Why Hasn't AST SpaceMobile Shipped Satellites Yet?

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[00:00:48] Speaker C: Everyone, thanks for joining. I figured I'd start up a space and talk about ASD, just given how bad sentiment has been. Understandably, to a degree, but, um, also, um, I think, you know, from my tweet earlier, nothing drives sentiment quite like price. Um, that also holds true. And so I did want to just cover a few topics, and, um, I'll try to do it in a very compact manner. Um, unfortunately, I've got a headache this morning, so, um, so I'm not feeling too great. But, um, it's nice that the stock price is up. Uh, the Fed yesterday Warsh raised rates by a quarter point and indicated— the rest of the committee indicated that there's going to be additional hikes this year. The market has reacted positively because I think there's this view that there's actual adults in the room who, at least on the monetary and interest rate sides, want to get control on inflation. And so that can be positive if you have an economy that's still growing and prospects still look good. Obviously, we're dealing with some structural issues with oil and inflation related to AI data center spending. But when you do have a Fed that is looking at keeping inflation under, call it 2% or around there, and they're serious about fighting inflation, then that gives you positive conditions for investing. And so you've seen a relief rally in high-beta names, which have been absolutely taking it on the chin. And so now you're seeing whether it's space or any number of sectors rally quite a bit today. But going back to what I was saying before, yeah, sentiment has gotten pretty bad in AST. And I think it's important to point out that it's not just AST SpaceMobile. It's almost every high-beta stock. You can type in any ticker and look over the last few days, and people on the retail side have pitchforks out for any management teams. I saw people really upset with Rocket Lab, the Neo cloud companies, Quantum, any of them. I mean, you just pick, you just throw a dart, and people are upset that management for XYZ company is not doing enough. They're lying. They didn't put out enough PR, whatever it is. I think that's kind of the mentality that we live in now with social media where people need instant gratification. I pointed this out the other day to someone where a long time ago, maybe 20 years ago, 15 years ago, there was no such thing as social media. And a company would PR things that were material from time to time, but you would have to wait for quarterly updates to get any material news from the company. And that was it. There was no social media post on production, on shipping, unfolding satellites, any of that stuff. And so I think it's important to have that context in mind where companies, there are, by the way, there are companies that are very good PR machines. They're marketing machines and that's what they're good at. And there are companies that aren't as good at that and they might be focused on doing something that's really difficult, right? Not to say that those 2 things can't exist at one time, but as I've explained before, the DNA of this company is not really to be promotional. Maybe that will change over time, but if I had to choose between a company that was focused on execution versus one that is promotional, I would take the latter, not the former. Or sorry, I would take the former, not the latter. But it is important. I think it's obviously fair to question management. If you miss deadlines, that can impact the confidence that you have in a management team, and obviously people discount what that management team would say or project for the future. And so that's fair. But I think also you have to kind of look at what the underlying business is and what they're doing. So I've talked about this in the past where if it's a company that's making widgets that they're selling at Walmart and the level of execution there is probably a lot easier than what AST is doing, then you have to give the management team some room, and you have to look at their body of work. Yes, there's been delays over the years, but what are they trying to do? Yesterday, I watched the SpaceX video on the development of Starship and also the chronology of Falcon 9, and it is absolutely amazing what they did. With Falcon 9, they did something that was impossible. It's difficult to build a medium-lift rocket, or back then that was a heavy-lift rocket, that can get to orbit reliably. And then they created one that returns the first stage, which was unheard of. And then now with Starship, they're looking to return both stages. And that's a really difficult problem to solve, right? It's something that people thought was impossible. So looking at what they've done with Starships thus far, you can't really take away anything from it, right? Because they're doing something incredibly difficult, viewed as impossible. I think there was that famous video of Ariane, one of the executives, saying reusability is a fantasy, right? But here they are, they're doing it. But that said, can you criticize Elon Musk for the timeline? Sure. Starship, I think this was back in 2017, he was projecting Starship to landing humans on Mars in 2022. So we're what, 4 years behind that and probably another 2 to 4 years, probably more like 4 years away from landing humans reliably on Mars. Are people going to be upset about that who invested in SpaceX? Not really. because they understand the difficulty of the problem. So similarly, if you look at AST, there was a— in Paris, there was some article talking about directed device, how originally it was just AST and SpaceX, and no one was really talking about it. Whereas this past week, it's everything. It's the only thing people were talking about, direct-to-device. It was something back in 2018, 2017, when Abel conceived the idea of creating satellites that could deliver broadband service to an unmodified phone, people viewed that as an impossibility. They thought he was nuts. Then now, fast forward to today, now it's accepted. that inevitably we're going to get there. And so for AST, we are already doing that. And so now it's a matter of execution of delivering satellites to space, producing them and delivering them. And that's not an easy task to do. But I think it's important to see the progress that people are focused on the actual satellites being shipped, but There's also a ton of progress around that, right? And so there are specific reasons why that's been delayed, and I'll talk about that in a bit. But it's also to look at, well, what's going on? What's going on around the company? What's going on in the background? Does this tell you that things are being stalled or that there's a ton of progress being made in parallel? There was this one, I think they were a Korean investor, they were saying, the entire production line should shut down and they should just focus on fixing— if there was an issue with Bluebird 14, they need to fix it and then ship it. It's like, that's not how real companies work. If you go to Hyundai and they build a car and there's an issue with it and they have to go send it back and get it fixed, they don't stop the entire production line. They keep going. If anything, with ASD, they're actually expanding the production line Because they are looking to produce many Bluebirds beyond just 6, but getting to 10 to 12 a month, and they're taking the steps to do that. There's also this potential for them to have multiple launches in Q4 where they need to be ready with those satellites. But yeah, it's a complex problem to solve. It's not an easy one. If it was an easy one, everybody would be doing it. quite candidly, because they see the opportunity, there are more people trying to do it. And guess what? They're going to go through the same hell. This is the Tesla hell, production hell. You got to get through that hump. And then once you get through it, then my God, unleash hell. That's when things really start cooking. But this past drawdown, there's been this constant whining of people needing PR. So the company gave you PR, right? Then people are upset that it's not the PR they wanted. They're like, well, they need to ship the satellites. I wasn't asking for that PR. It's like, well, the company's giving you some update on production, and they told us Bluebirds 48, that's what they're working through. They also gave us an update on the fact that Antonov dropped off even more composite rings. So they're doing a lot of this stuff in parallel. But people got upset with the company. They sent out this proof of life PR, and people got upset. They're like, we need PR, we need material updates, we need satellites shipped. What's going on with Bluebird 11? So the company sent out a PR, and then they got lambasted for it, at least for, I guess, people who are unstable. And so if you're the company, it's like, oh, okay, so I guess we send out PR, people get upset, maybe we should not send PR out, right? Like, what's the point of that? Because it seems to have riled people up even more. And so I don't know, I think folks should look in the mirror and just ask themselves, like, what am I trying to accomplish, right? Like, clearly Abel and the rest of the team are aligned They're fully invested, they have equity in the company, they're trying to push this thing forward, and then you've got these people on the outside who are upset. I don't know, what's the point of destroying morale or whatever? I don't know how you would couch it, but yeah, the company's damned if you do, damned if you don't. Okay, we'll provide some more communication. Okay, it's not the right type of communication and people get upset. It's just like when, I think when, what was it, the last batch of Bluebirds, there was one that was unfolded and people were like, oh my God, what happened to the other 2? And it's like, this is a process, right? And people were upset. It's like, they didn't give us an update on the other 2. And then of course the other 2 unfolded later. And we've talked about it among Space Mob that Bluebirds, the most recent Bluebirds, 11 and 12, sorry, 12 and 13 were unfolded very quickly because the company is testing out different processes. And so they unfolded it as quickly, and then Bluebird 11, it seems like maybe they're doing a bit of an orbital raise and they might be flying the satellite in a bar configuration, and then they'll open it up later. And so someone's like, well, they need to communicate all these things to us. It's like, no, these are industry secrets. The company is learning from them. these are things that you don't give away to other competitors. And clearly, it's not just Starlink and AST that are pursuing this market. There's several other companies that see the massive opportunity, they're trying to pursue it as well. Why would you give those things away, those learnings? But yeah, I think it's important to have some perspective. The sector is trading together in tandem. And so if you look at somewhat, there's these new X accounts that are like, the stock is up, so something positive must be coming, or the stock is down, something negative must be coming. It's like, hey guys, just look at the rest of the sector. There's nothing— I'll be the first person to tell you that there's the factor of space and momentum is up today, And that's why AST is up. There's some relief. And so from a fair value perspective, should AST have been in the 50s? In my opinion, no. It should be much higher. And I think you could ask a shareholder of Rocket Lab, should it be down? Should it have been in the low 60s or 50s? No. Or some of these other companies. But I mean, just take a step back. For the people who— and this is when investors are looking for answers where they're like, why is the stock up today? Or why is it down today? And if it's down, it's like, it's management's fault. They need to do something. And if it's up, it's like, oh, this is great. It's a great investment. It's up today because the rest of the sector's up. Rocket Lab is up 6%. BlackSky is up almost 8%. Intuitive Machines, 8.5%. Planet Labs, 6%. Redwire, 7.7%. Firefly, 8%. And so Yeah, the sector's up. This is a relief rally. And so all these names have been beaten down and they're up. And there's not a specific— well, the reason is that post-Fed meeting, now that people view that the Fed is going to be vigilant about inflation, and so by having an investing backdrop that is positive in terms of inflation's under control, the economy seems to be doing well, these growth sectors are doing well, then stocks are up. I think I agreed with JP Morgan. If the Fed had cut rates yesterday or stayed flat, that would've been bad because then the market would've threw up over that saying, oh, the Fed's not serious about inflation. And so we have to price in risks that inflation could run away and then they'll have to raise, they'll have to be even more restrictive than nipping it in the bud now. But yeah, when you do have a drawdown, and we've seen this every single time with AST, when you have a drawdown, the pitchforks come out and the level of sentiment, it's very— the negativity, it's very acute. It's like there's this pursuit, there's a few accounts out there where they just go nuts. And especially, you know, it's not always, but there are some accounts that do tend to invest in leverage, right? And use options. And so the sensitivity of volatility tends to be more acute, right? And so just keep that in mind. I mean, and I would say also, I just noticed this as well. For the last week or two, I pretty much have been busy, so I haven't been paying much attention to the timeline, but There's a lot of new anonymous accounts that are posting negative stuff, like accounts that were started in July, August, June. It's like, oh, it's very clear what you guys are doing. It was funny. There is this hedge fund analyst that I talked to, and he's great. He's long ASD. He's one of the few guys that are out there that are long, but he actually spoke with the Berenberg research analyst post-initiation of coverage, The analyst told him that a vast majority of folks were hedge funds, after he initiated coverage and posted a few notes, were hedge funds that were short the stock and were upset with what he was writing. These guys, they're also spending time that maybe they can pay people a few bucks an hour to go post negativity on X and Reddit. Totally exists. It happens, right? And so just be just be wary of like where where stuff is coming from, right? And and I will say, as I've mentioned this before, social media and especially like X, it it can influence your thinking and your your mental health, right? Because I've I've talked about how because I am involved in X and it's hard to filter out stuff, I've probably become more xenophobic. I've probably become in some measurable way more racist because that's all you see on X. It's kind of crazy. I would be the first person to tell you, back in the day, this whole idea of media and brainwashing, it's like, I don't buy into that, but I totally buy into it now because you can influence the way people think and feel. That's where it's like this negativity begets negativity. It's like a spiral and everybody It's interesting, like everybody feels the need to put their 2 cents in, right? And go like full negative or full positive on the flip side of that. But for me, like I've been, I stay pretty even-keeled. Like this is my view, I'm sticking with it, right? And other folks tend to be quite volatile. One week it's like rainbows and flowers and nothing's going to stop this company. And then the next week it's like, oh, the management lied to me. And everything's negative. And so for some of these people, it's like, just have some awareness, man. Go through your timeline and just reflect on what you're posting. And then for folks who, if you feel— and look, it's human psychology, right? It's difficult. It's difficult, especially if you're invested in a high beta name, whether it's high growth, big opportunity, but a lot of risk as well, it's hard to compartmentalize that and to be even-keeled, especially if a stock can go up to $133 and be down at $50, which by the way, that's every momentum high beta name. I've invested in a few other spec situations and every name has suffered. So, uh, it's no— AST is no exception. But, um, going back to production issues, um, you know, some people have asked, you know, why haven't they shipped, shipped the satellites? Um, you know, they originally said that it was imminent. Well, yeah, that was true at the time. It was imminent. Um, they felt good about where the satellites were and they were probably going through final testing. This is my speculation, but they probably found something in testing, right? So something did not get through testing where they felt comfortable in launching a satellite. So they had to fix one of the satellites. And so then after you fix a satellite, you have to go put it back in testing, and testing can be a multi-week process. And so sometimes people are like, well, they need to ship it anyway. It's like, no, why would you ever ship a satellite that you know has a high probability of getting bricked in space? That would be the dumbest thing, right? The company is not managing their business like an option or as a PR machine. They're managing the business because they actually want to put up a working constellation and go attack a massive opportunity, right? And with testing, if you do find something and it has to be fixed, then, well, guess what? Testing was successful. Like it caught something. And so then you have learnings from that where, okay, we caught this issue. And so for future satellites, we will adjust the manufacturing process or make adjustments so that won't be an issue in the future. So yeah, there's that. And then I think also around shipping, as some of you know, SpaceX Falcon 9 is delivering a crewed capsule, I think it's now scheduled for early October, that timeline got moved around as well. And there is a buffer ahead of that launch and after that launch where you can't fly commercial cargo, right? And so there's scheduling issues that you kind of have to deal with. But I think in the last update, you have Parallel production, right? So the company is not making one satellite at a time; they're making multiple satellites at a time. And so one of the you know one of the things that that we saw on the production update, I think it was was it last week? They they tweeted it last week. Was that you know additional composite rings came on an Antonov, right? And so I think they we at least know they have composite rings through number twenty-three, and it might be higher than that. But we're looking in the future at a shipping cadence that could be multiple at one time, right? So they have 4 to 5 shipping boxes, so that means that there probably is going to be very close back-to-back launches. But for the people who were upset, let me just see here. I think I'd written this down somewhere. Where is it? There's some people who are upset about the company not having enough PR. I actually went back and just looked at the company's X account and just kind of ticked off the days, right, of when they sent out some type of PR updates. Shoot, now I'm not— now I can't find it. I had written it down somewhere. Bear with me here.
[00:23:48] Speaker A: Propel Fitness Water with Gatorade electrolytes, zero sugar, and vitamins. Propel hydrates better than water to help you get the most out of your workout and get back to your best self. What propels you? Propel with Gatorade electrolytes.
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[00:24:33] Speaker C: Or, you know what, the easy thing to do is just for me to go look at the account. So again, putting this into context, back in the day you used to never have companies with social media accounts, and they— so you wouldn't get minute-by-minute or day-by-hour-by-hour updates. But here, just looking at AST, you know, so we got an update last week, September 9th, about production over the summer. There was another one on August 27th from 2 Degrees Mobile where they talked about testing and New Zealand. Then August 27th, about Bluebirds 12 and 13, they're fully deployed. August 6th, where we got the great disclosure that now Deutsche Telekom is testing with AST. Let's see, August 5th, that's when they acknowledged the successful launch of 11, 12, and 13. Let's see, August 2nd, there was an award, Guinness Book of World Records. Okay, that's kind of fluff. July 31st, Bluebirds 11, 12, and 13 are stacked and ready to go for August 5th. July 28th. Anyway, if I keep going through this, I'll just say the dates. So July 28th, July 20th, July 17th, July 15th, July 14th, July 10th, July 6th, July 4th, July 2nd, June 28th, June 25th. Anyway, you get the idea. Like, yes, recently the company hasn't been tweeting every 2 days, but But they have been tweeting every week. So is that the norm? Should we expect that? No, but I think it's pretty difficult to say that they haven't been communicative. But anyway, I do also want to address, there's been this view that management has misled people, they lied, or at least some of these anonymous accounts that— I mean, by the way, I'm an anonymous account, but Some folks have tweeted that out, but I just want to remind people, space is hard. I know it's an easy cliché thing to say, but it's truly hard. In first space, you set out goals. You set out goals that you hope to achieve. These are, if you say, hey, we want to get this constellation up by this time, or we want to ship satellites by this time, These are public acknowledgments where the company puts that out there, and it's for not only internal employees, it's for suppliers, it's for all kinds of folks, whether the launch provider, everybody's kind of working towards the same goal. And so there are inevitably gonna be delays, right? Things that are unforeseen. And just a big example of that is Blue Origin. mishap at the launchpad. That was unforeseen. Could we have gotten the number of satellites that we wanted to by the end of 2026? We probably would've had a better shot at that if Blue Origin New Glenn was up and running, but not only were there issues potentially with New Glenn, but then the entire launchpad got blown up. So you're going to have to adjust your expectations. So what a company said prior to the blowup of the launch pad and post-blowup, that is important. It's a big deal. It's a thing that people conveniently forget. It's like, well, management said they would get this number of satellites up by the end of 2026. Well, a big part of the plan to get there was Blue Origin New Glenn, and because it's offline, then you're not going to have the ability to do that. But it's important that you do have these aspirational goals, and so it is different than For space companies, it's different than other public companies. If you're making widgets or it's a software company and things are more in your control, and arguably the number of variables that can be out of your control are much less. It's a matter of engineering team executing on delivering your product versus with space, there's a number of other variables, suppliers, launch calendars, Does your launch vehicle, are there issues with it? I mean, like for ULA, when they had solid rocket booster issues, then that took Vulcan Centaur offline for some period of time. Whoever was relying on that vehicle, you've gotta adjust your timelines, right? And so with space, it's hard, and there are things that are going to go wrong, and you're gonna have to adjust your timelines. As I mentioned before with SpaceX, Starship, no one's going to take anything away from Starship. It's been a tremendous, so far, success. Will they get to commercial cadence? I believe so. Will they be able to do reusability? I don't know when that's going to happen, but I expect them to eventually get there because they've got a ton of smart people working on it. But are people going to be upset that Elon said that they were going to land humans on Mars in 2022 on Starship? No, because people understand the gravity and difficulty of the problem. It's going to take time. It's going to— and as a management team, you're going to set out ambitious goals because you want to motivate people to execute. As I've said before in space, if you lay out— if you have a base in your mind, if you had a base case, upside case, and downside case, you're not going to go out to the public and to your employees and give them the downside case. You're going to aspire to the upside case. Space companies work very differently than other public companies because you want to reach towards that aspirational goal, and if you miss it by 10% to 15%, that's really good. If you miss it by 50%, that's probably the norm, and beyond that, it is what it is. So I think for people who are invested you've got to accept that as a reality, that just comes with the sector. And so you're investing in a high-growth, high-opportunity, but high-risk sector, and timelines inevitably are going to slip. If you aren't comfortable with that, then you probably shouldn't be invested in the sector because it's not going to be for you. So yeah, and for these companies, public investing overall for any sector requires patience and room for management to execute, but especially in space, that is more so the requirement. So anyway, taking a step back, are they executing? Well, yeah. There's 48 Bluebirds that are in production. I think besides from people focusing on, okay, when have the satellites shipped? Yeah, when they're ready, And when the schedule makes sense for Falcon 9, SpaceX to receive them, to process them, then they will ship. What I don't want is them to ship a satellite that has an issue, a known issue. It's just like any other space company. You've got one shot to get it right. And once it's up there, it's done. There's not much you can do about it. But the key question is, Are they executing still? Yeah. They gave us the update with the satellite. There's 48 satellites in production. They got more rings. We know that there's more shipping boxes, and so they've moved from 3 to probably, I think it's 5, 4 to 5. And then just look around, regulatory is advancing in the US, in Brazil, Japan, Europe, other areas. So in the conference this past week, we saw Deutsche Telekom, Orange, Vodafone, and Telefónica talk very positively about a European solution. And guess what? Those 4 are working with AST with Satellite Connect Europe. And so you don't have to— you can take a step back and see, is the company executing? Are there multiple things that are going on? Hirings, the job postings continue to go up. They keep getting additional space for production. production floor space. Facilities are expanding. And then we had, what was it, last week, the Space Development Agency on behalf of the Space Force and Department of War are now requesting formally that the STA be extended to test 900 MHz spectrum over AST satellites around radar and sensing applications. And then we saw grain management NEST looking to extend the STA to test the 800 MHz spectrum. These are all things that are happening and the company's executing. It's not just a matter of, okay, well, when are satellites 14, 15, and 16 going to ship? They're going to ship when they're ready. Or BlueBird's 11, it's getting raised, it's getting an orbital raise and it's in a bar configuration and eventually they're going to fold it when they feel like it's time. And I think Koo covered this with Tanner recently, where as part of the learnings, you're going to unfold satellites under different conditions. You're going to want to learn how to fly the spacecraft under different conditions. And so that's probably what's happening. So we actually saw them go from 50 days from launch to deployment down to 20 days. And then this one's taking longer. They're kind of going backwards because Perhaps they're testing something different. So yeah, just give them room to execute. And as I mentioned before, this is not something that you PR and disclose to competitors or the industry. You work and you learn from it and you keep iterating, right? So anyway, that's kind of what I had for AST. I think it's important to take a step back and just have some perspective. whether it's in positive green days or negative days. And again, I think if you— by the way, if you have constructive criticism for management, then just email them, send it to IR. They may not respond, but they read everything. And if you have a question that you want publicly answered, then send in questions for the quarterly call.
[00:35:02] Speaker D: It's interesting.
[00:35:05] Speaker C: Maybe it was like a few weeks ago, there was someone who was saying, well, how do you get access to management? It's not a fair thing or something. And just in general for companies that I'm invested in, it's like, well, I reach out to them. Anybody can, even retail investors. You can reach out to IR or executives. You can send them— Yeah. They're not going to necessarily respond to you, because if you think about the The number of retail investors there are. So imagine how much time it takes for an executive, whether it's a CFO or IR person. Is their time better used talking to an institution that has a, I don't know, $500 million position or to a retail investor that has a few thousand shares? It's probably not as good use of their time. So they may not respond to you because they're responding to a lot of requests. That said, most companies are sensitive to investor sentiment, and I think retail is a big part of that as well. So yeah, I would encourage people, if you've got issues, then email the company. You may not get answered, but I'm pretty certain most companies do look at feedback and they it impacts how they're thinking about communications and other things. So anyway, that's all I had for now. So anyway, hope everyone is doing all right. And yeah, we'll talk again soon. But I just wanted to do a quick space. And yeah, until next time, take care.
[00:36:43] Speaker D: Thanks for listening to the AST Space Rover 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's Thanks again, and I'll see you next time!
[00:37:18] Speaker C: Listen... Mmm, waffles!