they keep raising money and they should be fully funded and they should just stick with the original plan. And it's like, okay, well, if that's If that's what you desire in investment, then this company is not for you because this company—the the the the truth of the matter is that they have expanded what they're doing, right? Like I remember, and this is important. This is super important. I remember was it January 2025 when they announced the Legato deal? People were up in arms. They were angry. They were angry at ASD. They said. What? This company, they have cellular spectrum through their partners. Why do they need to own MSS spectrum? Why do they need to raise $500 million in this SPV to go pay for this? And then they're going to pay Legato ongoing fees to use this spectrum. And yeah, management, for the people that didn't get it in the first, call it 2, 3, 4, 5 days, they lambasted management. And you can go back and see those comments. And I remember Speaking with Cook and Katzi and others at the time, it's like, okay, well, why are they doing this deal? And it took a little while, but then it was like, oh my gosh, this is a no-brainer deal. This is smart. They're buying— the Bluebird satellites are the only satellites out there that can utilize the spectrum. We call it spectrum alchemy. This disputed spectrum, 1.5 gigahertz to 1.7 gigahertz, it's the L-band spectrum. 45 megahertz, which was of— it's untouched, it's in dispute with the Department of War, and these guys can unlock it because they are able to utilize the spectrum for its original intended purpose, which is from satellite to terrestrial use. They're going to be able to utilize it through AT&T and Verizon and provide a much higher quality of broadband service beyond just terrestrial spectrum that they're using. And so maybe it took a few weeks, then the stock absolutely— actually, before I speak, let me just look. This is back in, let's see. Yeah, this was January 2025, I think. And so the stock was in the 20s, and maybe it was the mid-20s, I believe. And then this was announced, when Ligado was announced, people were up in arms and maybe the reaction wasn't that positive, but lo and behold, the stock ended the year much higher from there. And then that kicked off obviously SpaceX buying EchoStar Spectrum, Amazon needing to plant their flag, they bought Globalstar, and then of course Rocket Lab buying Iridium. And so this company's economic outlay of $2 billion ended up being worth $20 billion. If that's the management that you want to back, where they're going to be smart allocators of capital and expand their business, then you should be willing to give them more money and say, hey, if you see opportunity to deepen the moat or pursue something that's complementary, then absolutely go do it. Let me see. Okay. This isn't dilution yet. Maybe not at all. It's convertible debt, not a common— Yeah. So for those that don't know, this is convertible debt. Eventually when it matures, you would have to pay the cash back, but if the stock price is above the conversion price, then it turns to equity at a much lower dilution level than say if you were to raise straight equity at $66 or now $58. And so if the strike price is done at, call it $150, that would be about 1.5% potential dilution. But of course, the stock price has to perform. And so in 7.5 years' time, if we're not above there, then you would have to refinance this convertible debt or pay it back. Let's see. Can you share your thoughts on buying ULA? AST is not going to buy ULA. Um, ULA is a great company, but from an economic standpoint, um, I mean, they exist because the US needs a, um, you know, needs a diversity of launch vehicles. But, um, in terms of reusability and all that, they are behind. And so I just don't see AST buying them. So let me see, why do they raise when stock is down? They have $2.7 billion in cash. Why can they not use this money to buy more launches and then raise more when conditions are better? Okay. So Jacob, good point. Why do they need to raise now? Why don't they raise when conditions are better? Because you don't bet the company on the uncertainty of future, right? If you see opportunities in front of you right now that require capital, you raise money to go do it. And it may not be the most opportune time in terms of stock price, but as I mentioned before, because of this convert structure, the potential dilution is at, call it 140 or 150. So the economic terms were pretty attractive, so they decided to pull the trigger. Now, could conditions be better in the future? Yeah, absolutely. Based off the catalysts that are coming up, the stock could be much higher, but it could also be— as I mentioned before, most people thought SpaceX would be a positive catalyst for the sector and it's been the exact opposite. And then you've got everything that's going on in Iran. So if the Iran conflict spirals out of control, is the market going to be much higher from where it is now or is it going to be lower? So with the management team looking at what's in front of them, they've got to make the most logical decision And if they see opportunities now that they can execute on, they have enough money, $2.7 billion in the bank, but they've allocated that to 100 satellites in orbit, then they need to raise additional money in order to be comfortable with what they have. Let's see. Do you think management will comment on diluting after they said they wouldn't? Okay. I'll just address this again. Management, first of all, at the end of the first quarter when they did their call, they said, we don't foresee doing the need to do a convert anymore. They did not preclude the possibility of raising equity, which I guess if people want them to do an equity raise or ATM, then sure. But for me, I like doing these converts because I think it's a smart way to monetize underlying volatility of your equity. And as a result of that, you get a low coupon piece of debt that gets equitized if the stock price performs. But yeah, things changed. Things changed. The big one was Blue Origin blew up after they made those comments. And so they had to probably buy additional SpaceX launches and do any number of things. And so maybe Management teams, like a company is a living and breathing thing and the environment around you changes. Like when you, in your day-to-day life, if let's see, if you get into a car accident and your car breaks down, you didn't budget for it, but you have to go buy a new car or you have to go perhaps like if someone gets sick and you have to pay for a higher premium of better insurance, you know, things change. So that's, You have to adapt. Let's see. Rocket Lab disclosed why they raised. We still don't know what they raised last time. Where did the $700 million go last quarter? Where did $700 million go last quarter? You can check in the filings of what they spent. If you go to the cash flow statement, you can see where they spent the money. For example, Space Mob, we A decent amount of cash went to prepayments for launch. But yeah, you're— okay. This person's saying Rocket Lab disclosed why they raised. Well, yeah, they raised money to pay for Iridium. I'm not sure. I don't understand this question fully. And they've been very specific about buying acquisitions. And so they've done a number of tuck-in acquisitions and then of course Iridium. And so Yeah, those are very visible reasons to raise money. Let's see. What are the chances that SpaceX is being a pain in the ass in the future about launch agreements, so we're just moving on from them and partnering with other providers? I don't think SpaceX is being a pain in the ass. I think SpaceX is being commercial, and the reason why we went with Blue Origin is that that vehicle was very promising and would be very economical for us to use, And they made it very attractive and it's had its issues, right? And so eventually they will get there. But in regards to SpaceX, if we pay money, then they will launch our satellites. And so I don't think they're being a pain in the ass. From what I understand, they're very professional. The folks on launch site are different than the folks on the Starlink side who are obviously competitors. And so I don't think there's any issues there. Let's see. Do you agree that this dilution should have been joined with the reason to get that billion? Because it's catching people off guard. The impact is going to have a big impact. Uh, okay, this is kind of some word salad. Um, they, they kind of laid it out in the, the use of proceeds, but of course, you know, it gives them flexibility. But I do think we are going to find out in the near future what this billion was raised for, or some parts of it. So as I mentioned before, buying additional launches, J-LEO was disclosed very specifically in the Reg FD disclosure. And so, and in that Japanese program, you do need to raise side-by-side capital. So $1 billion, of course, Rakuten will contribute some portion of that. They'll be able to raise some level of debt, but equity needs to be contributed to that JV. Let's see. Okay, this person. So the $3 billion cash on hand is not enough for near-term launches and development. I'm scared of another dilution in the next 6 months. If you were scared of dilution in the next 6 months, then this is not the stock for you to own. Sorry to say it, but this is a growth company. There may be times when they have to raise money. And if you are looking for a company that is generating a lot of cash today versus the future and does not need a quantum of capital in order to fund growth, then yeah, I hate to break it to you, but this may not be the investment for you. So yeah, and I think it's important, like the company wants to maintain some balance of cash. And so whether that's $1 or $1.5 billion beyond the the needs that they have. You don't run a $30 billion market cap company on a lean cash balance. You try to stay well-capitalized. Let's see. Someone's asking, when was your last buy? I bought after hours today. That was my last buy. Are you expecting management to explain the decision imminently, or at least at the upcoming earnings call? Uh, yeah, at the earnings call they definitely will be explaining the need to raise capital, and perhaps we'll get some insight sooner depending on if there's any additional, um, I guess, news or color. But, but yeah, anyway, um, I've gotta hop, so I'm gonna help put the children to sleep. But yeah, thanks for joining. I know people are emotionally in a rough place. It never feels good to lose money. And yeah, I mean, I'm right there with you, as are others. But again, I think it's important to take a step back and kind of think about the progress and the evolution of this company and where we are today. And unfortunately, From a macro perspective, stock price is down and for any host of reasons, which we've talked about ad nauseam, it's like, oh, SpaceX hedging or relative value index trade where people shorted the space sector and were long SpaceX, any number of things. But we are where we are. The company sees opportunity. They need to fund that opportunity beyond what they've already planned. And so they pulled the trigger. They did a smart deal. 1.6% coupon debt, 7.5 years, and a conversion price, which with capped calls will be somewhere in the $140 to $150 level. So that's potential dilution of 1.5%. Now obviously stock price is down, sentiment's down, and oftentimes those are the good times to, if you have capacity or ability, those are good times to add. And so with that, I'll end it. Thanks everyone for joining. And yeah, everyone take care. I'll probably do another space at some point in the near future. Take care, everyone.
[00:57:59] Speaker B: Bye.
[00:58:03] Speaker C: Thanks for listening to the AST Space Rover Podcast. If you enjoyed this episode, 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. Listen. Mmm, waffles.