Kook’s Weekly - October 20

[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.
[00:00:28] Speaker B: Okay, good evening everyone. Thanks for joining. I hope if anyone's a Toronto fan, congratulations. If anyone's a Mariners fan, um, brutal. And so I'm in a split household, and so I guess tomorrow's gonna be the night we all figure it out. Uh, if people can tell by my voice, I'm not feeling very well. Turns out going camping 2 weekends in a row with a bunch of dads is just like a recipe for testing one's immune system. And mine didn't pass the test. But anyway, ASTS must go on. I don't think Abel takes a, takes a sick day, so I won't either. So this week we had quite a lot of excitement, maybe a little bit too much excitement for my, for my blood, but we had FM1 arrive in India. And so it's, it's happening. We have, you know, it shows the global reach of the space mob. We had people basically at every airport, um, or at least being able to pull footage from every airport of the Antonov's flight around the world. I know I speak for many of us when saying that I did in fact go and order a 1 to 200 scale Antonov model, which should be arriving any day. Uh, that will complement my 2 Block 1 satellite models I have. So I don't have just one, I have 2. I probably need to just get some more. And ultimately, you know, I need to find like a really good vendor of these things because I worry that AST SpaceMobile will quit producing them and I might just buy a Bluebird model for every bird they put in the air. So this could end up being pretty expensive, obviously. Like we're talking like $10,000 to $20,000 of Bluebird models that I'm sure my wife You know, on Bluebird 243 will go, seriously? And I'll be like, yeah, definitely serious. What are you talking about? This house was built by this company. We're going to have 243 Bluebirds in this house. Goddamn it. So anyway, India. So the satellite is in India. Bombay the hard way. Guns. Cars and Sitars. I haven't listened to this album in a really long time, but hard to forget that title. But what's exciting about this is there started to be some rumors that this ISRO flight was going to be in November. Now, I personally think we're going to be having Falcon 9 launches first, but I could be wrong on that. And so it's kind of interesting to keep the market guessing because when you think about what's happening This weekend, next, we might have FM-2 ship as well. And so as we know, that, that will be by a truck and we'll get the photograph, you know, hopefully after it's actually arrived in Florida. The reason I say hopefully is just for operational security. Like clearly I'd rather have minimization of risk versus, you know, some press releases if the timing is just a day or two. But it is really exciting to have this real ramp up of operational velocity occurring. And I think a lot of us were conditioned to thinking that the ISRO launch was going to be in January. And so that means we'd be having, you know, maybe a handful of Falcon 9 launches this year, which in a way would probably be what the market would want to see the most because that's just to be the lowest drama launch, but maybe India is saying, hey, we want the attention and we're going to go first. But in any respect, this achievement of milestones, and there are many, is what is going to drive, in our opinion, I say our, certainly MPM and myself and Katzi and Tanner and Kevin, you know, these guys that we talk to all day. The flipping of operational milestones Should ultimately be the unlock for share price progression. And so, Anpanman has made this cool chart that he's posted really over the years that just shows the milestones Starlink hit and what the implied valuations are for SpaceX. And so, clearly, you can have a little bit of a debate because SpaceX is private, and there's certainly some implied values. within SpaceX because SpaceX is of course a launch company and a telecommunications company. Now, a lot of people were giving Ant-Man a bunch of crap saying, hey, this is, you know, you pumper, you're being irresponsible. This isn't right. But I just say, look, I think I don't have the numbers off the top of my head, but the launch business isn't particularly exciting. You know that they're doing whatever it is, 120 launches. A year, do this math real quick, and roughly $70 million per launch at sticker price. And we know that most of those launches are actually for Starlink, but just in theory, if you just kind of go with my logic, that's $8.4 billion of revenue for launch. If you were just to price that at retail, that doesn't underpin a half a trillion dollar valuation. And so when you look at Starlink, Starlink has 5 million subs and people are paying, I'm just making up numbers real quick right here. People are paying at least $1,000 a year of ARPU. That's $5 billion of revenue, but that's super high multiple revenue because that's cable company revenue and it's growing like a weed. And so the, and that doesn't include all the government revenues is for Starshield and things like that. And so I forget off the top of my head, but we know that Starlink is probably doing $10 billion plus of revenue. And it's really the only exciting telecom growth asset out there. When you think about what people are otherwise dealing with, they're dealing with Liberty Global, Charter, things like that, which are struggling from price compression and competition. I haven't checked in on Charter in a while. That had been a pretty big position we used to follow maybe like 10 years ago when Rulledge was really plowing ahead on their aggressive strategy. But as you can see, I was pulling up a chart. Chart has kind of been dragging ass honestly for quite a lot. And so it peaked at COVID at 800 and now it's 200. That's no growth. If there's a lot of competition, Starlink comes on the scene. I'm not here to talk about Starlink by any means, but when you think about it from a team, it's really the most exciting game in town. And so this is why you would be really excited to own SpaceX, and then you get all this dreamy Starship and, you know, whatever the hell else he's going to do. But I think M-Pen Man's analysis really holds water when you look at the stepwise progression of SpaceX's valuation. And so we're at the point where we're just starting to have our big-scale birds in the air and we have approvals. If you look at the corollary of what happened with SpaceX, that's right before things just went totally moonshotted. And so that's when SpaceX was worth, you know, $40, $50 billion, you know, before then just zipping up to a quarter of a trillion and now onward to half a trillion. And so I think this analogy is going to hold because right now the market's really grappling with, okay, can they execute? And what we saw the other day, or couple days, the move from $40 to, you know, now $80, whatever it is, $87 in the aftermarket, is, um, is really reflective of people going, oh yeah, wow, they're actually going to be able to make these salads. There's no showstopper on the new form factor. The next thing the market is going to want to see is turning on the revenue. That's where we could really expect the valuation to go vertical. Now, it's not going to happen overnight, presumably, because we'd have to have a bunch of satellites in the air. But you could, you can see why this path is likely to hold and why are the, why The stepwise chip price as we unlock various uncertainties. And so, you know, zoom out, big uncertainty for this company was, can they finance itself? Another big uncertainty, did the prototype work? Yes, it did. Another big uncertainty was, will the regulators permit it? Yes, they will. Another big uncertainty, will the MNOs choose them? There was a real debate in the market as to whether Verizon was going to bail on AST SpaceMobile. Thought that was asinine, but you can see that that was it was not priced in the market. Stock price shot up a lot when Verizon came through the other day, and so you know I think we're going to get a flurry of these DA contracts, which will be exciting. But I think at some point it's just going to start to be this tension on the stock. Not to say that it can't keep going up just on those, but there could be a point where the market goes yeah yeah yeah yeah we we understand you're going to get all these DAs. And we're going to hold this sort of pressure behind the dam wall and wait to see you get 20 satellites up in the air and start to convert that to revenue. And then we're going to blast through the value of all those DAs. Well, whether that pressure starts to build at $85 per share, whether that pressure starts to build at $150 per share, I don't know. But it is exciting because Now the release of all this pressure is really kind of inside a 1-year window, which doesn't really leave shorts much room to maneuver. You know, they really have to start having their short thesis rely on like, well, shit happens and really hope for some sort of exogenous event. But yeah, and I can't predict that obviously. And we've had a lot of exogenous events during our journey over the past 5 years. But I do believe this SpaceX roadmap is going to govern the share price progression. And as you know, I won't repeat myself for the 5th time again, but as the MPMN points out, we really are seemingly at the point of max inflection and max inflection is where the revenue dam breaks. So let's check in with our dear friend Kevin Chen, who made the point about the dam breaking. And so people, I don't know what people do all day in terms of these FUDsters, but people are then like, oh yeah, okay, fine, it works, but will they become profitable? And here I'm quoting this guy, Lab_Stocks, quote, let's say they do make money and somehow turn $1 billion a year per annum. That would be incredible. Wouldn't the company still be overvalued right now making $1 billion a year? And Kevin makes the point that this is really a dam waiting to break. And so all of these M&O deals are piling up. The value of them aren't very obvious to the market, the general market. They're very obvious to Space Mob because we've spent every waking minute analyzing this. But this dam has been under construction for 7 years. And so while the cash flow hasn't run through the P&L, It's wired to do so. And so these DAs are wiring cash flow. They're wiring go-to-market. And I just want to reemphasize this point because it's certainly the reason why I started to look at this company in the first place and the reason why I thought I had to take a huge bet. And it really is around go-to-market. And so go-to-market is a concept that I certainly hadn't focused a whole lot on, like let's say 15 years ago. And it's hard for me to say whether other public market investors were focused on it or not. But it's really a concept that was just drilled through my head in the private markets. Because in the private markets, you're dealing with companies that are so incipient, they don't have brands yet, they don't have other real moats. And so the go-to-market swing is usually, you know, hey, we're going to spend money on Facebook, or hey, we're going to hire all these sales reps, hey, we're going to have a channel partnership, things like that. It's crucial because most companies die, in my view, because of go-to-market inefficiencies, which is really just a way to say the market can be very competitive. And so getting to market and getting customers can end up being economically challenged and drain you of your capital. And so AST SpaceMobile, where it differs from the legacy satellite companies, is it's not trying to acquire its own customers. It's not in the business of selling its own handset. That's where the Iridiums of the world died. The go-to-market was really hard. Think about the friction of getting someone to go purchase a separate phone for, you know, $1,000 or something, sign up with another plan. That's what we call high friction sale. That would have CAC against it. You'd be having to advertise, you know, on Super Bowl commercials and things like that. Costs a lot of money. And so ASTS with its super wholesale model, Has seemingly solved the CAC problem, the customer acquisition cost problem, because the partnerships they have with the MNOs. And then when you kind of extend the analysis of that, they're also not a cost to the MNO. And this is something that I think the bears overlook a lot. They think, well, there's going to be all this competition or MNOs are going to try to beat up AST, you know, whatever. From the AT&T and Verizon's point of view, This is just money they didn't have before. And so you could see, see, you know, realistically, sure, a profit share can be considered a cost, but it's also incremental revenue. And so the business leaders at the M&Os who were championing this, you know, fast forward a year or two, they're going to be going to their evaluations and saying, look at all this incremental revenue I created. There's not incremental costs they incurred. There's no investment. And I kind of put the little asterisk. Of course, there's some investment because, well, we know AT&T has 100 engineers working on this, but let's just presume that that's just allocating costs. I don't want to die on the hill of that nuance. What I think John Stankey is going to see is, oh, hey, we generated an extra billion dollars of revenue out of nowhere. That's really exciting. And from ASTS's perspective, there's no other way To get to 300 million customers as efficiently than through this super wholesale model. And so as you've wired these deals, you've filled the dam up with water. Once the satellites are live and there's a service that's sufficiently good to, you know, to effectively roll out in front of consumers, that's when you start having water run through the turbines and you start generating a huge amount of cash flow. We're getting more and more details about what this is going to look like. And so we had the Bell Canada CEO out in an article. Quote, Kirby also confirmed pricing for the first time, explaining that Bell's plans to include satellite coverage in its top 2 wireless plans, and other customers will be able to add it for roughly $10 to $15 a month as a pay-per-use option. And then he described that it's just very affordable compared to international roaming rates, et cetera, et cetera. So he wouldn't be talking about pricing if there weren't a DA. So the first obvious thing to conclude is that we're going to be getting a Bell Canada DA really any day now. The other point of confusion people have is they go, oh, well, if it's included in the top plan, does that mean ASTS isn't making any money? Well, no. And so in, let's say, say for example, they have this $85 per month plan, which gives you 175 gigabytes of data implied in that will be some value for AST SpaceMobile. That's going to be in a contract that's going to be stipulated. I don't have that number. I don't have that DA, but that's the type of thing that Scott would be laser focused on so that when it's bundled, there's an implied price, just like, for example, When you pay for cable behind that contract, there is a fierce negotiation with ESPN going on with the cable companies about what they get paid for a carriage rate. And that's a lot different than what, you know, Home Garden TV or whatever gets paid per sub. And that's been the crux of the cable battles is, you know, basically a lot of people are subsidizing ESPN, but the whole point is like ESPN gets paid a lot of money. To be included in the bundle. And cable obviously got very complicated as people sought to break the bundle, but it's not just because it was bundled didn't mean ESPN wasn't getting paid. They were, and they were getting paid a lot. And so ASTS is going to often be bundled in these premium plans because, you know, for example, I have a premium plan, of course, you know, single most important thing in my life is having my phone work. And even this weekend, you know, up in the mountains, coverage was pretty spotty. You would pay, you know, it's just as simple as that. And then for premium customers, all of a sudden, first of all, we'll reduce churn. I'll feel like I'm getting more value for my money. But then if they increase the price $10 on me, you know, because they're including satellite coverage, I'll be really happy. But we're starting to see these numbers come through. And so if we start to Assume this is going to be $10 to $15 a month. What I really relate that back to every time is really data. It's not going to be unlimited for a couple reasons. One, people are not going to be in these dead zones most of the time. And so the actual usage could end up being quite low, even though the value to the consumer is extremely high. And that's another point that I think the bears miss. is, you know, how often am I in the alpine region of the mountains? Um, 1% of the year. You know, I'm just thinking I was— did it 2 weekends in a row, 4 days. So 1% of the year I was in this spot. And how often would I have used it? Not very often because I was busy. But when I wanted to have data, I really wanted to have data. And so something that people should realize is this $15 a month ARPU is divorced in a way from the actual data and capacity of the satellites. And so in my models, I'm pricing stuff off gigabytes and I'm using $2 a gigabyte. Now, I think what's going to happen is when people are paying, let's just say easy math, $10 a month gross, I suspect that that's going to be For far less than a gigabyte. So our actual retail price for data capacity, which is the critical path gating factor of this company, could, could potentially be $50 to $100 a gigabyte because you're going to be overselling the system. For every person that has this premium plan that's implicitly paying $10 a month, how much they're actually using is going to be probably pretty low, and the system has to be built against The demand curves, not the number of people. And so it's about the concurrent usage of the systems. And this is where things get really exciting. And I don't think anyone can— well, certainly no one in space modeling has an ability to truly model this yet. I think ASTS has probably done it, and I'm sure AT&T has done it because they would have, you know, have really good information about the user concurrency and about how this is all going to flow relating number of users and dollar per user and whether that's tied to data. We're probably going to have data caps in it. And it gets really exciting to me. And this is where, you know, when people start to play with numbers, the approach I've always taken is really just trying to think about, you know, from a first principles perspective, what's really going on with this system, this system being AST SpaceMobile. And I've said this before, but I think of AST SpaceMobile as a solar company. And it's constrained by solar power. And if it had infinite power, it would have infinite RF signal capacity, all else equal, but it does not have infinite solar. It's very, very scarce real estate up in space. And so what I look at is how much power they can generate. And that's really, you know, the proxy for that is the bandwidth processing on the chips. And then from that, you can figure out through some math, which I've shared before, how much data could be effectively processed, you know, when you start to think about the usable data, so time of day, where the satellites are, things like that, and start to get estimates of just gross data production. And that's the thing I put a number on. And I think at the end of the day, I believe I'm going to grossly underestimate the earnings power of this company because I think the proper way to analyze this is going to be Looking at how many users are paying effectively a capacity payment or an insurance payment for if they need to use the service. And that's going to mean that a lot of people are paying for a gigabyte of data, probably using a very small fraction of it. And that's not to say that they're not extremely happy customers for the peace of mind and being able to have access when they need it. So I'll move on from that topic. Hopefully that makes sense. But then we also have some more data coming out just in terms of how these premium plans work. And so Ampere Man put out some data from an interview with Verizon CFO. And so he's just pointing out that 60% of new user accounts take the unlimited plans. And it's just going to the point that people really do pay up for these premium plans. Again, you know, ask most people, if you took away their cell phone versus their car, what would be the bigger problem? For a lot of people, it's their phone. And then we also have ASTS Investors putting out a tweet, which I've linked, that also just recaps some of this math that we've been talking about. And they get to a path of how you could generate $5 billion of revenue from the US alone. And I've certainly come to numbers like that as well. And I shared the other day, and I'll share it again if we have a down day. I meant to do it, but last week, I don't want to share new DD when the stock is ripping because I don't feel like it's productive to add fuel to the fire. But when we take these breathers, I'll put out more hardcore DD because people are usually then looking for answers and trying to figure out why the hell they own this thing. But I did some work the other day on Legato. Trying to value what that spectrum is capable of generating as just simply a bandwidth issue. And I got some huge numbers and I again think that that's, you know, an intellectually honest way to start to project out some floor revenue figures for it. And so you're just seeing more people sort of do some of this math and arriving at these really big valuations and it has to be juxtaposed. against the valuation. And so right now we have, you know, $35 billion, $40 billion valuation. And so, you know, we're wanting to solve for a viewpoint that we can have $5, $10, $15, $20 billion of revenue. These are the things we're playing for, and that's why it's important to take stock of that. The exceptions are like the Palantirs where it's like, wow, huh. How's this valuation make sense? And I would just be very careful as a side note of ever doing a valuation short. That is an easy way to lose your financial wellbeing because sometimes I just wouldn't ever do a valuation short on a growth company. So that's all I have to say about Palantir in that respect. But you have to assume that the market is seeing through something where the, whatever it is, $1 billion of revenue today, They're seeing a path of why that's going to go to 5 or 10, and you want to take a lot of time and really understand what is happening behind that process before certainly shorting a stock like this. And I think with ASTS versus Palantir, I think it's far easier to model out upside revenue calculations in ASTS because it's really just a pipe and you're trying to figure out how much data can flow through a pipe. And we have really good estimates of what That data is worth on a dollar per gigabyte basis, then this should be the most premium of all data because it's able to serve areas that cannot be served. So then let's get back to launch. We spent a lot of time on sort of the revenue stuff, probably rambled on, but we have Katzi coming out with this point that I was talking about earlier of not really knowing which satellite will launch first. And so he's put together a little graphic. It's the first thing that's linked, just showing, you know, what do we know? So FM1 was boxed, boxed and tagged in October, made it to India in October. FM2 is scheduled to be shipped this month. And so then FM2 should be on its way to Florida, you know, during, and then prep and all these things in the month of October, or I'm sorry, November. And then we have FM3. 3 through 5 kind of all flowing through the system. And then what happens though is these Cape Canaveral launches are going to presumably be faster cycle. And so you could almost see a scenario, you know, per Katzi's analysis where FM-2 launches as well as a full, you know, 3 to 4 bird shot for FM-3 and 5 in a dedicated launch in December, followed then by a January launch. Um, of FM1, but I was just checking my DMs and, uh, thanks. Yeah, I won't name you because I don't know if you want me to keep you confidential or not. But, uh, for the person who is in India right now who just DM'd me with some pretty specific information, it seems like, um, you know, Katzi may be wrong. Katzi was wrong about everything. Um, the ISRO launch might be sooner than January. And I'll check in with this person and see if they're comfortable with me sharing any more specifics. But it is exciting. I kind of liken it to the B-2 attack on Iran, which is funny enough, one of my friends is in the Navy and he got shipped off to Guam this summer and they don't tell, they don't tell people what they're doing. He was just like, all of a sudden he's like, I gotta go to Guam. And he was basically just playing golf all summer, but they just had to ship all the, all the guys out into the Pacific just so that, uh, counterintelligence people would, you know, in fact see all these people shipped out only for the real attack to be launched, um, in the other direction. And that's what I think is going to happen with ASTS is everyone's going to have all their eyes on India and then you're just going to get blasted by all these launchers in Florida first, which is, which is pretty exciting. So then we also think, well, there's a lot of strategic activity happening right now. And so I think a lot of people have seen the market, Trump doing something seems quite logical to me, which is don't depend on China for critical items for US energy and for the weapons manufacturing. So all the rare earth metal guys have gone crazy. There's a bunch of activity in uranium. There's a side note, I kind of liken this to what Elon did this summer. were this spring where, you know, he went crazy and threatened the Department of War, um, without, you know, whether he'll make his systems available to them. And now he's, you know, realized the error of his way and, and got back in line. And the right analysis of that is not to go, oh, he was just kidding. You know, he just had a tantrum like a 3-year-old. That's cool. So I guess we can go back to, you know, having a sole source vendor. For this critical infrastructure, ha ha ha. No, anyone in the Pentagon will go. Okay, we saw that card flip. Our memory is forever. We're going to diversify away from this guy. We're not going to not use SpaceX, of course, but we are definitely not going to put ourselves in a position where anyone, much less a capricious person who publicly said they're going to screw the U.S., we're not going to put that. Guy in a position to screw us again. That is a really good bull case for Rocket Lab, Blue Origin, and things like that. And so when I see people kind of peaking all these rare earth guys and nuclear things, you know, based on whatever news is happening with China, it's the same thing. It's like, well, okay, they're probably going to find a trade deal with China. That doesn't change anything. And so they already showed their card. The Department of War's memory is forever. They're still going to close all these vulnerabilities. And so it's kind of funny to see the market puke all these things like the memory is, you know, for one minute and people are like, oh, that's cool. I guess China is our friend. That's not the way it's going to work. And so then when you think about ASTS, you know, this idea has been building among the space mob of, you know, whether ASTS is going to get strategic U.S. investment. I obviously don't know, but when you think it through, it's not hard to imagine that Trump is going to say, well, we're about to give you this massive Golden Dome participation. I want something in return to A, you know, make sure that there's alignment, B, to get, you know, something effectively a kickback for the taxpayer, things like that. And so it's not a stretch to me that that could happen. I don't know if I actually want it to happen. It kind of opens Pandora's box to me whenever you have sort of a government participation with your company. But in the intermediate term, it certainly is not negative because it will be a de facto, this company's not going away vote, and it will be a de facto, this company has infinite money vote. And it'll be de facto, there are no barriers to this company's success vote. So if it did happen, then I think we could kiss the shorts goodbye once and for all. I don't know if it will happen, but I'd have that in the back of your mind because that is clearly the new playbook of this administration. Command economies, right? What could go wrong? But I don't see the flaw in it. I see this sort of simple, the simple reason why politicians would want to be doing that, and that would certainly be tail risk for anyone that's short this stock. It would totally change the risk-return calculations. So let's go back to TAM. We had AT&T and Toyota announce a 5G deal. Toyota is the biggest carmaker in the US, and AT&T is widely considered the leading connected car provider with around 60 million cars on its network. It's exciting. I, the other day, just anniversaried the, you know, 1-year anniversary on my Toyota and they hit me up with, you know, do you want to keep having all these services? And so I do, I do like to be able to lock and unlock my car from my phone and that requires a cellular connection. And I, as it turns out, have to pay for that and it's, you know, $10 or $15 a month. And now I haven't done this analysis, but I could actually probably easily check on my phone, actually, now that I think about it. I am going to hazard to guess that my data usage to occasionally unlock my car is like zero. And so then you're paying— I'm just looking at my iPhone right now just for the sake of fun. And so this goes to my point about I'm paying— oh, here we go. So On my Toyota app, my cellular usage has been 530 megabytes. And that is in the current period. I also had to download the app 3 times because it crashed this week. And so I don't know if that totally skewed that because it seems like 500 megabytes is quite a lot of data considering how much I use it. But in any respect, it's a lot less than a gigabyte. And that goes to my point is I'm paying whatever it is, $10 or $15 a month. And I'm paying for the usability of that app. I'm not paying for the data capacity. And so the load on an ASTS satellite for that is going to be quite low and the ARPU is quite high. And that goes to my point of how you could start to have these sort of $50 to $100 per gigabyte realized revenue coming through the model because It's going to come down to your concurrences of usage. Really exciting concept. Similar to how airlines try to oversell a flight. You can only oversell a flight by, I don't know what it is, but 2 to 5%. I don't know. It cannot be that high. You can oversell a system like this probably by 100 or 200%, if not more. And that's where the incredible revenue opportunity is going to lie. Now let's go back to CATSI. So going back to talking about MNOs, we found out, or actually we're going to start with ASTS Investors again. So Vodafone Turkey acquired an extra 100 megahertz of 5G spectrum. So a lot of spectrum. We know we're actually pretty big in Turkey. We have a ground station there. Vodafone is there. That's a market where where we're going to live. And Kasey last week had speculated the timing of things where once an MNO had their spectrum, then they would sign their DA. And so we were wondering what was taking so long with Verizon. And, you know, we then speculated they finally got their spectrum situation locked down, then they locked down their DA. And so it's interesting as we start to see whether or not this is a domino. Where if an MNO closes on a big spectrum position, which is particularly usable with this system, is that actually starting to become a forward indicator of when a DA is going to fall? As Katzy would say, the spectrum is going to find its most efficient home. And then Anpanman just reminded us all something that really shouldn't ever be forgotten, which is that SATCO, which is the Vodafone ASTS partnership. Has I forget what it last count, but I think it's 21 or something MNOs now signed up and working with it. Pretty exciting. And then there was also something slipped the other day that I think it was in a what was it? I think it was in the Bell Canada teaser video. It showed that they were working on S-band. And then we have this this week was interesting. This account Mega Constellations, which is an industry-focused. Commentator, very, very smart and detailed, made the point that Skylo, EchoStar, these guys, they're going to be losing their S-band in Europe. They expire. That gets to be very exciting. So when a new technology comes out like ASTS SpaceMobile, and you start to have renewal cycles of spectrum, who can pay the most? Well, ASTS SpaceMobile. Duh. Someone who has a big, robust broadband system. is going to have much higher value at use of spectrum than someone with a clunky little narrowband solution. And you could see that ASTS is chomping at the bit for this. I mean, this was at the heart of the Inmarsat adversary proceeding as part of the Legato bankruptcy. We already have our IT coordination rights. The writing's kind of on the wall. We certainly don't have to think too hard about Abel's ambition. He kind of has showed his hand in this respect. So we want to keep a close eye on here because the value creation, you know, what started as sort of like a joke that I was serious about when I said that ASTS SpaceMobile is the first spectrum treasury company, I wasn't kidding. And so I do think that ASTS SpaceMobile could ultimately really be a spectrum treasury company that just happens to have an ability to utilize it. And so when you think about what Dish was, Dish was a, with Charlie Ergen's company, was a spectrum treasury company. They just had no ability to use it. And that's where he got cornered. He ultimately was able to navigate out of it, you know, somewhat by the grace of God, honestly. But he was stuck with a ton of spectrum, but no ability to light it up and no ability to light it up efficiently and totally cornered. Think about that analog with AST SpaceMobile. So they can, first of all, they're playing nice with the MNOs. So they have access to the customers. Charlie didn't. Then they can aggregate all the spectrum for pennies. They've already showed that with Legato. So spectrum other people just literally could never use because of interference issues, things like that. ASTS is the only company in the world that could use it. So you can pick it up for cents on the dollar, and then they can bring that spectrum back to their MNO partners to monetize it. get the full support to get it regulatory approved and then get access to consumers. It's really the dream Charlie had over the past 15, 20 years, but one where there's an actionable strategy to make it happen. If I'm right on that, that starts to become, you know, the most convincing path on why what we're looking at here is a, you know, half a trillion to a trillion dollar company because being able to aggregate spectrum globally and monetize it through access with all the MNO subs is a really big idea. And I'll leave it at that. So big ideas are good. Then we also have, you know, strong suspicion that we're going to be getting a Saudi Arabian contract soon. And so there's been a lot of activity with Saudi. Many XT SpaceMobile. Um, people that are older in this investment will know that, uh, Tarek, who was a former board member, uh, representing Rakuten, left Rakuten to go be the chief technology officer, I believe, of Saudi Aramco. And he was one of the big proponents of XT SpaceMobile. And he's sitting there at Aramco, and his job is to figure out how to connect all their oil fields. And so they have all these far-flung oil field assets in the desert and offshore and things like that, then it's crucial to have information and data so that you know how to do preventative maintenance and things like that. And so it would, it should come as no shock if we end up seeing a deal like that. But then there's been lots of touchpoints where we believe that ASTS might actually get spectrum in Saudi Arabia. This is going back 4, 3, 4 years ago where Katsi found some details on that. But then a deal with STC, Saudi Telecom, wouldn't come as a surprise. And that, that could come with strategic investment and things like that. Keep an eye. We just show the global reach of this company. Then we also increasingly have Europe waking up to the problems. That they're facing in terms of defense, and so Europe is very quickly realizing they need to defend itself. And in doing so, you have to have the command and control systems. You have to you know look at the U.S. You know we are a expert logistics operation when you think about the U.S. Armed Forces. That's you know I think that's why we win is we have the ability to move stuff and have integrated operations like no other country in the world. And then we also have some, some great technology, but that goes hand in hand. Europe does not have this stuff and they need it. And the power of Starlink in Ukraine, I think, is a really wake-up call. And then also being denied access to it is an even bigger wake-up call. And so Europe is struggling to do this. They have this IRIS Squared system. There's a, we wrote about this a couple of weeks ago, why this is potentially really flawed. And meanwhile, you have Vodafone sitting there with Safco, which has all of the regulatory compliance stuff necessary to be the system that will work. And importantly, and this is a term we've kept using and we just want to drive it home, is data sovereignty. And so the data has to be secure and resilient and it cannot leave the continent, for example, if you're serving Europe. And that's something that Safco has really had it in the front and center. And then let's think about where data sovereignty can really blow up in your face. And so this week, interesting, there was a big scandal that sort of was unleashed. And here we have Mario Noffall highlighting it for us, where researchers were able to expose a massive satellite security meltdown. And so a team from UC San Diego, University of Maryland. Interestingly, University of Maryland, big ASTS connection with the University of Maryland for its worth, spent 3 years eavesdropping on satellites and they were able to intercept a lot of it. Interestingly, they pulled down T-Mobile calls and texts, in-flight Wi-Fi data, blah, blah, blah. Interesting. They call out T-Mobile. Interesting. So I wonder if this is perhaps Coincidence, or if this is just a real-life demonstration that T-Mobile chose the worst possible solution they could that's exposing all of their customers' data, but more importantly is a system that is completely unsuitable for government use. By contrast, AST SpaceMobile addresses these issues. So while this article might in general scare people, go, oh my God, this seems like a really big problem for generic satellite technology, this is really specifically an opening for AST to shine. And so what I dropped in the weekly is a short 3-paragraph blurb on exactly why SpaceMobile is different. And so they're using core architecture that is able to provide security that is unlike a traditional satellite system. Usually a traditional satellite system is going to rely on unencrypted relay paths, which is exactly what T-Mobile did. And AST SpaceMobile is functioning as a cell tower that connects directly, but it leverages the same encryption used by a terrestrial system. So it ensures that the data is encrypted directly from the phone to the satellite. And that eliminates the exposed unencrypted legs that is plaguing the older systems. Which is very, very important. And then you also have these very advanced phased array antennas that create very tight beamforming, which shapes and isolates data links to specific devices on the ground, which makes eavesdropping more difficult. In other words, they're not spamming everything with a signal, which makes it easier for, you know, some, some bad actor to pick it up. And where's the proof? So AFC has demonstrated the encrypted secure connectivity in real-world scenarios as they've PR'd in terms of their tactical non-terrestrial demos with the U.S. military, which included voice data, multi-party video calls, things like that. And it shows that our system is suitable for sensitive defense communication. Very important theme. That is a needless to say a couple peels of the onion deeper than most shorts are going to go, but very important when you start to think about the TAM and why all the MNOs are going to use the system and why all the governments are going to use this system. The next thing we want to address is Pierre. Pierre Leonet is one of these legacy satgos and satgo satellite guys. in Europe that likes to opine on stuff and just sort of, you know, walk up and down Piccadilly Circus being fancy, having, you know, tea at the appropriate hour, but is just sort of like a perma-denialist of progress. And here, you know, again, he does 15 seconds of work. And so showing that the period of time Where people are without service for AT&T, for example, is about 3%. Well, that goes— and his conclusion is, well, there's, there's no TAM. This goes exactly what I was saying earlier is, okay, so how, how often am I out of service per day? I don't know, probably more than the average person. But even if it's 3%, that 3% when it hits is extremely annoying.
[00:45:51] Speaker A: Yeah.
[00:45:51] Speaker B: And so for me, I'm always on, well, I'm always on, I'm trying to always have, you know, doing work. And so I want to try to get calls done. I want to be on Zooms while I'm in transit. It's time I can use really efficiently. And so I have to drive around a lot, unfortunately. And if I can bang out some Zooms while I'm doing my commute, that's time I don't have to do those same things in my office. And that, you know, gives me more usable time. When I'm in front of a keyboard. And so that 3%, if that means I cannot have a reliable connection, then I cannot use an hour to do a Zoom call because I know it'll be choppy. Well, that's really important to me, and I think it's important to a lot of people. And so it's that 3% is how often is that 3% hitting people and over what effectively rolling period of time. And so to me, The analog is insurance. And so how often does someone's house burn down? Well, I'm an interesting person to ask that question, but it generally doesn't happen very often to people, but when it does happen, it really sucks. And so as it turns out, 0.1% of homes have a total loss claim per year. Was that the TAM? 0.1% of homeowners? No. 90% of homeowners have insurance. Well, you know, people could argue, well, that's because mortgages require it and things like that. But yeah, it's because people do require people to have insurance because it's a high magnitude loss that might be low frequency, but when it hits, it's a really big problem. And so I think when people look at their cell phone, when they don't have service, the Real cost to them is high, but the perceived cost is higher because people will fear that they won't have service when they need it most. And so as I was driving down a mountain today, just thinking, well, my God, what would happen if my car broke down? There's, what am I going to do? Am I going to really, you know, walk with 3,000 vertical, you know, assuming halfway down the mountain walk, 3,000 feet vertical up or down to, to, you know, then pray to God a gas station is open, which of course it probably won't be when my car breaks down. You're going to want your phone to work. And, you know, especially think about female consumers. I mean, it's their worst fear is being stranded on the side of a road. Or for me, I put, put iWatches on my kids so then they're running around and I can try to call them. Of course, they don't have cell phone service, so I'm trying to call and find my kids. it just goes straight to voicemail, I'm willing to pay to not have that outcome. And so I think of this as insurance, is the perceived cost of a loss is probably way higher than the actual cost of a loss, and the cost of a loss in its own right is also high. And so it— this is the sort of scratching the surface type of analysis that most of the bears have done. And I think they're going to be shocked at what the TAM ends up being. And it's going to go back to the earlier part of this call where we talk about how what you're able to sell is something that can have oversubscription effectively. You can sell that capacity many hundreds of percent over because of user concurrency issues. And so Then when you get back and just to repeat the punchline of that, when you actually start to dial in what the effective dollar per gigabyte of data sold off ASTS system is, my suspicion is that is going to end up being a massive number. And it will then look like a $10 per user per month number, but in terms of actual data capacity, because of your ability to oversell it, you know, it really might be like $100 a gigabyte. That's what's going to be the shock value if I'm right on that. And that is not how the shorts are thinking about it. I can guarantee you. So now, you know, we've identified that Pierre has a pretty small creative ability. So then we get to other things that are able to sense and detect small things like his brain. And Amp Man points out that we have 2 satellites that are flying very close together, and a lot of us know That the reason why 2 Bluebirds would be flying in really tight formation is to be testing out, uh, PNT applications, position navigation and tracking applications, and radar. And this allows them to have really high resolution radar backup, which is really interesting stuff. So just a reminder, this is happening. Scott has been crystal clear about These non-communication use cases, which are going to drive early revenue gains. And imagine the surprise in the market when all of a sudden there's a lot of revenue that has nothing to do with consumer dead spots. Imagine their confusion when hundreds of millions of dollars, if not billions of revenue is coming through something that has nothing to do with the 5-second elevator pitch. Of this company. And then we go back to things like drones, and this is really interesting too. Look at what's coming out. And so Boeing is launching a new family of tiltrotor combat drones. Well, I was out this weekend with a guy that is a specialist. I forget what he was, but it's a military guy. And he was just saying, yeah, we can't use helicopters in contested areas anymore. You know, Ukraine showed that we just can't do that. They'll They all get nailed by drones. So now we're going to have our own Skynet, of course. How are these things going to be connected? Somewhat, somewhat obvious answer. AST SpaceMobile. There's not going to be a whole lot of friendly cell phone towers where you need to operate drones. So then let's look at what Lucky Palmer is doing this week. So he's coming out with basically Iron Man. And so you have this Eagle Eye thing, which is this Warfighter augmentation platform that integrates mission command and AI directly in the helmet. Again, how are these being connected? Are you going to slap a Starlink dish to this helmet so that you have a bright reflective surface so that snipers can, you know, put one through their dome? No, you're going to want something super small, like a cell phone modem integrated into this. that has broadband capability. I mean, could you imagine using Starlink's DDD capability on this where it takes 15 minutes to connect and then you have some narrowband jumbled text message, you know, and the troop, you know, the soldiers getting the command of, you know, fire, aim, load in the wrong order? No, you need, you need something with a lot more reliability. And that's where, you know, we know that Palmer is an investor in AST SpaceMobile. Reason stands that Abel and Palmer are talking. It could be very likely that, you know, this is a use case for us. We might be integrated into it. Would be really interesting way to express this TAM augmentation. And then we again have Fairwinds, not to be crowded out by Palmer, coming out with, you know, more press releases talking about Their strategic partnerships to support the US government and talking really every day about the non-terrestrial network satellite applications that will be leveraging AST SpaceMobile. As many people know, they're one of our prime contracting partners. So now going back to sort of other work people did this week, we have Antonio Linares, who seems to have a very high opinion of himself. He came out with not a deep dive, but just an updated thesis. So I've linked that here. I think he has some reach. So anyway, I put that there. And then we also had the real Professor Kevin, not Professor Kevin Mack, but Professor Kevin Chen, who's a professor in the School of Life, came out with a really cool tweet that really broke down the essence of the thesis. Pretty concisely, and so that that link is provided for everyone else. Meanwhile, where you have calm, cool-headed people like Kevin Chen, who seemingly can write incredible tweets while under fire, on the opposite end of the spectrum, you have Barclays. And so Barclays decided to downgrade the stock, and you know, whatever. And so basically just saying. it ran too high and I didn't really focus on this too much, but this is what the sell side is going to do. And so it just kind of sucks because you can catch people off guard. And so I know a lot of people were really pumped to see the stock break $100, and even Barclays says that our upside valuation points to a fair value of $125 per share. Not even that I would take with a grain of salt because all the things I said earlier, It's going to be incredibly difficult to predict the upper end of the revenue opportunities this company has. You can try, and I think I'm accused of being a pumper, but I think I'm being pretty realistic with people when I say I could see a scenario where this thing is worth $500 to $2,500 per share at some point in time. Now, that's not going to happen overnight, so don't go and buy a bunch of call options on that comment. But it just goes to show you the range of uncertainty. Just like almost zero people on planet Earth would've predicted that ServiceNow was going to be a $1,000 stock, for example. And that's a pretty mundane example. That's just a company that has a dominant position in a big market and executed in some boring stuff. And that company now is as big as what used to be the biggest company in the world. And that's the type of power that I think AST SpaceMobile has under the hood. But when the sell side sort of did these random valuation downgrades, it creates a lot of noise and uncertainty, and I hope people can kind of see through it and just realize also when the stock is pumping like this, there's just a lot of heat in it. A lot of people are buying call options that creates a lot of gamma, and the second that reverses, there's just a lot of fuzz that has to come outta the market. And that happened certainly in spades of that reversal from $102 or something to whatever the low was overnight. I think like $78. I decided to sleep through it because I don't want to disrupt my creative energy with noise, but it is what it is. And so then the next thing we have is just this idea that everything's kind of priced in. And Kevin makes the point that if you're too close to a stock, it can feel like it's priced in. Like, you know, we make jokes of, you know, FirstNet has got me in trademark. FirstNet is coming. And you know, you get so used to knowing that something like FirstNet will happen, which I adamantly believe, that you can begin to convince yourself that it's priced in. Now, I can almost guarantee that when a contract hits the tape with FirstNet, the stock will go up. I can almost guarantee that when DAs hit with various MNOs, which have been publicly testing with this company, the stock will go up. And so when you're so close to something, you can really lose sight of the fact that you're really not in the market. And so what I noticed in my own career over time, to my own detriment, is I generally do a lot of work on the names I own, as evidenced by this. And so I would know every little detail, and then I would get so bulled up and so excited that I would own the most. And then when the stock started going up, I didn't sell because I don't have that red button in my account enabled. And so what ended up happening is the people who own the most stock know the most, and those 2 things are related. They've done the most work, they're the most confident, they feel like they can see the future the most clearly. But then when something happens, they don't have any more money. And so then the stock has to find a clearing price that is not Kevin Chen. And so Kevin Chen knows everything, so he's going to be the person that can most efficiently price the upside cases because he knows that this thing is on a path to XYZ, $2,500 a share or something. But when some FUD hits or something like that, you rerack to the next in the market. And so what we saw over time, rewinding back, months ago when the stock would really crater, you know, all the space mob people, including myself, were, you know, already fully laid out on this thing. No more cash to invest. And that's what can cause a stock to go from $40 to $20 because it's repricing to where it's easy enough for the person who hasn't done the work to be like, well, okay, I guess, you know, they have some satellites that are coming, but you know, then maybe they'll get a DA. It reprices for that person's own ignorance. And that's really the burden of DD that I've seen over the years. And I don't really know the answer of it, but just to kind of recognize that sometimes if you know too much, you think it's priced in, but it's not. And that can cut both ways. And hopefully this really cuts to the upside, which it has been for us over the past year and a half, where all of the things we had researched and expected happened and we had an astronomical revaluation of a stock when almost all of those things had been predicted, written about. You can read my posted DD document, which is, you know, a year and a half old, and it talks about most of these things. Most of these things have happened and the stock went up. And so always remember the The average guy, and not talking about the retail investor, but the average professional investor on Wall Street has 40 or 50 names to cover. And this is not going to be how they spend all their time. It's going to be reading some sell-side reports, talking to an expert network. And when you look at those expert network calls, the level of diligence is pathetic. They do not understand Anything about this company. The one that was posted last week was a complete joke. They were concluding that ASTS was somehow in distress and it might work out because they have some good tech, so AT&T will buy it. And it's like, hold on, they have like $2 billion of cash. All their partners are throwing money at them. And AT&T has specifically said it makes no sense for us to buy this because it's worth so much more as a multi-client model serving the world's MNOs that we could possibly be the highest value owner of it. John Stanky's own words. And then people just go, well, satellites are traditionally pretty hard, so we will probably go bankrupt. And then someone's paying $1,000 an hour for that type of insight. Astonishing. But just don't forget, How few people on planet Earth care about this company as much as we do? And then you have to realize how little other people know, and that's okay. It's not an indictment against them. It's really just a reminder that you could end up being pretty far ahead of your, you know, you could be ahead of yourself, but you could almost certainly be ahead of the market. And that's where chilling out and being calm is a good virtue, which is something that's not my strong suit, but it's what King Tut says a lot. which is just sort of, you know, remember to chill out because when you've really done the work, you could be so far ahead of the market that the worst thing you can do is, is think that the market is really caught up with you. And then you can do, you know, all this great work and all this, you know, thoughtful investing and then, you know, not harvest the return that you deserve. So the last thing we have to talk about is Starship. So more videos are coming out and just pointing out that This thing looks pretty beat when it's landing. And it, first of all, it looks like, um, you know, CGI, it almost doesn't even look real, but which is cool. But it's interesting to think about Starship as a space shuttle and just what is its real usability going to be? And I've talked to some people that are experts in the space and they made the point that this thing has to be just totally dialed To be economic. It has to be fully maxed out when you start to think about getting in that dollar per kilogram down to an efficient level. I haven't done this math, but it's a, it's an interesting point. And then also when you look at the amount of refurbishment that's required, I mean, this thing is just like falling apart. And so what really will be the impact of Starship? It's still in the kind of to be determined point for me, but something to just keep an eye on. And look at what the actual levelized cost of this is going to be to operate, how often someone's going to have cargoes that it can actually efficiently use such a massive rocket where it becomes truly more efficient than a Falcon 9. Interesting things to think about. And I'm not saying that I've made any determination on this, but it's an interesting thought experiment just to be aware of when we think about the future impact of Starship, but also just where launch crafts are going. That's all I got. Uh, my voice is struggling. It feels like I have knives in my throat, so I'm gonna end the feed here. Hope everyone has a great week, and I will look forward to joining everyone next week when hopefully I feel better. Talk to you.
[01:03:47] Speaker A: Thanks for listening to the AST Space Mover Podcast. If you enjoyed this episode and you'd like to help support the podcast, 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 big, and I think with this technology we can really affect a billion lives. AST SpaceMobile is the only company that has proven We're using satellite 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 MNOs. Listen.
[01:04:47] Speaker B: Mmm, waffles.