AST SpaceMobile: Production Hell Is Over, Here's Proof

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[00:00:30] Speaker B: Post that said he blew up his account got more impressions and views than my DD document over the course of almost a year. So Iridium, soon to be part of Rocket Lab, is like a Palm Pilot from the '90s. A company has zero subscribers. Yet is going to be doing $200 million of revenue. So someone's subscribing, someone's paying them something for something.
[00:01:00] Speaker A: Okay.
[00:01:01] Speaker B: Good evening. Sorry for starting a little later. I wanted to get in the water, which was useless. The tide was too high. So it was like surfing on moguls. And then a bunch of teenagers showed up, which is usually the end of a good time because these guys are just knuckleheads. But anyway, here I am. So last week was pretty awful. I got some people DMing me saying like, please tell me that was a kook bottom. And you know, you can't tell someone it's a kook bottom. It's more of like an observed state. And so I would just say that I was pretty despondent last week as most people were. And then reading about what's happened to some people who I don't know that well, but I know everyone read Jacob Keaton's posts, which to kind of show you the state of man, his post that said he blew up his account got more impressions and views than my DD document over the course of almost a year. So it's somewhat kind of remarkable when you actually think about it, is there was more morbid interest in this poor guy's portfolio destruction than the number of people who actually got an impression, never mind actually read the DD on the investment and similar investments that actually wiped the guy out. So it's kind of just an interesting data point, but it's very sad what what happened to him. And it's worthwhile just to reflect on that. I don't know the specifics, but from what I can gather is he made a ton of money doing some things that in hindsight were really dependent on nearly perfect timing and then kept doing it. And then the market reversed violently, as we all know. And then he got wiped out. And so as best I can tell, the only way that he could have made as much money as he made is through an enormous amount of leverage. And then that sword has a second edge. So if you're sitting there with your account and sort of wondering what the takeaways are, the takeaways are that easy come, easy go on one hand, but also that if you do not understand derivatives or products with time decay, You should not use those instruments. And so buying short-term options with any meaningful amount of your capital is really just asking for it. And unfortunately, a lot of people are getting hit hard. Hopefully, the stock turns around real fast and bails a bunch of people out. And then if you are one of those people that gets bailed out, hopefully you realize that you were given a second chance and you make amends. But also things like ASTX are just total pieces of shit products. They have incredible time decay. So if you own those things for any meaningful amount of time where there's up and down chop, you're going to lose an astronomical percent of your capital, even if the stock ends up being flat. If the stock gets halved, which it did, you're you're going to be down like 80% or 90%. So pretty terrible. So it's safe to say, this isn't financial advice, this is just math advice. Don't go full port on those things. They're not safe. If you own common stock outright in cash, fully paid-up cash, then you're pretty invincible to the vagaries of the stock market. It can go up and down, but it can't kill you. And I remember one of my partners, an old fund, would just always say, just make sure you don't lose your chips. That's the thing that ultimately interrupts your compounding is just you can't ever lose all of your chips. And that's what made me just so viscerally sick to my stomach when ASTS went to $2 is I felt like I had lost my chips. And that's really the only thing that allows you to stay in the game is making sure You you still have some capital, and that's what hit me so hard back in 2024 is just going God damn I lost my chips, and I and I had leverage at the time, which is a sin that I repent. But I was given a second chance, and I will I won't ever put myself in that position again. So last week I know has brought a lot of people to the edge, and I feel horrible. for all of those people and really hope that a valuable education can be the only thing that you suffer and that the stock has in fact found a bottom and then you can make amends for it. But if you are in that category, please make amends for it. Don't put yourself in that position. Use Jacob as a cautionary tale. I'm very optimistic that he's going to get himself back in a good spot. And it was generous of him to share his experience so he could hopefully show people what happens if you're not overly prudent. So never mind the stock volatility. Sorry, I've got sick again. When people are overleveraged, you have this cascading effect. And so while we were all kind of looking at South Korea and all these guys getting blown up on leverage, I'm honestly astonished to see just how many people in our ownership circle are also very leveraged. And people that are blowing up and getting margin called and things like that, it's something that I shouldn't be surprised by, but I am surprised by. And so when that happens, that's what creates a lot of forced selling, which unfortunately creates manifest negative destiny where if you're overleveraged and the guy next to you blows his brains out with leverage, then the guy to your right gets leverage decapitated too. That just creates this cascading of selling, which then knocks out so many more people than just sort of a market clearing mechanism would otherwise knock out. And that's what happens across the market in general. It's incredible how Leverage will build up, and then something will will prick it. And so is you know South Korea, which you know why did that go? I don't know. Something with SK Hynix, some you know Iran surprise. You know it's just you never really know what little butterfly is going to flap its wings. And you know as they say, like some wind in Shanghai creates a hurricane in New York. And but it happens every time. It's astonishing. These momentum and growth unwinds. You know, how many times have I seen this in my life? You know, many. How many times have I been actually perfectly situated for it? Zero. And surprised every time I am. I know everyone is, but they end. And what's useful is to recognize about the human experience is these periods of negativity seem like forever and you forget May, you forget January, you forget last October. You know, these periods of time, uh, are erased because of, of the pain factor. And that's what also suppresses the stock price. And I'm not just talking only about ASTS. It creates this persistent negativity, and then the bears come out and go, look at you all, you chumps, this was all hot money, this was a bubble. And then you kind of sit back and you go Well, you know, first reaction is like, oh my God, that, that's awful. Like, was I that stupid? You know, you know, and will it ever come back? And I don't know if it will ever come back. No one ever, you know, really knows. But I mean, common sense says, yeah, probably. So let's take a look here. The stock had, had, you know, hit the, the $100 mark, you know, 3, 4 times. Um, you know, the price discovery has shown an ability to go there over a reasonably long period of time. So it wasn't just one flash in the moment. I view it as sort of a price signal supernova of saying, guys, look over here. There's something exciting happening over here. Then it will go too far, wipe a lot of people out so that ultimately only the right owners of the company persevere. But this wasn't the first time this has happened to this company. And what's pretty remarkable when you actually think about the real psychology, what I was thinking about when I was surfing was a year ago when the stock went to $60, I couldn't believe it. It was just an incredible amount of wealth for me personally. I couldn't believe it. And then of course, stock just got obliterated and went down below $40. And I just remember kind of being despondent and just going, oh my God, how was I not How was I so stupid? You know, July 2025, this thing was hitting 60. Scott, of course, then, you know, rips my face off with a convert. Here we are again. Um, and it was so easy to think, especially at that point in time, because that was the first time the stock had hit 60, that that really was maybe like the one time and you had missed it. And then October really caught me by surprise when this thing went to $100 intraday and then corrected back down to $50. And again, I thought, oh my God, that was the moment. I'd always dreamed of $100 per share, and, and what did I do?
[00:10:53] Speaker A: Nothing.
[00:10:54] Speaker B: How stupid am I? But here we are right now, you know, is this the low? I don't know, but it looks like it right now. The July 2026 low is what that blow-off top looked like just a year ago. So that same price was marked by both kind of incredible enthusiasm and, oh my God, it might never go there again, to now it's happening again. And we're all hoping, oh my God, I hope that never happens again. This is so low. That was yesterday's high. And it's incredible how the human mind adapts and loses perspective of that. And it, to me, seems like a really natural correcting process because ultimately the fundamentals are what drive a company. The valuation can change for sure. So if you're in like a blow-off dot-com bubble type peak where crazy things are being valued in an unsustainable way, then all bets are off. But if you look at the TAM, you look at the market, you look at the business model, their proof points from SpaceX, there are a lot of reasons to support why the price we had seen, roughly $50 billion of value, is really not that crazy at $130. And so that's what I look to when thinking about it. I'm just trying to mentally check out because I view this as a momentum blow-off designed to kill off the weakest of the flock. As much as I love those people, this is what the market does, is it culls the herd, it battle-hardens people. And if you bought the stock at $130 and you're on this call, what that's telling me is that you're trying to figure out what you own. So you're in the process of knowing what you own. Welcome to the club. This is what we've all gone through. If you dig deeper, you might find, wow, this is amazing. Like, I was a dope for just buying something $130 without really understanding it, but it turns out I might not be a dope for owning it at $130 because this thing looks great. That's certainly what a lot of us went through. Initially, back in 2021, I was buying stock at like $20, imagine how stupid I felt when it went to $2. And now everyone's like, well, those OGs, they bought their stock at $20. They don't have any problems. What are you talking about? These are the silly things. And so the fundamentals are what ultimately matter. Contrary to a specific paid consultant, I am not a paid consultant. And so one thing I'm happy to always say very Candidly, is I have never been paid by the company. It would be quite flattering if they had offered to pay me. I don't think I would accept it because you know, could you imagine me with a muzzle? You know, Scott, for sure, if he was paying for me, would not approve of a lot of my posts, and there's really no amount of money he could pay me to get me to absolve myself of my First Amendment right. So I'm not a paid pumper. Anpanman is definitely not a paid pumper. Tut is not a paid pumper. Uh, Connor, uh, Tanner's not, Kevin's not, Katzy's definitely not. None of these people are paid pumpers. We are all, uh, deeply involved in this company because they represent a massive investment for us. And we work on our investment every day, all the time, because for many of us, that's by far our largest investment. And we found that by sharing our research openly, we get more people to participate with us in our research and it facilitates an incredible network effect in terms of learning. And so that's, you know, some basic background, which is always useful is no one's being paid here to the very best of my knowledge. And I'm 99.9999999% sure that I'm accurate in that for myself. I'm 100% sure. And the reason why people do this is not to bait other people to buy a stock. This stock trades on Friday, for example, traded $630 million. No reasonable person could say that Anpanman or myself or Tut tweeting, quote unquote, pumps our bags. That is a truly ridiculous statement. It's a $630 million volume stock on a low volume day when the price has been cut in half. So anyone on this call seeking to learn and wondering about the motivations can just use common sense and arrive at a common sense answer real fast. Let's get to the fundamentals. So production is ripping. So the thing that ultimately is going to drive this stock is becoming a functional operating company. And so the thing I post on the regular is the satellites in assembly versus the satellites cumulatively that have been delivered. We're starting to see that the cumulative shipped satellites is starting to go up and to the right. It had been a long time coming, but what's interesting is the satellites in assembly is going up too. So it's not like there's a fixed number in assembly and then they're depleting the WIP, the worst— the work in progress. They keep adding to it, adding velocity. I actually don't know where that's going to tap out because presumably at some point that factory can only fit so many work-in-progress satellites in there. What we've seen is they can continue to increase the overall number of satellites in production, which is interesting. At some point though, we're gonna expect that in-assembly number to remain flat, and then that cumulative satellite shipped is gonna go up increasingly so as we hit some cadence of between 6 and 12 satellites per month as capabilities are needed. But Abel came out with a really interesting tweet this week. So Bluebirds 8, 9, and 10 are now fully deployed, not in bar configuration, fully deployed to their full size. Each are the world's largest communication arrays operating in LEO. They've invented a new way to design the satellites, a new way to manufacture the satellites, which goes to the scale. And he's specific to fly lightweight composite stackable architecture combined. These are like the Koenigseggs of satellites. This is no steel pushrod Chevrolet. This is composite, Rennsport, lightweight. This is that option you select on a Porsche, which miraculously turns what is an expensive car into twice as expensive a car because you selected a couple of things to save like 6 pounds. It's like, oh, I'll just put some carbon ceramic brakes on my car. It's another $25 grand. Thank you very much. So we are flying some fancy stuff with these composite satellites to make them light so that they can be put into orbit at an insane size. And interestingly, he says they're the largest and most advanced direct-to-device and radar phased array. Why did he add radar? And then he goes, with the ability to launch them in groups of 3, 5, 6, or 8. And so as we reported elsewhere, that's a giveaway in terms of the diverse launch vehicles that they're working with. 8 obviously being the 9x4, uh, Blue Origin New Glenn rocket, which will, you know, hopefully be back in the race pretty soon. But then 5 and 6 satellite configurations are You know, I guess ULA, MHI, lots of exciting things. And then he drops that there's the peak data rate of 200 megabits per second. And what was interesting, just kind of debating some of these points with, um, Just Another Smith over the weekend, he points out that our data rates are now better than what the 4G network was on a terrestrial basis just 10 years ago. And he points out that 10 years ago, we were all using our phones. Now, have our phones gotten better? Yes, but it's not like our phones were crap 10 years ago. I mean, I still remember being astonished 20 years ago when I had my first BlackBerry. And so it's crazy just how fast and capable the satellite network has become, and the constellation isn't even up yet. And so the future advancements in what they're going to achieve with the forward product roadmap, Hasn't hit, and this is ultimately going to go into the TAM discussion because as this gets better, it starts to knock more and more terrestrial towers off the grid. And importantly, in this tweet was the fact that we very clearly, as as the tech investor pointed out, the fact that we've gone from 38 satellites in production to 40. 2 in production in just 2 weeks tells you that we are well past production hell. Most great companies go through it. A lot of people lose their mind and get knocked out of their investments because of it. But once you go through the gates of production hell and reach production nirvana, things are different. And it appears that we are there. The fact that Abel is saying that Bluebirds 14, 15, and 16 are right behind. It doesn't imply they're right behind them and they're going to sit on the dock for 4 years because there's no launch vehicles. They're right behind because there's yet another launcher ready to go. And so some very exciting things are happening at this company, and we're getting up to just around 2 weeks before the next launch. From what we can tell, launch date hasn't been officially announced, but we can start to guess Based on a lot of observable patterns that we could very well be encapsulated by now. We'll find out probably this week that we are. And SOC generally does pretty well when it gets reassurance of operational cadence. And so then the scale of the satellite is always worth remembering. And so again, the tech investor reminds us that there is a nice comparison with Iridium here. In one single launch of 3 satellites, ASTS is launching double the square footage of the entire constellation of Iridium, which cost Iridium $3 billion to launch. One launch by ASTS puts up twice the square footage of the ultimate economic asset, which is the array, as the entire Iridium constellation. It just puts everything in perspective on the comparisons. And so Iridium, soon to be part of Rocket Lab, is like a Palm Pilot from the '90s. And ASTS is like a hacked iPhone with jailbreak Claude Fable 5 running on it. It's just not the same. And that's why the economic opportunity is not the same. If you even look at Iridium's numbers, it's quite impressive what they have considering the technology they're using, billions of revenue, and look at the government business. And so then when you look at the capabilities that ASTS is going to bring to bear, that's why people like me expect tens of billions of dollars of revenue. That's why people like me see a pathway for this company to be worth half a trillion dollars. Now, is that a call for everyone to go buy the stock? No, it is not. Is that a target price? No, it is not. That is my own personal estimation of gun to head. When I own this much stock, what do I have as my own expectation of things that could happen? And then I have to take a directional bet on— I've created a distribution of things that could happen, and then I have to ultimately believe, do I think that that thing will Will happen, and that's what I do. And I think the answer is yes, that will happen, and it's useful to understand and contextualize it. So I think the tech investor did a really nice job just kind of laying that out for us. Sometimes it's the simplest observations which are the best. You know, a clown like me will put out 300 pages of research, but then a tweet like that should should be the one that actually is read, and people go, oh shit! Well, oh my god! Like you know, one launch is twice the entire. capability of Iridium. Okay, seems like a pretty simple thesis to me. Yeah, it kind of seems like it is. And so now let's look at something slightly longer, uh, from Kevin Chen. And so Kevin Chen does a ripdown of all of the latest things. And so he does a great thread here. I'd highly recommend it. It's called the Kevin Chen Ripdown. Um, still not convinced that Kevin isn't an AI from the future based on this guy's inability to sleep and working at all times. I'm glad he's on our side. And so he goes through the same tweet we just read. Abel says that we invented a new way to design and manufacture at scale. And then Kevin points out, this is a nod toward why manufacturing has taken so long to ramp up and is now finally getting batches out the door in a steady cadence. What they're doing has never been done before, and they've had to literally invent the assembly, integration, and testing procedure. Now the process is ready for mass scale. This is a critical observation. The machines that we've seen come out the factory gate were really just the prototypes to make the massive machine, which is the machine that makes the machine. And so it's so easy for pundits to be like, whoa, look, they're so delayed at this point. The constellation will be up in the year 2050. Well, no, it won't because they were making the machine that makes the machine. And once that machine is done, this thing can pump out satellites at an astonishing rate. And it's a massive— competitive moat. The satellite itself is a competitive moat, but being able to make the satellites at scale is potentially a moat very few people could ever really achieve, maybe 2 other companies out there. And so then Kevin also picks up on the radar phased array, and he links to another thread which goes into the exciting opportunities about radars that we're excited about. And then he goes into the groupings of satellites, 3, 5, 6, or 8. And so the 6 to 8 Bluebirds is the Blue Origin 7x2 rocket. And then the 9x4 is between, between 12 and 14 Bluebirds. Again, not quoted by Abel on that. That's Kevin's own math. And then you have the MHI, Rockets can do 3, Vulcan can do 5, Ariane can do 5, and ISRO can do 2. So tons of launch vehicles. Again, a lot of those launch vehicles have some, have some pretty, pretty busy calendars. You can't just go fly standby on those tomorrow. You know, this isn't Frontier Airlines, but into 2027, a lot of things start to open up and especially into 2028. And so the question a lot of us are thinking about is just what bridge are we gonna see in the near term as the company bridges to a much more diverse slate of launchers? And my personal speculation is, I don't have any particular insight into this other than common sense, is that management did the recent convert to probably lift quite a few Falcon 9 launches in the near future to give us some visibility on getting to quite a few satellites in orbit. before we start using some other launch vehicles. We'll find that out sooner rather than later if that ends up being true. And then he goes, peak data rates approaching 200 megabits per second. Again, we talked about that. Then Abel talks about space AI edge computing. Ooh, that sounds fancy. And so we have lots of patents we've analyzed that show that we have, we being the company, you know, and those unofficially associated with it, again, because I'm not a paid pumper, so I'm not technically the company. I'm an owner of the company though. Um, we have lots of patents that solve a lot of the problems that data centers in space are going to have. So it's very interesting that Abel is going out and saying space AI edge computing. He wouldn't do that randomly. Abel, of all people, is not a pumper. The guy is very conservative in what he releases to the market. So for him to say space AI edge computing is very interesting. It's very interesting indeed. And so someone like me might speculate, well, who would be interested in what is undoubtedly going to be very expensive at first, AI edge compute? Probably the US military. Pretty cool. It's very natural that this would be the initial customer for this type of stuff. And really pave the way for what will ultimately be commercial applications. That would make sense to me. And so the fact that he's dropping that in the press release says maybe it's sooner rather than later. Very exciting stuff that market doesn't care about last week, but maybe the market will start to care about pretty soon. And then he talks about many mission-critical government applications. Well, Hennessy has been great at sharing their research around what those applications might be. Really exciting stuff. Radar position navigation and timing, uh, tracking, identifying friend and foe, drone control, signal intelligence, signal jamming— lots of exciting things. And then of course Kevin gloms on to the fact that there's an accelerated, uh, production cadence. So lots of things in the Kevin Chen ripdown. And then again, contextualizing the transmission speeds. I thought this was really interesting by one Moore Smith. And he points out that in 2020— 2014, the global average mobile connection speed was 1.7 megabits per second. And smartphones were running at 6.1 megabits per second. In 2012, smartphones were running at 2.1 megabits per second. It's fascinating stuff, and it just shows you just how functional the ASTS constellation is going to be, even at the speeds it's only recently achieved on what is still a nascent system. So we're going to get to why that's important. So the MNOs continue to circle their own castles. They are making sure they can address a market narrative that worries about them being knocked out by Starlink. The boogeyman is coming for them. And so they need to be really up with investors and up in reality to make sure that they have the right product roadmap so that people don't churn off of AT&T. If SpaceX comes out with an awesome phone, with an awesome service at a low price, that's a winning proposition. Why, why shouldn't Starlink be able to attract customers if they have an awesome product? But, you know, of course they will. And so AT&T needs an awesome product at a good price. Simple as that. And Stankey says, for example, one of the partners we're working with, AST SpaceMobile, those are going to be coming to fruition as we move into the next year. It's going to be a product that we have been working on with ASTS. That's a very intuitive product that does not require the customer to do anything differently. That's a key theme we're going to see is the seamless nature of the product. And we're going to understand, we already do understand why the T-Mobile product has had such poor reception. And we'll get to that in a second. And that, you know, so no pun intended, you know, the T-Mobile product had poor reception. Period, and a poor consumer reception. So both of these things are related. But what's great when you take a step back, why do MNOs like this so much? And so you don't have to just do much more than just see what the MNOs are telling you. So Bruce Dean, who's the SVP of network technology with 20 years of time at Bell, says that connecting to AST SpaceMobile is quote. Just like any other cellular site, and that quote initial tests have been great exclamation point. The key is it integrates directly to the MNL, so you the user don't have to hop into an app. Your phone doesn't have to roam, which then drains its battery and obliterates the device as it desperately tries to compensate for how it has to scream into space to connect to the satellite. It is just. the MNO's core. And so when you have something that's integrated and native to the MNO, it's just gonna work a whole lot better than something that it's having to fight, which is how the Starlink system works. And so the MNOs are aware of the market sentiment toward Starlink potentially disrupting them. They are not dumb. They have seen this movie play out across other industries over the past 20 years And they know that if they're not proactive, their kind of oligopoly can be challenged. And they already had to deal with T-Mobile grabbing a ton of market share. And so they've seemingly used this JV, which we haven't seen the details of, to create a block on MVNL access for Starlink. So Verizon rules out giving Starlink MVNO, which is mobile virtual network operator access, which would basically give their terrestrial network to SpaceX and says there is no backdoor through its wireless network, which means they can't buy something. And then all of a sudden, they being SpaceX and then being MVNO, and it supports the idea that ASTS is the carrier-first model that the JV partners are planning to use to try to create a front against SpaceX. And so it's good to see that happening. It seems very clear now that this is exactly why the Adminos did the JV, and I'm anxious to see some more details coming out. Last week I was actually sort of— well, I wasn't sort of, I was hoping that we were going to get the T-Mobile deal. As usual, whenever I buy short-term calls in expectation of something like that, I lose, but it was a teeny position for me, but I felt like, God, all the pieces are lined up on this. I would definitely be a whiny little crybaby if they announced it and the stock went up and I'd be like, oh, I knew it. So I actually wanted to put some money behind it and then lost that money. But how Starlink is going to compete is actually pretty fascinating. And so Tanner came out highlighting some comments about Starlink, where Starlink and Tesla are going to team up. And so every Tesla vehicle is going to be a Starlink hub. Then all of a sudden they start to have this mesh network. And so can SpaceX be the 4th MNO in the US by combining its fixed satellite spectrum and then the cell phone service and utilize a hybrid Wi-Fi network with Starlink dishes and Wi-Fi within cities and then Teslas? And then the EchoStar D2C spectrum. Is it possible? And so Elon seems to be confirming this plan. It will only work on new phones because you need the chips that are different, but it's interesting. I don't, again, I don't know if the service levels will be where you want them to be and reliable. Those are all questions beyond my pay grade, but I can guarantee you that the boards at AT&T, Verizon, and T-Mobile are looking at this and almost certainly are not sitting by idly at this, this new threat. Meanwhile, people continue to choose ASTS with their careers. And so, you know, while one person joining is, you know, great, um, but not necessarily dispositive of any one thing, it is nice to see people that are extremely tenured at really important companies deciding that their best opportunity is at ASTS. And so this week we had Ankush Bansal, who is a 21-year veteran at Nokia, deciding to join AST SpaceMobile. And so why do people do that? They think it's the best opportunity for their own personal growth. And so this is a presales lead for Asia Pacific now at ASTS. Just shows you what a global opportunity ASTS has now had quite a few hires in APAC. Does this have to do with the J. Leo opportunity? Well, this gentleman's gonna be based in Sydney. The prior guy we had highlighted as being based in Tokyo, but it just shows you that this is a global opportunity. We focus a lot on AT&T, Verizon, and our expectations around T-Mobile. But the world is our oyster, and we continue to see talent joining the company that allows us to pursue it. So meanwhile, T-Mobile. T-Mobile seems inevitable at this point that they will join ASTS. This last week, there was a 30-day FCC authorization to do tests on direct-to-device broadband. On T-Mobile spectrum, so that doesn't seem random. Let me just go through these other tweets that we had. And so then we had another Smith again pointing to the same thing: that that grain management spectrum on 800 megahertz is being tested, and then there's ASTS working on that same spectrum. Walter Picek, who is an industry consultant but but an ethical one. Highlights that he thinks the T-Mobile SpaceX JV is just about dead. And so when the CEO of T-Mobile says, so looking forward, the telco JV does allow for individual operators to have conversations and agreements with other parties, but our expectation of the vast majority will be sourced through the JV, is something that leads Walter Piechek to conclude that T-Mobile is out with SpaceX. Doesn't allay my concern on having one buyer. So this idea that there's a buyer cartel, so I'm anxiously following how that JV actually works. Time will tell. But again, it's very difficult for ASTS to be beaten at this point because it's a global company and within any one market, it has multiple levels of business. And so in particular, in the US, they're going to have the public safety with FirstNet, they're going to have the government, they're going to have the military, then they have the individual contracts with AT&T, individual contracts with Verizon, and then whatever business the JV does on top of that. You start to have this layer cake of staggered contracts that would seem to me to be difficult for the JV just to team up on ASTS and commoditize them. But that is of course the thing that we want to be really careful about. But whether or not T-Mobile is going to become a customer of ASTS seems to have been allayed directly by ASTS themselves. And so there was an interview with a gentleman speaking in Portuguese who is our— I forget what his role is, but, um, somewhat important. And he goes, uh, directly, um, what did he say? ASTS will provide direct-to-device coverage in the US in partnership with these mobile operators. And he had in that sentence before defined these mobile operators as AT&T, Verizon, and T-Mobile. So it seems like a little bit of a slip on his part, but it matches all of the other research we've done and seems like it's just a matter of waiting. And waiting is the hardest part. You know, where's our JLEO deal? Where is FirstNet? You know, all of these things. It's tomorrow, tomorrow, I love you tomorrow. But in a lot of these instances, the company has delivered. Just sometimes the things take time. It's usually— can only imagine— never their choice to have things delayed. But if you do the research and if you structure your position correctly, which is basically don't have a time value of money burn in your portfolio, then you can wait for these things to happen. Then year over year, sure, the stock is almost exactly flat, But it's up a lot if you held it for the past 2 to 3 years. And if this is just, you know, a blink of a correction, just rewinding 2 months ago, year over year, the stock was up a huge amount of return. So waiting, uh, can be very valuable. The things the company says they're going to do generally happen. And most importantly, because we're past production hell, things are going to start to look pretty good pretty soon. So what do we have here? The next thing is really why T-Mobile and Starlink hit the wall. So this goes to how it's fundamentally just a defective service. And so T-Mobile satellite, which is the Starlink JV, it's had low usage because it only activates once a phone enters a dead zone, which is usually in a remote or rural area. And It acts as a roaming service, like a totally different network. So what it is not is the supplemental coverage that takes you from 1 bar to 4 bars. That's a big opportunity because when you think about for yourself, how many times— it's not that you have a total dead zone, which I actually have quite a lot, but it's the areas where you have a low signal. And so when you have a low signal, your phone gets kind of messed up when you're using the T-Mobile Starlink system because does it abandon T-Mobile and go into roaming? What does it do? It's far better if where you only have 1 bar of terrestrial service as opposed to a complete dead zone, you can switch to ASTS to then have a 3 to 5 bar connection. That's a dramatically bigger market opportunity than a separate roaming network that kicks in once you are in a true dead spot. And so that's a subtle point which will become more obvious when ASTS's service goes live, and you can start to see why the usage patterns are going to be very different. So now let's go back to one of my favorite topics, which is the TAM. The TAM of the market Kind of dovetails to what I was just talking about. First layer, the simplest layer for the elevator pitch is just always going to be dead spots. Well, now let's expand that to the not just dead spots, but going from 1 bar to 4 bars. Well, that is— remember I was talking to Anpanman, I think, and he was saying like 25% of the market is actually that 1 bar problem versus— and I forget the exact number, but it's like 1% of the market is like zero coverage, which for me certainly doesn't feel true. Maybe I'm just unlucky, but it's an exponentially large market opportunity when you're solving the weak coverage problem versus the no coverage problem. And so then when you compound that to the MNOs desperately wanting to shrink their terrestrial footprint, and for other things we've talked about, like getting rid of copper and replacing some wireline services with satellite just for the economic reasons from the MNOs. But if these guys can start to shrink their terrestrial footprint, that again increases the footprint that must be covered by satellite. That's a TAM improvement. And I think we're going to flip into a state where, you know, down the line in a year or two from now, people are going to go, oh my God, this is just going to continue to eat away at American Towers market because more and more towers are going to be rendered uneconomic. As the satellites improve, that cost of having a base station, running electricity, running fiber, maintaining a station, paying for radios to be hung, all these things incrementally, they're just going to get eaten. And that's just increasing the market for ASTS. So where you have a stock that starts to continually grow its TAM, that's what starts to underpin an increasing trading multiple. And so where ultimately this stock will trade on a price-to-sales, price-to-EBITDA, or these things, I don't know. But my view is that it's going to have upward pressure to those multiples because we're going to have inflecting TAM. And that's an important observation. Just like the MNO opportunity should be inflecting upward sloping, we have Increasing government opportunities, and so ASTS Space Mobile's phones are becoming a GPS backup. So that's a cool article that ran in SciSat, whatever this is. And so they said that the U.S. Space Development Agency and Missile Defense Agency are drawing on the same ASTS Space Mobile satellites built to give ordinary smartphones broadband service using dedicated secure frequency partitions on those spacecraft. To test an alternative sourcing of positioning, navigation, and timing for military equipment operating where GPS is jammed or spoofed. ASTS confirmed the arrangement on July 1st, 2026.
[00:44:45] Speaker A: Boom.
[00:44:46] Speaker B: Pretty cool. And so that's what we call TAM expansion. This is good. Diverse revenue sources from AAA counterparties that are mission critical. This is the type of stuff that starts to stack your revenue opportunity that drives a lot of value creation. And so then the work by Hennessy to help further explain this government opportunity is really valuable. And so the Spectator brought this back to the front. It's a nice video by Hennessy. It's a minute and 20 seconds. And so I recommend everyone listen to it and they do a great job just explaining this. I think these guys have really done their work and it's very generous of them to share it. Meanwhile, the Pentagon is gassing up the coffers to spend on these critical technologies. So Pete Hegseth was requesting a liquidity inject— injection. On July 21st, there was the hearing, and in August, we could potentially expect the relevant bill to pass. More money flowing toward these things is good. And coincidentally, there's no coincidences in life, ASTS is expanding. They And so as we talked about last week, they got approval for this massive expansion in Midland with tax incentives and a 23-acre lease. And this is an expansion that helps the company go beyond 6 satellites per month. The current facilities are what we've always estimated for the 6 per month. And what you kind of know, despite what the FUDsters said, because they— FUDsters never do real work. With the company continuing to add satellites in production backlog and now shipping quite regularly, you, you know that the capacity is being uncorked in the facilities we currently have. Clearly, facilities that haven't even broken ground are not contributing to our current capacity. And so any idea that this new capacity is because for some reason something is presently going wrong with our current capacity Is very easily dismissed with a couple seconds of thinking. And so this new facility is all net new capacity. It's over 1,000 new jobs. It's huge. And so it's just showing that the company is ramping up production capacity like crazy and that they're going to have multiple and parallel production lines. The only question you should ask is the one I'm asking, and it's for what? What do they need all this capacity for? And that brings you to the, the things that we, we know, and then there's things that we probably don't know. So we know that they're working on Golden Dome. That's probably going to be a lot of dedicated capacity because some of that stuff is probably going to have some different clearances. JLEO, that's a separate constellation. Are there other sovereign constellations that are in the hopper? Satellite Connect Europe, for example, is that actually gonna be a separate constellation? I don't know, but we're certainly starting to get capacity that suggests that there's something coming beyond which we presently understand through simple reads of current disclosure. That's my takeaway. And to fund all that, the convertible bond closed. And so that's great. Money is in their bank account. And they were able to raise $1 billion with pretty de minimis dilution, very low interest, certainly some stock price impact, but stock market sucked anyway. So it's really unclear what we really paid for in terms of temporary stock price depression, both actual depressing of the stock price, but then imposing depression on other shareholders. And, you know, it's times like this that flush a lot of people out, certainly burn a lot of people out. I know I go through the phases where I go, oh God, you know, next time the stock is $130, I'm going to sell. I tell my wife, I'm like, I learned my lesson. I'll definitely, you know, can't live like this. Then it was the exact same conversation I had last year when the stock was $60. So we'll see next time this thing is ripping. There's going to be new facts. It's not like I'm just an undisciplined person. I think I'm reasonably disciplined, but there's always new facts that come out, but the sentiment is always the same. It's regret. It's promises that if we could just get one more rally, this time I'll fix it all and go into S&P 500 and things like this. And so it's the natural clearing mechanism. And you look across the board for momentum stocks, every little stock community, whether we were talking about modular nukes, data centers, You name it. There's probably a kook speaking for all of these sectors right now, somewhere around the world lamenting the decline of their stock, not realizing that probably 95% of the stock price movement is just because of exogenous factor risks. Doesn't really help you pay your rent. Certainly doesn't help people like Jacob Unfortunately, um, factor facts, sort of death taxes and factor risk come for everyone. But it's good when you then use these periods of time to go back down the rabbit hole and, and learn. And so I enjoyed this tweet from this radio systems engineer who kind of went crazy on Reddit and just went through and validated all these technical points. So I have this in this second to last, this penultimate tweet of mine. called Rabbit Hole. It is good just to read some other people's opinions from time to time and just do a sanity check. You know, do you know what you own? For, for someone that spends as much time as I do, I'm always sort of astounded at the blind spots I have where I'll read something from, you know, particularly a technical person and go, oh, I had no idea how that worked. And, you know, sometimes I'm kind of terrified by that. But if you're someone like me who's a generalist, you're always going to not know a lot about how this works. So you're always going to be playing from behind. You've got to use your own mental models to get to your own confidence interval to make an investment. But once you do, the learning doesn't stop. The learning really only accelerates, and the learning really accelerates when you start losing money, because you're either going to say, this is not for me, I'm out, or you're going to go, God, this is super annoying. I got to actually figure out what I own. And for a lot of us, that's when we dug in and we go, wow, this is amazing. I'm definitely going to you know, for me, maybe the extreme is effectively dedicate my professional life to it. I would say that you shouldn't jump to that conclusion, but this is the time to really learn and figure out if you're comfortable with the position you have. If not, first bid is the best bid if you've realized you've made a mistake. For others, it's going to be like, well, shoot, I wish I'd waited, but I really like it. Maybe I should buy some more. And then it's always useful to revisit the short thesis. And so our last tweet is the short thesis. Some guy named Evan Tyndall who seems like a know-it-all jackass and kind of came out with this long list of shorts including Walmart. So ASTS is in the same bucket as Walmart and Intel and of course Tesla. But the short thesis on ASTS, $20 billion market cap for a space cell tower company with zero subscribers that will do less than $200 million of revenue this year. Street estimates have been $500 million for 2026 a year ago. They'll burn $1.7 billion this year, and their main competition SpaceX is light years ahead in terms of commercial uptake. That's the short thesis. So Not very difficult to deconstruct that. We're running up on an hour now, and so I've got a couple minutes, but you'd point out some inconsistencies first. Well, a company has zero subscribers yet is going to be doing $200 million of revenue. So someone's subscribing, someone's paying them something for something. Um, I don't know how many of you have had someone give you $200 million in your life for nothing. I have not been so fortunate. Sign me up. And Street estimates had been $500 million of revenue and downgraded. Sure. That's what happens. The stock was never trading as if that were going to happen. So that alone is very different from a company. Let's say Walmart, for example. If Walmart had had a series of revenue revisions of that magnitude, Walmart stock would be obliterated because that would imply that there was massive disruption. When a pre-revenue growth stock has massive volatility of earnings estimates, that's just the market trying to figure out as it gets data and as the company works its way through production hell. That doesn't really have much bearing on anything. It just means you had to have waited a little bit longer to get to the promised land. And then the company burned $1.7 billion. Well, they didn't like burn it per se. I don't think Scott's sitting there with a Zippo kind of on the beach with a bunch of surfers being like, hey bros, you want to have a campfire? Let me burn some money and keep us warm. Not burning it, you know, in Baja California, they're spending it. And so what have they spent it on? Spent it on a team, spent it on facilities. And now they have over, I think it's a billion dollars of work in progress of satellites in various stages of production and satellites that have been launched. and future launch contracts. That money's not burnt, that's invested. And then for what? For future revenue. So burn is a, is a funny statement. And then their main competition SpaceX is light years ahead in terms of commercial uptake. Well, like, I don't know. So they have T-Mobile, which had actually very low uptake because it's a shitty system and very hard to use it. And then they haven't gotten a lot of other MNOs on a system that can provide only a modicum of service. So I don't know, I'm starting to lose my voice, so probably a good time for me to call it. So it was a long week, I'm tired. You could summarize it as me texting Ant Pin Man going, I hate stocks. What are we doing? Why am I doing this? Stock market sucks. You know, whatever. Um, that's kind of a summary of our sentiment, which is usually not what happens at a top. And it looks like overnight Trump taco'd out again. There's peace in the Middle East for another 4 days, which sets the cue for potentially a rip-your-face-off momentum rally. As always happens. So hope springs eternal. I'm going to wake up when I wake up and not really care too much and let the market sort itself out. And we're getting to an interval of time that is going to be pretty interesting for the stock. Expect an encapsulation earnings release at some point. you know, probably in the next week. Expect a firm launch date to potentially drop next week, maybe the week after. And then if our research is right, it's sort of tick-tock on some other meaningful news events like Jay Lio and potentially T-Mobile. So these are exciting future catalysts that could cause a big rerating, uh, that could happen in a hurry. So I hope everyone has Have yourselves a great night, and we will, I'm sure, meet again next week. Talk to you. Bye. Hi, it's Redrum here. Before we wrap up, I want to hear from you. I've left a pinned comment down below asking: Cook says AST at $130 was not that crazy. Do you agree with a $50 billion plus valuation? Head down to the comments and drop your take. I'll be reading through all your replies. Thanks for listening to the AST Space Nova podcast. If you enjoyed this episode and you'd like to help support. If you'd like to 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.
[00:57:46] Speaker A: Listen.
[00:57:53] Speaker B: Mmm, waffles.