Kook's Weekly - September 15

[00:00:06] Speaker A: This is the AST SpaceMobile Podcast. It will just basically come to your phone and be seamless regardless of where you are. We don't want the user even to know that it's connected by satellite. Listen, the opportunity that we have is very, very, very large. Okay.
[00:00:31] Speaker B: Never before have I been this apprehensive at the state of my microphone. So if I could get— I realize people might not be able to comment because I'm doing this off my computer, but I pray for all of our sake that this connection is better.
[00:00:47] Speaker A: So.
[00:00:52] Speaker B: With that, let's begin. Everything happens for a reason is my firm belief. For example, I was sleeping, I was camping this weekend in the tent next to me. There was a 5-year-old and, you know, there's separation because of a tent, but, you know, it's just one little piece of vinyl. And turns out this little girl every night likes to Wake up at 2 o'clock and hysterically cried for reasons unknown to myself or her father. And that complemented by the freight train that runs by the campground, complemented by Interstate 5, which seems to be loud all night. I am super tired. And so as I was getting the weekly done, when I came back, it was kind of slow going. And so then I realized, well, everything happens for a reason, of course. And then ASTX drops a rare Sunday tweet, very rare. And so out of the blue, we have our friends in Midland start to pop up. And so he put out a video, which was pretty cool. And it seems to show an iOS system, not just simply sort of a hacked connection, but something looked to be integrated into iOS. So we know that ASTS from the start, a key priority has been backward compatible compatibility with existing phones, and that hasn't changed. But we also know is that as they have partnerships and agreements, With handset manufacturers, there's going to be increased integrations to make sure the functionality is as good as it can be and also to add some special features. Now here we're seeing an iPhone very, very clearly with a sat-to-cell indicator. And we know that they had this deal with Google. And so a lot of us have read the side letter with Google, which was really interesting. And for those of us who painstakingly read the Legato documents, you would see that the Legato documents contemplate integration with Apple, specifically Apple devices supporting the L-band spectrum. And there's real economics tied to that. There really should be no reason why that wouldn't happen. Apple is, of course, going to accommodate AT&T and Verizon, just like Apple accommodated T-Mobile. But one must ask the question, A, is there going to be a formal sort of story hitting the journal or formal announcement of Apple cooperating or partnering with AST SpaceMobile? I think it's very reasonable that that would happen. That was enough to drive, frankly, a lot of negativity toward ASTS when Starlink was rumored to be Working with Apple, which, which of course they were. And it was always kind of silly because you think, well, yeah, well, there's going to be a press release that says Apple's working with AT&T and Verizon as well. That is sure as the sun will rise, that will also happen. But a lot of us are wondering whether there's something more afoot. And we'll get to that in a second. But this week was a week that I think is going to go down as a Strategically important week, but not for the reasons the shorts think. And so I know there's a lot of shorts. Some of these guys will pretend to be pretty neutral and they'll have a little DM conversation, but one guy in particular, I just saw him really kind of arrogantly mocking the space mob. And that's it for me. When these guys kind of reveal their colors, it's the hedge fund douchebag mentality of these guys who maybe they think they did real work, but are generally just coasting on some platitudes and some rough assumptions of how they think the world ought to work, but usually don't understand the nuances of ASTS's technology as it relates to MNO partnerships, for example, versus just a general sort of Pavlov's dog response of, well, if SpaceX does it, then they're naturally going to have a A monopoly is the general conclusion. We've well, I've lived through this phenomenon before where every time Amazon put out a press release, something would get absolutely obliterated. And so in some in some instances, for example, when Amazon put out a release saying we're going to start a pharmacy, well, I shorted Rite Aid bonds because yeah, they should be able to put something like that out of business. On the other hand, I remember vividly in 2018. they came out and said they were going to offer effectively MongoDB for free. And MongoDB got obliterated. And it just didn't make sense to me because of the reasons why Mongo is a valuable company. And so that was a time where, you know, the market said, well, Amazon's coming in, surely they will beat you, especially if they're giving it for free. My God. And the stock was down a ton. I loaded up and it worked out pretty well. And so I think this is a scenario and we're going to get to it about what SpaceX did. But I think this was a week where the market flat out is just getting it wrong. And then you just have to ask yourself, why is ASTS putting out a tweet on Sunday? It's just generally not their MO. And so we have some takes on this, of course, these crazy kooks that are the space mob. Of course, microanalyze everything the company puts out. And the company knows this. And so this is actually this interesting feedback loop of whatever details the company puts out, you can bet they laid the Easter eggs for us to find. Nothing is random. They, they definitely know us. And they definitely know that if they put out something, expect it to be analyzed to the 800th degree. And so don't put something out if it's If it's not intentional. So this first tweet, it was a great screen grab by Ampanman. And it shows this sat, the cell sat, and then up in the upper right hand of the phone, it has 4 bars of service and sat. And so it's showing that the phone actually knows which network it's on. And this is kind of interesting. I'd be curious to get some additional knowledge about this because the phone shouldn't care which network it's on. It was unclear if the phone actually knew which network it was on. Is this seamless integration with the way, with how ASTS works? So, you know, a future question for me as well, was these, was this done on testing where this is the ASTA proprietary network for testing, or was this being done through the MNO core? My strong suspicion is the former, not the latter. But I don't know. And these will be interesting questions to get to down the line. And we know that it works directly with the core as well. ASTS put out a press release and I believe AT&T confirmed it, that they had been making calls directly through the MNL core. So there might be a nuance here where ASTS is showing what they can do, but it's really on their own. They had their own core for testing purposes, as I'm sure people know. And that might be what's happening here. And they're flexing and really showing, hey, look at just how incredible our technology is. And the question is, who's the audience for this? I kind of say that rhetorically. I don't know that the audience is us. So we also don't know is if there's going to be an Apple announcement either tomorrow or soon, or if there's something else coming. Tomorrow or soon. The bears will of course mock us with our endless helpium. I don't care. A lot of us are up a huge amount on this position, and sometimes when you have gains measured in thousands of percents, you get the ability to say, you know what, I'm going to continue to be a patient investor here, and I don't have all the answers. I don't need to have all the answers because I, I know the team and I know the general direction of the company. But you have Cathie coming out. Of course, I'm really curious to see Cathie think about this more Katie's first takes are great. Katie's sort of in-depth ruminations are usually better. But Katie comes out and says, breaking news, Apple and ASTF showcase iOS 26 development beta with native FaceTime app doing livestream over Bluebird satellite. We will see what impact this has. The next thing we had this week, which is a surprise, is Wheel of Fortune with ISRO. Who knows what is going on in India? But you had the chairman, I believe, put out a slide that says Bluebird mission target September 2025. Say what? You know, these guys had just recently pushed this to, I think it was Q1 2026, or maybe it was November launch window between November and January. But we thought we had lost our slot. For the next LVM-3 rocket, and then they put out a slide, you know, potentially indicating the contrary, I would be the first to say, I have no idea when we will be launching an ISRO. But that's not the same statement as saying, I have no idea when we're launching FM-1. The answer to that question is the same answer, but more nuanced because, well, I don't know. There's strong hope. I'd say hope in this instance is the right word. There is strong hope that we end up having a Falcon 9 come, and there's some chance, although seemingly less likely now, just because I feel like it would have come out, that would be on New Glenn 2. But I do think that we're going to have FM-1 have some visibility in short order. My understanding is that you can go rideshare. I've asked some friends who work in the industry, but we don't yet have a date. And while that is obviously something we're very focused on and would love to see, the value creation process of this company can continue on while we wait. And so let's think, you know, we're at the 1-year anniversary of the Block.one launch. You know, how fast a year goes. A lot of us can remember being up at 1 in the morning, to catch our bus with, you know, 1,000 other— just mute my watch. I'm getting lit up on WhatsApp. A lot of us remember, you know, the 1,000— I think it was more than 1,000 people get together to watch the Block 2 launch. And some people will say, well, gosh, I wouldn't— couldn't have imagined it would take another year before the next satellite goes up. And yeah, me either, but here we are. And we know that it's gonna be soon, and we have a lot of satellites behind FM1. And in the meantime, as we'll discuss shortly, there's been a lot of coiling of the spring, the spring of value creation, so to speak. And time to time, the market will let that spring rip. And so back in July, the market really started to look forward to the future value creation of the company. We saw $60 a share. Then you had August, which is typically pretty crappy, and September. So nothing really new there. I had been thinking about how to plan for that type of volatility. You never do enough, but it is what it is. And then people confuse the seasonal crappiness of the stock market with other fundamental things. For example, delayed launch and then SpaceX announcements. And then, you know, the, I like to say that the stock price writes the news. And that certainly has happened recently, but the stock price could start to write some very different news soon. And so if we do a quick little journey down memory lane, we have a contributor named @TutuFly. So it's not King Tut, it's TutuFly. And this was auto-translated from Spanish by Grok, but it's a person that put together a nice little summary of what's happened and just saying, well, the bears are back, you know, big frowny face of a chart from going from $60.95 down to $38.37. I can safely say that this probably sucks the most for me versus almost any other person on this call or maybe in the world of a non-employed shareholder in terms of position sizing. And you know what, You just put your diaper back on and get back at it. And so this person is clearly also able to put their diaper back on, said, well, the market was expecting an imminent launch and instead we got delays and there's certainly uncertainty. The uncertainty is certain. And that, as this person continues, is an easy cover. It's an easy cover for fear. It's an easy cover for people to rotate to whatever is flying higher. On the day, like open door, things like that. It creates a lot of noise. People are putting on the long EchoStar, short ASTS, all sorts of things. But this person interestingly notes, but again, there's a little bit of correlation here. This person has read Katzi's work and I think mine that saying, well, the Block 2 might have been delayed because of a redesign. Because of government work. And that might be true. It might also just have been some redesign as they try to increase the load of the satellite in terms of its, I think it's the right term is the duty time. And so basically dealing with heat dissipation and power loads, we don't know. But they've clearly had an ability to make great satellites in the past. And if things take a little bit longer, whether it's for government modifications, whether it's for L-band, whether it's for increasing power loads so that the satellites are more economic. We don't know. But then this week, as this person points out, and what we'll talk to you shortly, we had SpaceX come out and buy Spectrum for $19 billion, which of course the market freaked out, predictably drilling the stock as if it's, you know, some fly-by-night operation. And so what was effectively an admission by Musk that he needed Spectrum, which we had already Purchased at a much better price, the market then immediately assumes that, well, ASTS must be obsolete. And quote, the market is big enough for ASTS to also have a place in it. And I was thinking, well, I don't know, like, I feel like it's the opposite statement. Maybe the market's so big that SpaceX can have a shot at it. And not to be smug, but I truly believe that SpaceX is going to be a distant second in this market. And by no means ASTS being a distant second. And then the person continues to point out that the regulatory risk is basically nonexistent. So first of all, we've made a head start with the technology. We've been integrating to the government. We have a head start with spectrum. We have the FCC coming out just basically saying, put it on my desk and I'll stamp it. And they've been doing it. We have Brendan Carr, again, the chairman of the FCC, saying that this market is, quote, a game changer. Every day, just more and more validation. And then we have the defense industry going crazy. We have Golden Dome potentially coming this week or next. It's very unclear when that will get announced and whether we're in it. We have ASTS rapidly hiring for government positions. Again, strong correlation with Golden Dome opportunities, but even if Not Golden Dome. And this is where you cue the bears and go, oh, Cook's already backing off Golden Dome. We got him. He's already, already moving on to the next pump. Well, I mean, I don't know if they got Golden Dome, but what I do know is they have a lot of other government business and the government opportunity is far larger than Golden Dome. And I do believe we're going to get Golden Dome, but I don't know that. And we'll all find out together. But then the person points out that, yeah, the stock is volatile. Anyone that bought the stock in 2024 is up pretty nicely. I mean, maybe there's someone who top ticked it at $40 in 2024 and they're going to be fine, I think. And the person just points out today the market is just screaming impatience, and his plea is really just let it unfold. And the quote that he points to is, if you can't make money by being smarter, make money by being more patient. And this really resonates with me. I try to trade from time to time. I'm very open about this is not who I am. I've spent a lot of time talking to people like Reformed Trader, for example, to understand his strategy. He makes a lot of money doing what he's doing. He's very talented, but he's just wired differently from how I'm wired. It's just not That's not my natural state. I'm more of like an ironclad battleship that has an inability to turn, but is very confident in the destination. So not willing to turn, but will instead drive through enemy fire and make it somehow, some way versus the traders are going to see chart patterns. And to Reform Trader's credit, saw it correctly. He didn't know why the stock was going to go down, but he saw that the market was telling him something recently. Thank God the market seems to be telling him that the stock is going to $100 soon. But my strategy has always been to move heavy and slow. Other people's strategy is to move light and nimble and quick. And I don't know who's ultimately going to be more successful, but to me, I kind of have more of a sniper mentality of find a really nice little nest and dig in. and stay there and don't move. Because if you move, you're more likely to get blown up. People, more things, more bad things can happen to you. But if you stay perfectly still and you've really done your work, then I think that you're, the time is on your side. And that's certainly my lived experience. And I think this is what this person is saying as well. He continues to say, ASTS is not a telecommunications stock. It is the key to global direct-to-mobile connectivity. Blessed by the FCC, backed by AT&T and Verizon, and already seen as a strategic national defense asset. Nothing new for anyone that's been studying stock, but good sort of zoom out reminder of what's really happening here. And sometimes it can be so easy to lose sight of the long term because, you know, people like me, for example, can be the worst sinners of like, oh my God, where's F1 one? and worry about every little thing. And then I zoom out and go, well, I mean, I've held this thing for 4 years, so what's the rush? I have a nice IRR on my investment, so it's certainly compounded well. And I like to also take a step back and realize if you can have your portfolio go up 25 to 30% a year compounded, you will be rich beyond your wildest dreams. And so while I have very high return expectations for ASTS, in my head of like, let's just pop to $100, you know, which would obviously be much more than a 25% move. The reality is if they can keep creating value at a 25% clip, then this stock price will get where it needs to be in short order. But I personally believe that this gets compressed on the front end as you're in these rapid inflection phases of a stock. And I believe we're at a rapid inflection phase at ASTS where I think that while the stock might end up being a 25, 30% long-term compounder, if you are there for the right unlock events, if you will, the realized returns over a shorter period will be much, much higher. And this is where my studies of things like Tesla and even things like Cheniere, things that are like big project-based, long-duration stocks, studying when the value creation happened, And usually it happened quite suddenly. And so if you traded around, if you tried to be too cute, uh, you were very living very dangerously. You could in fact miss the bulk of the return stream. And so then when thinking about what the company's doing, Katzy found a job board hiring and is looking at the fact that they're hiring for 3 shifts so that each shift is 8 hours. 3 shifts means 24-hour schedule. They're pumping. This is a company that is taking it to the, taking it to the end zone. Meanwhile, their lead is becoming more obvious. And so this week, the thing that really rattled the stock, frankly, just brought me to the point of total exasperation, is when SpaceX bought 50 megahertz of spectrum from Charlie Ergen for $17 billion of cash plus stock, plus $2 billion of interest relief, a total of $19 billion. This spectrum is for the US only, makes it very comparable to Legato. This spectrum is not yet supported by handsets, so it requires a change in the chipset. It requires new satellites. Current phones do not support it. And it's going to take two years to deploy the spectrum. I think the reality is much longer than that. And so, the market for some reason decided to think that this was a near-term threat to ASTS-based mobile. And when I sat there and thought about it, so the next tweets, the title is just lots of opinions on on what it means. I'll just go to the second tweet, which was my own. But as I sat there thinking about it, and I appreciate that I have what is perceived to be a bias when it comes to this stock, I understand. But the unpopular opinion on the day as the stock was getting murdered was that the SpaceX deal was defensive and was really not indicative of a company on the offense. Doing what it had done, which is pioneering a market. But instead, this was an example of SpaceX didn't see this market. They were not equipped to tackle it at inception.
[00:23:38] Speaker A: Why?
[00:23:38] Speaker B: It requires the partnership of MNOs. It required a form factor that just simply didn't help their primary mission, which was to underwrite volumes Falcon 9. Starlink, as we all know, was an unintentional baby. They had rockets, but not enough cargoes to underwrite the rocket. So they created their own customer. They created Starlink. The Falcon 9s carry Starlink satellites, which don't need to be as big. They're operating in Ka/Ku band, I forget which frequency, but high frequency, don't need the big arrays. And so DTC would have been very problematic for SpaceX, all else equal. You don't have the spectrum. You would have had to go to MNOs. I would imagine Elon Musk would rather drink mercury than deal with discussions with AT&T's technical team and Verizon's technical team. Can you even imagine the cognitive dissonance that Elon Musk would have when trying to have a productive discussion with with an MNO, not to say anything about the MNOs that might be perceived to be not flattering, but I would hazard a guess that AT&T and Verizon have very different engineering cultures than SpaceX. Just going to put that out there as a, as a thought. And so this is not how he rolls. Did Tesla partner with GM? No, he just is not a partner guy. He does it his own way. He does it full vertical integration. D2C is his nightmare. He cannot do it by himself, therefore avoid. But now he cannot avoid because there is a clear and present danger to his business by AST SpaceMobile, even though AST won't Say it like this, but it's very obvious to me that when this service is working and you're able to get 35 megabits per second to your handset, for a lot of people, that will be good enough as a terminal, as a hotspot to provide the mobile internet that a lot of people might want. And when you start to have multi-in, multi-out, It's not clear to me that ASTS cannot start to disrupt and put a dent in some Starlink demand. It is also inconceivable to me that Elon is going to see another satellite player that is going to onboard 3 billion subs and not see a potential risk to that company then expanding to fixed broadband. We know that's a possibility. It is in the Legado documents. And so some people just think, oh, well, they're kook, kook and space mob are off speculating again, clueless cult. We know how to read. I'm not a great reader. I, I noticed that I, I'm mostly like a sight word reader at this point. Kind of look at blocks of words and see what I want to see, I guess. But I did see what was written in the Legado documents and has a very specific admission that the Legata spectrum could be used for fixed satellite broadband, which is right in Starlink's market. Now, is it such a large leap of the imagination to think that AT&T and Verizon might want to cross-sell such a service to their customers and compete with SpaceX that way? Seems very logical to me. It's a little bit more of a leap to me to think that ASTS is going to go direct to those customers. I just don't know. that if the company really has the muscle for that. I don't know if they're a go-to-market consumer company. Those would be really useful things to look in a mirror and understand if you're the company before you embark on that mission. But their tech should start to intersect with SpaceX soon. And so SpaceX sees that. They also have to keep raising money at higher and higher prices with these fake step-ups for all these employee sales. They need to have slides that show TAM. You cannot have these investors concluding that a startup company was able to beat them to a market that they're perceived to completely dominate and one-up them. Elon has to create a story around this, and he did. And so he made a big bet, a bet that allows him to have more control over his destiny. Certainly to be able to provide a service that could end up being more viable. Certainly the current one is not very impressive, but the problem is it won't be deployed until 2028 plus. The deal won't even close until 2027. And then my understanding is you have to get Apple and really Google and their ecosystem to integrate it into their handsets. You have to get FCC approval. You have to What else do you have to do? Probably more things. And then he was so silly to say that he's basically going to compete with the MNOs. And everyone knows, because the guy just can't help himself. His, I like Elon Musk, don't get me wrong, but, but the guy has got an ego that is quite large and he just cannot help himself thinking about an X phone. And he'll say, oh, we'd rather do anything but build an X phone, which to me just means he's going to build a Next phone. And what's Apple going to do? Is Apple, you know, what I don't know is what is Apple's obligation to support that spectrum? What is Qualcomm's obligation to support that spectrum? These are things I need to research. But point is, it's not entirely obvious to me that this goes off without a hitch in 2028. King Tut would point out, The delays on Starship, you know, where's my Tesla Roadster, things like that. FSD, history of, you know, some dramatic slippage, but even let's just say 2028. So AST SpaceMobile is going to have a generally available service, we believe, in 2026, continuous coverage in the markets that matter. So they're going to have a 3 Worst case, a 3-year head start versus SpaceX, who doesn't even have the satellite built yet. Now, can they build a satellite? Well, they've proven they can build satellites. Are Starlink satellites particularly complex? Have they dealt with the beamforming issues? Have they dealt with the integration with the network cores? We know because we saw the interviews what they did to integrate with T-Mobile, and it took I mean, I forget the quote, but it was hundreds of thousands of hours of the best people trying to make it work. It wasn't easy. Are they going to be able to do the Doppler effect? All the software? You know what they're probably not going to be able to do? An ASIC. And so over the weekend, uh, when I was camping, one of my friends is a principal engineer at NVIDIA. They know a little bit about chips. And so, and he actually knew that my life entirely depended on AIRST Space Mobile. And so we sat down. at dinner and he went, ah, you know, are you still involved with AST SpaceMobile? And I said, well, you know, once in the mob, you can't really leave the mob, bro. I have Tanner Kurt coming after me. And so yeah, it's still in the mob. And he was like, oh, what's happened to the stock? Stock's been down. And I just said, look, you know, you had SpaceX pile-on effect, you had August and September, but let's keep perspective. The stock was $2 not so long ago. And So we start talking and when I asked him about ASIC, he just said, oh God, you know, you really don't appreciate how hard these ASICs are. And we were talking as well about NVIDIA's own lead and whether people would try to do ASICs for AI. And he said, well, the problem is, you know, ASICs are so specific. You change anything, you got to redo it. They take so long to make. It's, it's such a difficult thing when you're dealing with a complex problem. What he and I didn't know is just how complex the problem is for bandwidth processing. I'm inclined to think it's hard, but I don't know. That's another area I probably need to research just because I just recently thought about it. But no one, not Elon, is likely going to be able to have an ASIC on the market shorter than 3 to 5 years. And so there's satellites. I mean, not to go too far down as I ad-lib this every time, but when you think about it, So if they get Starship working, I'd be inclined to bet that they will. Then if they design the V3 satellite with a focus on D2C, again, not, not clear to me, but let's suppose they do. If they do all the beamforming and things like that, they still have a power problem. And so these satellites are all about power. Your gating factor is power. What ASTS is really doing Is putting a really big solar plant up in the sky where all that power is then to process bandwidth and to create these very powerful beams. What AOCS does is enormously power consumptive because you have to have very powerful beams to reach unmodified cell phones. So for Elon to compete, he's got to be very power efficient. To be power efficient, you need an ASIC. To have an ASIC, you need time. And so I just go, well, what is the world going to look like? Let's just assume worst case. Everything magically happens in 2028. Remind me why ASTS is, is second place. It just makes no sense. And so I'd read these sell-side reports and everyone sort of just instinctively goes, well, yeah, there's, they'll still be relevant. They might still have. You know, a little bit of market share and maybe they're worth a little bit. No, hold up. Let's, let's actually think like human beings and think as time travelers and let's do the hardest part of investing, which is imagining the world 6 months, 12 months, 18 months out. Let's just pick 12 months and 12 months out, we're going to have continuous coverage. We're going to have billions of dollars of revenue likely coming in. We're going to have MNO pile on because they need to have the service that's available. We're having the apparatus built today to have far greater market share than anyone could have possibly contemplated previously because of things like SatBell and what we believe Rakuten is going to do. We might have this incredible barrier with government work with respect to FirstNet, which gives us then yet more spectrum to play with. We're going to have Uh, the Legato spectrum lit up and operational and FCC approved. Presumably, if we're wrong on FM1 being an L-band bird, which I give it 50/50 that we're wrong on that, ASTS will have its L-band birds out by then operationalized. What will Elon have? He'll just be ramping up. And so if he got everything done, Without testing, without all the stuff we had to do to, you know, to make sure it works. And remember, the testing intervals are brutal here. You have these flyover periods. If you miss it, everything just starts to cascade. That's why STS was delayed is it's just, you have so little time per day for your engineers to test because of the flyover rates. Even if Elon pulls it off perfectly, we already have been out there for 2 years generating love from all the MNOs. Consumer affinity, it's not obvious to me that Elon just displaces all of that magically in the year 2028. I just don't see it. I think the market had a deeply emotional response to this headline and did not think, again, I just call it time traveling, you know, just really try to journey through time and figure out what a company will look like as what are today future expectations become then current. And you're living it. And so I think it's the opposite when people say it won't be a winner-take-all market, quote, so ASTS can still be a player. I think it's the opposite. I think it's gonna be a winner-take-most market, and I think SpaceX might be a player, but I increasingly struggle to see just how powerful they will be. And that is what makes a market. We also had Anpanman come out, of course, with some really great analysis, and he's very good at it on the spectrum side, but he also gave us the UBS update and some other people have forwarded me reports. I just saw that they were already distributed, so I didn't distribute again. Jagaloon, who I linked out, gave a really great essay that, you know, just kind of said the quiet part out loud, or it wasn't even the quiet Quiet part, 'cause we're all moaning and groaning on Twitter and being crybabies. But, you know, it's been a painful week. But then he, he looks at what's happened over the past 1 year in terms of we have our own spectrum, really all of these other advantages we have. We have Professor Kevin Mack showing up to calm, calm down the, the children again, as usual. And he just went, yeah, largely a non-event.
[00:37:04] Speaker A: Yeah.
[00:37:04] Speaker B: You know, Starlink was always going to figure something out and be a player in this. And he thinks that there's going to be 3 players globally. And I agree, there was always going to be the case that Starlink would be one of them. And that's when I zoom out and go, what really changed this week? Starlink existed, crappy service notwithstanding. All this allowed them to do is to have a chance at having a not crappy service. And it cost them $19 billion out of the get-go, ex-satellite, ex-launch, ex-overheads, ex-everything. They spent our market cap plus this week just to get to a possible place where they could be a distant number 2. By 2030. Make it make sense. I understand why the market took the stock down. I remember I woke up, saw that press release and just went, goddamn. So, you know, let's not be fooled. I'm not saying I expected people not to freak out, but when you think about it, I think the market got it wrong. And it's the same analog that I lived through when Amazon, you know, appeared to take a shot at MongoDB. And MongoDB ended up being 4 or 5 bagger from there. So I think that's going to just repeat again here. And we also had Anpanman do a Spaces that was really good. I've linked that out as well. Looks like there are a lot of people that tuned in. But then let's just think about what Elon said. You know, he had, he was on the All In podcast, which, you know, a bunch of guys being a little bit sycophantic to their dear leader. And someone goes, yeah, Verizon kind of sucks. Elon nods and yeah, yeah. And the crowd goes wild. Okay. You don't think that comment made the boardroom of Verizon, world's richest man, arguably top 3 most influential human beings on earth politically, saying Verizon sucks? I mean, I don't think the response at Verizon is, oh, we should go do a big deal with this guy. Yeah, not, not, not thinking that's what the takeaway was. He says he will compete. He mentions that these MNOs are probably not going anywhere fast because he correctly points out that they have a lot of spectrum. But this is a guy who cannot partner with people. You know, I just reflected on that. If Elon couldn't partner with President Trump, Why would an MNL expect a different outcome? Apple and Google, I mean, they're just losers in this equation. I really don't see any upside here. So Apple and Google are sitting there thinking, so this guy bought a bunch of spectrum. Okay. So on one hand, he might be an MNL. Fine. Really? No. Big deal to them. I wouldn't think it's just, he'll be stealing market share from AT&T or Verizon or T-Mobile, not really creating net new subs in this market because it's not really a growth market. But then they have to dial in the idea that Elon's going to go create his own Fire Phone and the Microsoft phone. I can't even remember what it was called. They have to dial in that probability that there's going to be an X Phone. And you have to think that the X phone might actually be kind of cool. You know, for people that are big X users like myself, that also use Grok like myself, Elon obviously knows how to make payments systems pretty well. It will likely tie in very nicely to your Tesla. Maybe the robotaxis will be ready by then. It will obviously have satellite connectivity. You could see an X phone being pretty neat. So I wouldn't count him out. I also wouldn't count out that that device is pretty cool. And so for Apple and Google, this is not good. Even if you start shifting just 1% of demand away, those are big numbers. And worse, it ends up being something more to that. And Apple missed the AI train. Train, do they really want a competitor who's AI native coming out with a device? You know, just absolutely not. And so this is why I think that people will look back and realize this is the moment when the world ran to the sweet embrace of AST SpaceMobile, truly the carrier-neutral option. And now I think we can add a new concept here. Not only is it carrier neutral, but it's handset manufacturer neutral. There will be no SpaceMobile manufactured phone. I'm pretty confident of that. And so the carrier neutral strategy was always well intended. AST SpaceMobile is very careful to stay in their lane. And that's why also the big guys didn't Put a knife in their back when it came to Legato, because they know that AST SpaceMobile is really warehousing that spectrum for their benefit. The same cannot be true of what SpaceX is doing with its spectrum. T-Mobile might be so dumb to think that Elon, through pure generosity with his high cost of capital, decided to spend $19 billion for the benefit of T-Mobile. Now you'd have to be a special type of stupid to come to that conclusion, but you don't know what the boys in Bellevue were thinking. It's possible, but I don't think any other MNO is going to be so naive. And so then I just keep going back to why in the world would Apple and Google support this spectrum unless they're compelled to do so, if it's a prelude to enabling The monster from their eyes to make his own device. And so we saw some articles, Tim Ferriss being one of them, speculating that all this was a way to get Apple to force, force Apple's hand and, you know, maybe get Apple to cooperate on this H-block and AWS-4 spectrum and leave EchoStar really at the altar. I don't really know, but Musk has been clear over the years, and I think I put a tweet out on this effect, is Musk has plotted a challenge to Apple, building his own phone to get around Apple's gatekeeper position in the market. He, of course, hates the iTunes model. And with Tesla and Starlink and his other properties, Like I said earlier, this could be a really cool phone. And when you think about the expectations of your SpaceX investors, which I know some of those people and I know their expectations, these are people that have an expectation of having a $5 to $10 trillion company. You ain't doing that on Falcon 9 launches. I'll tell you that. That TAM is not there. And so this is a guy that has to be an absolute avalanche of TAM aggregation to support his current valuation and the ambitions of his investors. And so he will have his eye on Apple's market cap as his opportunity. That's my firm belief. So then what is the comparison of these 2 spectrum properties? So of course, let's just tune into our resident expert, Kasey. And so we have 2 players. We have AST SpaceMobile, got 45 megahertz of L-band, which has better propagation characteristics. It's a lower frequency than S-band. And AST SpaceMobile paid about half a billion dollars for that, plus some stock worth a couple hundred million dollars, plus $80 million a year of lease payments. When all's said and done, I haven't actually done this exact math. It's easy to do. But just if you kind of capitalize that lease payment, add in the upfront payment, we paid, I don't know, $2 billion total. Let's just use that for easy numbers. $2 billion of value for 45 megahertz of great spectrum. Starlink paid $19 billion for, oh my God, was it 50 megahertz of spectrum? Something like that.
[00:45:45] Speaker A: Of S-band.
[00:45:47] Speaker B: That is not currently supported and is going to require a whole lot of work. And they don't have the satellites that can support it yet. So Kasey points out, well, what is going on here? Why are the price differentials so extreme? Well, the S-band that Starlink bought has alternative uses. And so terrestrial players can use it and other constellations can use it. Whereas Legato was really orphaned. That's why I call it alchemy. There have been attempt and attempt and attempt to take what is otherwise niche applications. So really being using how Inmarsat was going to use it for supporting narrowband maritime applications. But if you try to use it as terrestrial spectrum, you had the interference issues and it was, it was blocked and the DID just won't let you do it. And so to use it as MSS, requires a very large phased array because it's lower frequency waves. Lower frequency waves means the satellite elements have to be physically spaced further apart. So if you have to space things further apart, that means to have a fixed number of elements, which you need to form good beams, the real estate you need up there just needs to be very large. So for example, a half of a wavelength for the L-band requires 10 centimeters. For the S-band, it's roughly 7 centimeters. And so for the same gain on Ligado spectrum versus the EchoStar spectrum, you need a 30% wider edge of your satellite. So the total area of your satellite goes up by 69%, and there's the mean. So it all ties back to $420.69. That is the end of our call, and the stock will go up on the basis of a mean. Uh, it was a really long way to get to the TLDR on this. Sorry guys, but it's pretty interesting. And then Cathie goes on with some more details that are beyond my pay grade, but I can just simplify that and just say alchemy. You had spectrum that could not be used in its highest value at use by anyone else with a company that was going bankrupt. Yeah, basically the game was up. Its rights were going to revert back to Inmarsat and their opportunity would be lost. And there was one company in the world that could keep them alive so that there was some recovery to their estate. And that company was AST SpaceMobile. And they got a good price for it. And I think that the market is probably this week going to wake up, actually, maybe next week. And so when we have the confirmation hearing of Legato, which is scheduled for September 22nd, hopefully that doesn't get delayed. Hopefully the plan gets confirmed. And then the next remaining step is FCC approval for the spectrum. But at that point, I think the market will start to reanalyze their assessment of the NAV and earnings power of AST SpaceMobile, especially now that you just had a precedent transaction by no other than SpaceX marking roughly the same thing. You know, we just made the point that it's worse at $20 billion, which is roughly, you know, $50 plus per share of AST SpaceMobile on the spectrum value alone. Never mind the business value, never mind the, you know, think about the business value as government work, military work, US consumer applications, US non-government B2B, which includes IoT, all sorts of stuff. And then you have international operations and then I'm sure I'm missing other things. All these, you know, pancakes of value that stack together to be a big number. All of that will be free compared to the value of the spectrum. It's not a totally clean analysis because then it goes back to alchemy where if these other business uses actually don't happen, then of course the alchemy wasn't affected because we were unable to turn lead into gold. But you get the point. People will start to see that there's some really exciting things here. We also had AT&T chime in. So John Stankey was at a Goldman conference. Basically the summary to him was, yeah, we looked at this and we thought someone was going to buy the spectrum and good luck. If you want to be an MNO, you're going to find out that it's really hard. People have tried to create a 4th MNO in the market and it's a lot more complicated than hanging 50,000 towers. So have at it. And maybe John Stankey is wrong. You know, Steve Ballmer laughed at the iPhone. And regretted it. Stanky wasn't laughing at SpaceX, but he was saying that this business was in fact a little bit more capital intensive than you might think if you want to create an MNO. Then we also had FirstNet, always kind of popping their head up to say, don't forget about us. And you had the FirstNet executives explicitly talking about the new technologies that they're going to be rolling out next year. Quote, with a differentiated product in partnership with AST SpaceMobile. So don't forget about FirstNet. We again, don't know what type of contract that will look like. Is it lump sum? Is it usage-based coming through ARPU of their 6 million? I forget how many subs they have, but I think it's 6 million subs that are going to be high-paying users, you know, for example. And so you should hope that every first responder has access to this product in $20 a month. I think they were trying to pay between $10 and $20 a month. You'd hope that everyone has it and it will save lives and it'll be great and it'll be a good business for us as well. We are also going to get Golden Dome soon trademark. So the, uh, Michael Gitlin, if I'm pronouncing his name correctly, he's the head of the Golden Dome. Is supposed to reveal his plan this week. So some of you may remember Airplane Lady. Airplane Lady did not return my email. So really nothing new in terms of my life of women not returning my outreach. So that's how you know that nothing in the world has really changed. But in this instance, because it was targeted outreach, it wasn't just a general, hey, it was like, hey, can I talk to your husband about Golden Dome? And the answer to that was No, but I will never forget that smile. I felt like she was telling me something or she was looking at me like, please God, just don't talk to me anymore on my airplane. But we should be getting Golden Dome this week and they're big numbers. There's also going to be a lot of players. So I'm not expecting this to be particularly easy to understand. And I really Don't know the form it will take. I've heard everything from it being done effectively on a satellite per by satellite deal. Most people creating satellites like this are going to have an insane cost structure. We're vertically integrated, and I don't think that the stock market or normal investors really quite appreciate the differentiated and disruptive approach ASTA SpaceMobile took. We're not a job shop. Doing one satellite at a time, which is the way that other market does, other market participants do it. We're not doing radiation-rated satellites that can survive 15 years, which make the cost go up 20x. This really, you know, gulp, starts to look a lot like Tesla's mentality. You know, aha, the boomerang of plagiarism comes right back at you, Elon. And so it really is modern thinking on how to be a scale producer. So the consequence of that is even if other people had an ability to have a technology that could achieve the military's goal in a somewhat similar way, my expectation is we're able to do it at, make up a number, but half the price. And so if we're able to sell our satellites for $50+ million a pop and then have service revenues on top of that, then this could be an exciting business opportunity. And so we got some hints from this in the SDA documentation that came out. Forget if it was the beginning of the year, but they started to talk a little bit about the economic model that they would have. It's so it's not clear to me that we're going to be using our own satellites for this as opposed to selling satellites to the government. There's a lot of reasons why I could see the government says no, we own it. They already had their fun with Star. Starlink on this matter with Ukraine. And so as an American citizen, I support their approach of trying to own it. And then they'll have the service contracts to operate them and have the software and support. And so I've seen this business model. I'm involved with a company that's going to have something very similar as well. Sell the steel, which normally in the analog world would have no service revenues of material amounts. Sort of, I'm not talking about consumables like selling flanges and hoses, but actually having real ARR. The new world will have meaningful ARR attached to it. And so I'm expecting ASTS to get something that looks like that. Katsi was out again. Let's see what Katsi had to say on this matter. Can't remember everything I tweeted out. Oh yeah, of course. The Missile Defense Agency just published the Golden Dome request proposal. It said, and I read it earlier tonight, you know, I forget, and Katzi didn't include this part. Let me go to the link. Believe it said that the bidding closes October 10th.
[00:55:42] Speaker A: Yep.
[00:55:42] Speaker B: Offers are due October 10th. Now, how is it possible that Gitling is going to be announcing his plan this week, yet the proposals are not due? It's a question. Question I cannot answer, but that's what the document says. And I think that maybe everyone can be kind of right because I do believe that this is supposed to be on Trump's desk tomorrow, is, is what I've heard. So outside of Golden Dome, we continue just to have a very accommodative government. So not a week goes by where Brendan Carr doesn't say that we must go all in on space. This is what I'm also hearing from people I know in government. Airplane lady, for example, made it very clear Space Force is the number one priority and small branch of the military, but one that's going to have incredible impact. And obviously Brendan Carr, got the memo. And you can see the full transcripts. I've provided links to it. But this is really a US versus China race. And so, you know, when a lot of us were growing up in the '80s and '90s, it was really, you know, Rocky Balboa fighting the Russian. Now it's us fighting China and that fight is in space. And we frankly just have to win. And we've previously talked in other weeks about The changing applications and understanding of 5G technology. There were some really core articles that Kevin Shen had posted a couple of weeks back, and I know when I read those, it's really revealing to me in just how early we are in understanding these technologies. It's easy to dismiss 5G as just phones, but the application radar, position navigation and tracking, and things that I probably still don't yet understand or are just really coming into the fray. And that's what again gets me so excited about the dynamic business opportunities in front of us for a company that's creating a market. It's really, I really have never been involved in something in this size that's creating such a big market. And you can see other governments are following in step. And so the UK is blowing the door open for this as well. There's a link from Peter Lindmark on this. And then all the while, ASTS is just building out more capacity. And so they've been doing some things in Homestead, Florida. Looks like there is a setback in that for reasons I don't really understand. It might've been space constraints. And there's some government inducements here and there. I saw some bears laughing at the $200,000 of incentive funding, but I think they might be missing the forest for the trees. But ASTS is really ramping up its factories. And what's interesting observation, I learned this today listening to a former employee, is just how tight the top engineering talent is. And so this new Homestead facility is just going to have 60 employees. Might seem small, but BW3, for example, seemed to have really been built by a core team of 12. You know, so while to have these big, these big staffs, when you really boil it down to the key, from what I understand, the big key individual contributors, it's actually quite a tight team. And so if they're going to have this facility in Florida that will host 60 employees, that could end up being a very important recruiting tool so that they're able to recruit outside of Midland, which is a tougher place to recruit that type of talent. And so the 60 number, while it might be small, the magnitude and the importance of that number might be large. Speculation on my part. Stay tuned for, you know, things that can, you know, prove me right or wrong. I mean, as Elon kind of quickly commented on Tim Ferriss' commentary, God, I'd be mortified if Elon kind of retweeted me and went, well, most of what Cook said in his podcast was wrong. And be like, this is why I stay anonymous, people. I'll just delete my account and go on my business. Um, but let's think about Going on your business, and so is Starlink a good business? You just gotta wonder. You know, sometimes like the the world just kind of assumes things because you have revenue growth rate, you have mystique and aura. But here you have a private company that I could almost bet he was not providing cohort data to people. When you I know how private markets work for better or for worse, and I'm the type of guy that asks very detailed questions. And I always go to what I call it bare steel. And so I'd be analyzing the characteristics of every individual user, which would mean I'd be going through the cohorts, understanding exactly what the cost to acquire them is, exactly what the ARPU is and how it moves around, exactly what the terminal costs, exactly what the retention is, and really understand how the business works. And this would be a complicated one to understand because it's not so simple. It's not like your typical DTC business. Because you have this double churn, you have the churn of the consumers, but then you have the churn of the satellites. And so I was talking to a friend and he put out a number. I came to a different number, but the conclusion is still the same is when Starlink, you know, basic business model is obviously sell you a terminal, they take some loss on that, and then you pay some amount of money. Initially it was over $100 a month. Now they're cutting some prices. That's your ARPU. And you have to have this constellation flying up there because they're flying at 300 kilometers low to help with the budget link. Those satellites reorbit fast. And so that's the churn of the fleet. And so it looks like satellite needs to replace 5, I'm sorry, Starlink needs to replace 5 satellites per Which means that they have a full Falcon 9 going up every 5 days or more just to hold the constellation flat. So just thinking simplistically about that, I mean, the right answer is look at their direct costs, but you could also look at their opportunity costs, which is what I did. And so ignoring the cost of the satellites, ignoring all the overhead, just the direct cost of the launch, At retail, that's $5 billion a year of maintenance CapEx just to keep the constellation flat. Now, if you say, well, that's the opportunity cost of the launches, and I don't know what their margin is, I'm sure we could figure that out, but let's just say 50% margin, probably high, then that'd be $2.5 billion of replacement CapEx for customers that might not look that good because again, your CAC is, you're not advertising and As much in the traditional way, but your CAC is that terminal you're subsidizing. So is Starlink a good business? Is this one of these things people wake up one day and realize it was all this bridge to the future, that it really wasn't that good unless they can get V3? Is this a story where it's an unless versus if story? If they can do all these things, it's a good investment as opposed to unless something bad happens, it's a good investment. It's an important thing to think about. And I introduced this concept in my ASTS work. You can find it on my pinned tweet where I started to look at the transition of ifs, you know, if they get FCC approval, if the satellites work, if they can produce, if they can raise money, if, if, if all of a sudden those things flip to unless. Unless a meteor strikes Midland, unless the FCC revokes the FCS, unless they, you know, the cash was stolen, you know, these things are now unless statements for ASTS. And we still have some ifs to prove, don't get me wrong, but Starlink might have some foundational ifs to prove. It might not actually be a good business right now. And I don't know if people understand that and they're really betting on a transition to V3s in Starship. Not clear to me. Probably not unreasonable bets, frankly, for people, but it just might be useful to understand just how vicious their maintenance CapEx is when then also thinking they just added $20 billion of book assets for Spectrum, the big number, and then they're going to have build these V3s and dedicate some capacity toward DUC away from their fixed broadband business. You just gotta ask, you know, sometimes not all is well in Camelot. You gotta check the math. They also might have a regulatory problem. They've moved so fast that regulators could have never contemplated the speed at which they launch things. And so the overloading of our orbits, because he's on this land grab, might be something that the ITU just simply says, no more. You're clogging up orbit. You're polluting through reentry. And look at these guys at AST SpaceMobile. Look, they're only launching 100 satellites, not 8,000. And they can kind of do the same thing without all of the problems. So Why don't y'all go back and redesign to be more conscientious? It's kind of like we used to have oil derricks, you know, lining the shores up and down everywhere. And when I see pictures from the 1920s, it's somewhat astounding to me when you look at the way America used to look, where there'd be oil derricks, you know, up literally in the middle of Los Angeles. And then the world just you know, got more efficient, but also said, no, you're going to do it in a different way. So this is not what it looks like. And I think the orbit might have a similar dynamic. Next, we have, you know, some continued news from New Glenn 2. I'm excited to see that launch. Godspeed for it to be a safe flight. And then finally, the last thing of note is Tim put out an article, which I actually, not to be repeated, thought was an interesting read and was curious to see, you know, his, his takes on this. I didn't think his article was that inflammatory for what it's worth. And of all things, Elon Musk responds and just went, quote, pretty much everything is wrong in this article. And that brought great joy and jubilation to the space mob and watching a guy who's usually not writing reasonable and sensible things about AST SpaceMobile instead of just spreading fear, uncertainty, and doubt, being laid out in the most public forum one could possibly get laid out in. And so hopefully that will make Tim a little bit of humility, but apparently his thesis about trying to pressure Apple is not correct according to Elon Musk. So I hope everyone enjoyed the weekly and I hope that the IT quality is a little bit better. I know people can't comment. I don't know why the desktop doesn't allow you to do that. And so the only other thing I was just going to comment on is this week I just made a couple other tweets on some other investments I've made. I just wanted to clear up any confusion. I made a comment where I was diversifying away from ASTS. That wasn't true. It was just, I have some extra money that is not in ASTS. And so I had bought DMYY. on the speculation that they would close a merger with Horizon Quantum, which is a software company that allows you to code in existing software languages and have it translated to the code that allows you to develop in quantum. Did some work on this. There's not a whole lot publicly. I have to read the deal documents and it's a super tight float. So I thought it could have a predictable outcome and I was really mad at myself for missing IonQ, even though I had looked at it, had talked to Quantum physicists who have some friends that have worked at CERN that know about that and really kind of lamented not being in the right place on that. So I own some of that as really schmuck insurance on having something in quantum of a real company. The CEO there is a PhD, his name is John Fitzgerald, impressive individual. And I would say it's a medium conviction investment of mine. I don't know what I'm going to do with it, but it's been working recently. And then I also have a position in MFI, which I think people might've been a little bit more surprised for me to tweet about. And he has written a lot about that. I don't clog up people's Twitter on those things because I know people just want to hear me summarize the news on AOC Space Mobile. But that just has a really crazy fact pattern in terms of the cleanliness with which an individual bought a corporate shell and knowing enough about how these things work, just saw a fact pattern that suggested with an extreme high confidence interval that they're going to do some type of deal. And when we looked into the background of this individual, you know, all jokes aside, it looked like he was Satoshi and he's probably not Satoshi, but he has a billion dollars of Bitcoin and a whole lot of really interesting crypto assets, including HBX, which is a big exchange. And so if he was going to bring that to the US, just because of the float dynamics of how these RTOs work, they, you have a lot of scummy RTOs, which are just pump and dumps. And, but they're really a bona fide vehicle to bring things public. I'm currently looking at, or proposing the idea at my firm on one because SPACs have their pluses and minuses. And in some instances, if you don't need proceeds, these RTOs can actually be really effective ways to IPO. And when it comes to crypto, it can be an expedient path. And so I own some of that, but just wanted to just clarify, you know, I don't know if I even clarified it, but just tell people I'm involved in those. And they're much small, much, much smaller bets by orders of magnitude to AST SpaceMobile. But I like to kind of have some other little irons in the fire and just keep the blood pumping. And I'm not a good trader, and so these things I've owned for 5 or 6 months, but just wanted to do a little lip service of that. And I also own obviously my VFC still, which was great and not great. And then I recently built a position in Weight Watchers of all things, and people are like, well, let's unsubscribe from this cute guy, obviously doesn't know what he's doing. But I, I am a distress guy by training, and so I, I look at try to look at, you know, what's going on in active bankruptcy dockets. And so I have a position there and I can, that was one I've actually intended to write up for people, not as a code red, but really as a cutback, which is kind of a different categorization of a theme. But they had a really crappy quarter last quarter. And so it's one I want to just see the numbers come in and build my own conviction before writing more publicly about it. Because God forbid people invest in it, While I'm still also, you know, very fluid in my thinking and just want to try to prevent lower conviction things, at least having my name attached to it. So that's the story there. I hope everyone had a great week. Hope people could actually hear me. It'll be really disappointing if I get off this and then people say that no one could hear me and I was talking to myself for an entire 10 minutes. Have a great night.
[01:11:14] Speaker A: Thanks for listening to the AST SpaceMobile Podcast. If you enjoyed this episode and you'd like to help support the podcast, please share it with others, post about it on social media, or leave a rating and review. To catch all the latest news about AST SpaceMobile, make sure to subscribe. Thanks again, and I'll see you next time. We're doing something very, very And I think with this technology we can really affect a billion lives. AST SpaceMobile is the only company that has proven technology to deliver cellular broadband connectivity directly from space to the everyday smartphone. People will just basically turn on their phone and be seamless regardless of where you are. We don't want the user even to know that it's connected by satellite. Our role is to bring this into reality, always in partnership with the animals. Listen.
[01:12:21] Speaker B: Mmm, waffles.