Kook's Weekly - January 11

[00:00:06] Speaker A: This is the AST SpaceMobile Podcast.
[00:00:09] Speaker B: 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.
[00:00:25] Speaker A: Good evening, everyone.
[00:00:28] Speaker C: Thought I'd start a little early now that the game ended. The X app keeps getting worse and worse where it doesn't let me adjust the time anymore without crashing the app, which is seemingly a problem. But anyway, let's talk about our favorite investment, ASTS. So last week was pretty crazy. Obviously, we started off with this ripathon. And then Scotiabank came out almost kind of like firefighters to a fire trying to put it out, and then just got totally mobbed by Bank of America. And so I don't even know what to think of it. It's just a lot of volatility without a lot of news. And so let's just think about what happened this weekend. So ASTF started off with a hype video, kind of getting us all ready for 2026, which is good. So it shows the company's focus. They're starting to set the narrative, but we didn't get the thing that I'm looking for, which is the batch 1 delivery. So that's gonna be the big one. But Scott was at CES and I've linked out all the Different ways in which you can listen to that presentation. I'll say it and I'll say it again, it's just listen to Scott. And so he lays out what will happen. The timing is always frankly outta his control, but certainly beyond our ability to guess when— I'm sorry, within the period of weekly options trading, which I know some people are pretty good at, myself not included. And so, but he won't tell you when a satellite is going to launch in terms of the specific week. Some would say the specific month, others would say the specific year, but he will in fact tell you what they are going to do to the extent that they have the ability to do it properly. And that's what I sort of adopted now 2 years ago. I realized that talking to the company, all it really did is mess up my own And so the things that I could see as somewhat obvious, I would frankly ignore because then I would listen to the company and not that they misled me, but companies are always going to be kind of bullish and you'll always feel like you know something if you talk to the company, even if they just repeat the earnings call to you, but in a private forum, there's a bias to think, oh, I know this secret when you really don't know anything. Because they certainly didn't tell you anything, especially this company. So I've just backed off and just listen. I'm in listen-only mode, and it turns out to be a pretty good strategy when you listen to what they say and don't overthink it. It has actually been a very good roadmap for what has actually happened. So with that as my sales pitch, please just listen to Scott at his presentation and they really tell you what they're lined up to do. We did get a clue. This is almost like a murder mystery. You know, it's ASTS is now playing this game, which I encourage them to do. I love it, where they'll send a picture of the executive that did a tour of the facility. Now they're actually just flat out showing us the signatures, which is cool. But we have Marco Bugic, the CEO of Bell Canada, went with his team to Midland. For a closer look at the technology behind the Bluebird program. So now, interestingly, the press release wasn't more detailed. Didn't say we're gonna go look at Bluebird number eight. They said something more broad about the technology, and then they did show them signing something. And I'm thinking that this is the clue to the space mob that they were giving. Most people just glanced over it. Oh, whatever this. CEO signed something. Well, when you kind of put all the pieces together, in the last update on the production cadence, they had moved or they changed the language to include testing in terms of how the satellites were progressing. Then I've gone through and it's in the DD doc to show how they've changed that disclosure and sort of how many arrays they've had, how many satellites are in construction, da da da. And to me, it was a pretty clear cadence that they've started to sort of move 6 units through the funnel per month. So if you hold that to be true, which of course could be wrong, but if you hold that to be true, then that means that between 1 and 6 or more satellites are in the clean room. Well, you're not going to go have a CEO walk in there. And he goes sign satellites when it's in a cleanroom environment. My understanding is that is not what happens. So then the implication is that he signed something. So worst case, it means that batch 1 is nowhere near done. However, that doesn't add up with the prior disclosure, and it doesn't add up with common sense to me. So that implies they signed something else, which is pretty neat. And so I wonder Whether that was in fact the hint, the fact that they did not sign batch one, from what I can tell, the implication to me is that they signed either batch two or something beyond that. And then it begs the question: What did the what did AT&T sign? McElrish? I don't think that he signed FM two. I think he signed black batch one, which would make sense. AT&T should sign the first batch of commercial satellites. That's what I think. So anyway, you might be thinking, I don't care what you think, Kook. You know what? That is a totally fair conclusion to this. And I would say you are not alone. Other people who don't care what I think include many shorts, and we'll get to those guys later. So meanwhile, the FCC really cares what ASTS says because they've been signing things. With great haste. And so we have FM2 was granted the authority. We have gateways being signed both home and abroad. The regulatory machine is moving ahead. And then you also have Brendan Carr talking about his focus on direct-to-device, about how they're going to clarify the SCS rules so that billions, and I quote, billions of dollars of investment can move forward. This is all happening in a great way. And so I think we don't need the SES approval just yet. And so that's, nothing's being held up by that. But in the next couple months, that's when that would be actually needed because we'll have the birds in the air and deployed, unfurled, if you will. And so then that's when we're going to want the service links. to be, you know, basically a scalable solution, not just STAs and not testing. We're going to want the broad regulatory cover to press go. And so meanwhile, in the docket for said regulatory threshold, we have just some final sort of bickering. Um, Katsi does a really nice job going through all this sort of, I don't know, bullshit that SpaceX does. And all their little letters. And this is all kind of fun and games. Katzi really makes it awesome. And so I've included those links if you wanna follow along in terms of like the final comment letters. But I just think this is your typical lawfare. This is how lawyers stay employed. God bless them. But at the end of the day, FM2 was just cleared. That's the important thing that's next on the Twitter thread.
[00:08:21] Speaker B: Yeah.
[00:08:22] Speaker C: The bears were wrong. What is new? They, I don't even remember at this point because I've kind of tuned them out, but I think between the idea that there were enough changes that these satellites couldn't be approved, I don't even remember. The request for approvals with great, you know, sort of expedited time and they said that was impossible. Well, here we are. FM2 is cleared. FM2 is sitting in the launch facility at this point. So That's pretty cool. But let's not forget about FM1. So FM1 is somewhere over the rainbow, and that gives me a reason to go update my orbital data. So Katzi put out some data. I separately restarted my birdwatching, uh, I don't know what you want to call it, antics. So my birdwatching antics have, have been reinstated. And so I'm looking at this too. I'm always going to defer to Katzie. He's just, you know, just better everything than I am, but I'm always going to be independent. And so I think he was sort of thinking maybe wanting to squint, but I don't think he came to that conclusion. I'm pretty sure he didn't, or actually I know he didn't. And when I'm looking at the data, I'm looking at it right now, I certainly don't see evidence of FM1 unfurling, but I do see evidence that it has likely achieve a more stable orbit and flight plan. So my suspicion is that perhaps it has finished detumbling, or certainly done a better job of detumbling, and, and gone into a better flight formation. That's what I see on the data. I'm staring at it right now. And you might say, well, Kook, that's so badass. How do you stare at flight data? I can't tell you. And so What I can tell you is that Saudi Telecom just raised a— what is this called again? A sukuk. And so it's a Sharia-compliant financing structure for those who celebrate. But they raised a big bond and so they just gassed up a bunch of money. I still haven't seen a press release of that money hitting ASTS's account. So I don't know that they Would press release it. But in any event, following the financings of our partners can sometimes provide clues in terms of how well they're situated to make do on their obligations. And I would imagine that Saudi credit exposure is something you could sleep pretty well on at night. Some credit exposure I don't know if I'd sleep well on at night is the UK. But never mind that. Let's think about what they're doing. With D2D service. And so right behind Australia, which was leading, you know, Australia has the Outback. Outback's all fun and games until you run out of gas or get a flat tire, and then you realize there ain't a lot out there, Outback. And so you really want your cell phone to work, and the Australian government is making it work. So now the UK Space Agency is looking for solutions to supplement their emergency services network. This is all very interesting. These government initiatives, which are basically going to force what otherwise in my view would've happened anyway, but it's going to force these technologies into adoption faster. And so they're really trying to solve these coverage gaps first and foremost, but then second, they're going to want the redundant backups. That's the thing that they certainly would've already known, but investors like us might not fully appreciate that. That last mile coverage actually turns into all mile coverage when there's a disaster event. I'm gonna mute really quick because I got a cough. All right, I'm back. So it's nice to keep seeing this regulatory evolution. What I think is going to happen is as these technologies are rolled out, that clamor by governments to mandate more and more things. Will, I think, expand beyond our wildest dreams. This goes directly to the bear thesis on the limited total addressable market, kindly known as a TAM. Some of you might think, is that a chocolate? No, that's a Tim Tam. So a TAM is very, very different from a Tim Tam, but a big one is as satisfying as a Tim Tam. They're both good so long as the TAM is big. But TAM is what ultimately is gonna justify a high trading value for this company and high multiple for this company. Where ASTS is not a good investment is where it is a niche point solution with limited applicability. If that were to be the case, then the shorts would very likely be right when thinking about a $40 billion valuation, or it would be a jump ball. Too hard to call. For yours truly, where that market application tends to be very big and dynamic, then all bets are off in terms of what something could be worth. And now that comment alone is still not going to satisfy the shorts. And I, you know, whatever, that's what makes a market. And we'll hopefully have a Spaces with said short at valuations this week or sometime. My whole point to him today when setting the ground rules is this doesn't, this isn't, you know, like a confirmation hearing where I have to get red in the face and scream at someone. People are totally entitled to have different views and you're really just defining betting lines. And so someone that thinks this is a small market is just taking the under of $40 billion. Someone that has a big position in the company like I do thinks it's Certainly bigger than $40 billion, but I have to believe that it's a lot bigger than $40 billion of value because I'm not playing for $45 billion of value. Simple as that. Just the same way the shorts have to play for it being meaningfully lower than $40 billion of value because they're also probably not playing for $35 billion of value, although many of them probably are. Many of them are probably going to be pretty happy to scalp 10% from their short and and move on, call us a bunch of knuckleheads, you know, and whatever. But anyway, going back to the TAM discussion, India. So India is also coming up with some new mandates. Cars need connectivity. This is actually a really cool solution where they're going to have the cars basically form, from what I can tell, a mesh so that they talk to each other. So if you're barreling down the freeway and there's a, you a traffic jam up ahead, your car will be able to sense that in advance of you being able to see it, or potentially if you didn't react correctly. And this is going to require, first of all, a lot of data, a lot of bandwidth, but a lot of connectivity. And so they're allocating 30 megahertz of spectrum to enable this vehicle-to-vehicle communication plan, which is the first I've heard of. So again, a really nice contribution. Someone added me on this. which is what I want people to do when they find something cool, because I certainly didn't find this by myself. And so I highly recommend anyone that wants to see what I see to look at the tweet that I titled India Comes Up with New Mandates, and you can see for yourself. Other reasons that make me believe that this isn't a good short are what Nokia is doing. And so Nokia, is opening up 5 new career opportunities, which all mention ASTS in the description. So the Spectator reminds me of a friend when I was in a fraternity. We all had pledge names, and one guy had to be called the Dictator, and he had to wear a potato around his waist. Yep, the Dictator. And, uh, you know, whatever. The fact that I still find that funny says Says a lot about what my wife has to deal with. But in any respect, we have Nokia hiring all these people to integrate with SpaceX. Oh, not SpaceX. Thank God. You know, can you imagine what a downer that would be if I read this little blurb and realized it was actually really good for the shorts? But no, it's not good for the shorts. It says the NTN project—that's non-terrestrial network project—is Nokia cooperation with ASTA. Asts Space Mobile Company that enables innovative direct-to-mobile satellite stuff. Our defense portfolio offers end-to-end customized tactical solutions for our customers. No, not casual solutions, tactical. And so again, we're having our partners, some of the biggest telecom companies in the world, really gear up their own internal sales apparatuses, apparati. and engineering staff to specifically serve customers with ASTS SpaceMobile solutions. And this brings up another key point that I'd like to just hone in on, to be a point solution or to be a platform. A platform is something you should pay a really high multiple on. I've taken, certainly in the private markets, I've taken a couple swings on things that could potentially be a platform, but otherwise, you know, look like point solutions. But if you can find something that can be a platform, The difference in the valuation multiple is extreme on the order of 3, 5, 10x, because what happens when you have, you know, call it user-generated content, is that your technology starts to propagate with the creativity and capital and sales efforts of others, not your own. That allows for a very different level of scalability. And so what I see and what I hope and heavily encourage the company to pursue is treating Space Mobile as a platform because the use cases at the ground level, the end mile, kind of in the hands of the people, power, you know, kind of the Federalist Papers version of AST Space Mobile is individuals and small companies have problems with connectivity that really only they understand, but only ASTS could actually solve. And so what you want to do is open up your platform so all of those interesting use cases can be solved by other people, but you benefit from it financially. And that's what I think we're already seeing in the military use cases. But I think that the consumer use cases are going to go crazy. So imagine that India car use case. Cool. Think about all the recreational use cases. Also cool. Think about all the IoT use cases. It goes on and on and on. And so meanwhile, another way to express this bet, or really a way to prove that this bet is right around the platformization of ASTS SpaceMobile, is SATCO. And so our friend Peter Lindmark, who is a regular person by day, but a European undercover agent by night. Um, has been closely monitoring the situation, as we all should be doing all of the time with SATCO. And so he found out that SATCO, uh, made their first hire, and it is a commercial lead, so a sales hire. This is exactly what we want to see. This is a person being hired by SATCO, so that's 50/50, um, that's going to go out, pound the pavement, and get business to Oversell our capacity. So every time our satellites fly over, that's capabilities that are flying over a region. The concurrency of usage, the number of people, no matter how diverse the use cases are, will never be 100%. So if I subscribe to something, like right now I'm a subscriber of Netflix, do I have it on? No. Therefore, the concurrency of Netflix is below 100% in this exact moment of usage. And a lot of things are like that. And so you want to be able to sell your capacity so that you maximize monetization. And that's what Safeco is, uh, not Safeco. Um, that's what SATCO is going to help do among many, many other things. So then we think about other use cases, which are really kind of coming to the head again. One thing that we have been following pretty closely is PNT. So position, navigation, and timing. And so here I have a tweet from Socrates who actually just put a message in saying he couldn't get into the Spaces, which is quite ironic. But now that I know that Socrates is not on the Spaces, we can really talk honestly about this guy's contributions, which are awesome. And so he has a really good understanding of physics and science. And this is an issue. The PNT issue is explored pretty, in a pretty detailed way in the DD, which is my pinned tweet, of course. And what we started to realize is that the ASTS positioning system is far more robust than GPS because GPS is low power. It's a one-way broadcast. And so it's very fragile. It's very easy to defeat and to jam, which is what's happening in all these war theaters that we're seeing recently. ASTS-based mobile can operate under the noise floor, which means that it is unjammable, but alternatively also it's so powerful it can just overwhelm All other radio frequency traffic, which prevents it from being blocked. Pretty cool. And so this is just going to continue to be a bigger trend in terms of advances in PNT and what is needed really by everyone most of the time. And then we also have the Wall Street Journal putting out a really cool article about electronic warfare. And it's really highlighting the Growler, which has played a pretty important role in recent raids. But also the question of whether the US is underinvesting in these types of technologies because they're not as sexy. You know, you imagine a Top Gun Maverick sequel where it's about the guy flying the Growler and it's like silent, like, you know, in that like key moment in the climax, he like flips a button and it's like, yeah, we jammed the RF. And then he just like flies back and lands. It wouldn't be a good movie, you know? And so Phil, Phil Baffey's Growler pilots, they come back, everyone's like, oh, you're, you're in the, you know, you fly for the Air Force? What do you do? How many kills do you have? He's like, I dropped like 50 megahertz of jamming capacity, bro. And people are like, I don't know, man, not cool. So that's why we gotta just have satellites do this so that these, uh, talented aviators can actually launch live munitions. But but the US military is going to really up the ante on this, in my strong belief. So that's really a lot of the stuff that happened. It's good times, especially because the space mob seems to expand and contract, uh, procyclically with the stock price. So welcome all the new people in the 90s. Um, just get ready because at some point you'll probably have your conviction tested. So make sure you study so that you're not one of the suckers that, you know, in October, the people that got excited and bought the stock at 100, or bought the stock really, you know, '80s, '90s, and then they saw, you know, a quick flip to $50. How many of those people still hung on? Well, I hope a lot of them because that's really the goal is to really understand the investment you've made, quote, know what you own. But for new people, we've included some tweets which bring you back to some of the basics of things. And so one is, you know, really one of my favorites is this Cathie tweet.
[00:23:55] Speaker B: from 2022.
[00:23:57] Speaker C: This was back when there's just a couple of us sort of staying up all night trying to figure this company out. And Katzi, I mean, this blew my mind that he started doing these sketches, which I really view as kind of Leonardo da Vinci level of work and as beautiful. And so, you know, he got it generally right in terms of how these mechanisms work. And so his real, well, many contributions, but one of the critical contributions he made was in understanding the mechanical physics of all this, which then our friend Steve Larison, who is a software engineer, software defined aspects of how this was going to work in terms of the Doppler compensation and the connection with the local core and things like that. And so then the 2 together could put together the full piece. And Steve Larison also had a really good understanding of AI chips. He was an AI engineer. And had worked at a bunch of defense companies as well. So really understood this. And so putting the two together is really what allowed all of us, but certainly Anpanman and I, to really increase our conviction to understand some of the technological questions. But now some of the things that are really salient, you know, knock on wood that we have no tech surprises, but this next tweet we have with the title, Back to First Principles with Katzi, Really is the type of stuff that should really always be grounding for us that we really want to make sure we understand. I definitely subscribe to this first principles type of thinking. You know, if you're looking at a commodity company, you always want to make sure you are, or understand if you're not, the low-cost supplier. You know, things like that. Some rules just to understand the survivability of your business, what the competitive advantage is and things like that. Katsy is very focused on making sure he understands whether we've maximized the output, or in other words, are we the most efficient place for spectrum to go? If that's true, and if the company is designing to ensure that it is the most efficient way to deploy spectrum for MNOs, then all sorts of really good things that we can't necessarily anticipate should happen. And, and that's okay if you can't anticipate it, because what is most important is to know when a good thing will happen. So you don't need to know which party it is. You just want to make sure you show up at the place where the party happens. And the party is going to happen generally with the lowest cost, most scalable solutions. with viable economic propositions for both itself and its partners. And so that's why these first principles with CATSE is a very important thing to study, but also it's important to really study history. And so I think a lot of us too have thought hard about, well, this is like a new cool thing right now. Well, it's not even a thing yet. ASTS has not deployed to consumers, but when it does, What's the staying power? Is this something where people pay for it for a year or two and then people get so accustomed to it that the price just sort of goes away and it's free? You know, I think there's been a lot of confusion out there on this topic because initially there was a thought that SpaceX was going to offer its solution for free. Well, it turns out it wasn't, but also my point was always nothing is ever free. And so even if it was quote unquote free to the consumer, you're paying for it. One way or another, the way you're paying for it could easily just be the fact that you don't churn anymore. So you actually don't view that as a cost because you're like, well, whatever, I'm still paying the same cell phone bill and I'm happy. But to the MNO, you actually did pay a lot more because churn is super expensive. If I churn off of AT&T, they have to go buy another customer. And if anyone's been watching NFL all weekend, it's incredible the load on cell phone commercials. It's all, you know, switch to AT&T, it's the best network, the lowest price, and we'll buy you out of your phone and give you a free iPhone 16. That's CAC, that's customer acquisition cost. That's very expensive. And so they really don't want to have customers churn because then just to stay even, you have to buy a new customer. They'd much rather just keep me and then buy a new customer and have 2. And so this might sound like I'm saying that the price will be zero, and it, and I don't think it will, but I'm just making the point that even if it were zero, that doesn't mean that the MNOs are going to pay ASTS zero. And so on this analysis, uh, at Keys Minnesota, presumably, uh, did a really nice write-up. Uh, this is really impressive write-up, just kind of articulating all the different ways where the MNOs experience a benefit. of various avoided costs, CapEx efficiencies, and things like that, which allow them to pay billions and billions of dollars per year without breaking a sweat. Never mind that consumers are likely to be willing and able to pay quite large increases in their ARPU for the service. And there's a lot of debate. This is the core of the short thesis is that People aren't willing to pay a lot, or that base is very small. We could argue all day, and it's kind of silly because it goes back to what I said in the beginning. There's a line in the sand, and you just have to figure out which of the 3 options you would like to take. You can be short. You could decide, I don't know, I'm just not participating. Good luck, SpaceBob. You guys are wild. Or you can decide, oh, I'm taking the over, and then you buy. It doesn't mean everyone has to be in a holy war against each other all the time. We just don't know. And for some of us that have researched this, I think there's abundant evidence that the attachment rates, and so the percent of consumers that decide to pay for it and the price they're willing to pay for it, and the number of use cases, including communication, but also including non-communication use cases, are going to be so large that this is going to be a really big business. If you believe that, then you're probably inclined to buy the stock. If you don't believe it or you're really uncertain, you might wait, decide too hard, I'm going to go buy some other stock, or you could short it. And that's okay. But this trip around how the text messaging market evolved is pretty interesting. And so, you know, I just would suggest just to think about these issues because they are relevant To the investment for sure, but they're certainly going to become more relevant as the angle of attack from short sellers moves from technology, financing, and regulatory, because those are all kind of done now, which isn't sort of like something to say lightly. Those are big, hard things they had to do. Really very, very few companies in the world have ever accomplished those things, and now it's sort of taken for granted. But in fairness to the shorts, yeah, the stock price is $100, and so they are taken for granted. The stock price is $100. And so those things happened and people that got that right had a really, really nice return. And so now the next leg of the investment, the next questions to knock down in the market is just making sure they execute. You know, there's still a lot to show there. And then the commercial model has to deliver. So those are the uncertainties, but it's great that we're reducing the number of uncertainties we worry about. But we still have uncertainties, and then those uncertainties become much more acute because there's more focus on them. And that's why you're going to hear the volume pick up on these issues. And that's okay. And it's okay to have different viewpoints. That's what I'm going to hopefully be able to— not convey to Evaluations, he understands that— but hopefully be able to demonstrate to people if we have a Spaces that there is a line in the sand. Doesn't Doesn't make you know one person like a thought criminal or not. But moving on, we have SpaceX again. They are confirming that they're going to fly at a lower altitude. So this this actually is is relevant to the short thesis too because there's this there's this idea that people like me potentially don't understand what EBITDA means. Rest assured I do. And so in my models, you're always going to see something quite notable is that I'm always reconciling to EBIT. Why is that? It's because I like to save on my text messaging bills. And so I don't want to use too many characters. So I just leave off the DNA and it saves me 2 characters. That's why. So from that, we can now move. No, I'm just kidding. So the reason why the difference between EBIT and EBITDA is depreciation and amortization. Now, if you went to some fancy schmancy business school, which I most certainly did not go to Stanford GSB, and I think I'll make that abundantly obvious now. Most business schools would be like, well, you know, just add back DNA. And, you know, they don't really get into this concept of using accounting numbers really as economic proxies. That's kind of something that I've noticed, but it really is important to understand economic depreciation. So what is economic depreciation? That means the actual cost that you spend to replace Your gross assets as they economically depreciate. Now, if my balance sheet, to paint a hypothetical, if my balance sheet just consisted of gold or land, that does not depreciate. And so if GAAP, for one reason or another, required me to depreciate those assets, which they do not, then that would be uneconomic depreciation. That just makes no sense. And so the relevant accounting number I would look to as a partner in that business of EBITDA would be the right one. Now, if I owned a bunch of, I don't know what depreciates in like a very, very straight line, like a Maserati. So let's say I had 10 Maseratis, those depreciate like no one's business. It's like throwing a rock into a lake. It's like, how fast can it go down? And so there, That depreciation matters. If I'm looking at EBITDA off the earnings of my Maserati fleet, well, whoa, you know, in 5 years I'm going to have hell to pay if I didn't reserve properly. That's where EBIT is so important. And so with satellites falling out of orbit because they deorbit, EBIT is an important number because you got to replace those birds, otherwise your constellation goes down. So it's really important to look at EBIT margin. It's really important to understand the bridge between Cash flow from operations and free cash flow. And so I'm acutely aware of this and have modeled it out quite carefully in my own model that does independently have a depreciation build so that I'm keeping track of this. So back to physics. So when you're flying at a low altitude, your replacement of those satellites is higher because it's nonlinear. If you fly lower, Your satellites are going to deorbit at a nonlinear rate faster than if they're at a higher orbit. And so ASTS is able to fly their satellites at 670 kilometers because there's so much power that they can close the link budget way up high, whereas SpaceX cannot. And so they're flying much lower, which requires them to have more satellites. So that's more dollars in orbit, and those dollars are going to burn up in atmosphere. at a faster rate. And so this is something that I think will matter because if you have the more capital-efficient company, the market's gonna give you a higher multiple and the market will at some point pick up on free cash flow conversion. It's a big deal. But the size of the market is also a big deal. Not to always slam on SpaceX, it is incredible what SpaceX has accomplished, especially with Starlink. And it is also incredible and humbling To see the implied market valuation of SpaceX, and so we have at Peter Adderton, who is this MNO CEO likes to troll us a little bit, which is fine. He says SpaceX has a market cap that's bigger than the combined market cap of the world's largest MNO carriers. Yeah, so what? You know, that's kind of funny. There's some other examples which I. are escaping me in this moment, but nothing says that a different take on an old business can't be far larger than the combined market cap of legacy businesses. If those legacy businesses are structurally just not good, high CapEx, super competitive with price compression, they can be big in terms of their importance in the industry, but they can have very low economic value creation. And then someone new comes along that disrupts all of the rules, And can capture all of the value. So think, for example, about a company like Apple. They just make the phone. Phones, the manufacturer of phones, hadn't been viewed as a particularly good business. Hardware, bruh. Don't invest in hardware. That's what they told me. And you know, it turns out Apple did pretty okay. And there's reasons why. We won't get into Apple, but you know, they were able to blast through some of the perceived ceilings. They're bigger than the things they depend on, which are the M&Os. And so SpaceX, whether that's the right price or not, I'd much prefer to see a publicly traded SpaceX so that we have real price transparency. But it is without a doubt a very large company. And Mr. Market is therefore telling you there's a big opportunity in what they're doing. And ASTS is doing everything also to show that they too see a big market. So what got me also excited this week is they filed for S-band access internationally. And this is the core, I believe, of the Inmarsat sort of pre-Legado bankruptcy emergence adversary hearing. I might've lost probably half the audience when I just said that, but there was what's called an adversary proceeding, which is sort of like a side fight during the Legado bankruptcy. Got super duper interesting. And ASTS really showed its hand to Inmarsat, which is owned by Viasat, that it was in fact going to go global with S and L band spectrum acquisition. And so ASTS is on the move and kind of prosecuting that strategy, which is great. But don't let big thinking get in the way of Scotiabank trying to drive the stock down. So Scotiabank came out with a hit piece. And, you know, in fairness, like when I read it, let me just pull it up. You know, everyone decided they were going to destroy Scotiabank. And let me just find that report because, yeah, where was it? He still has huge numbers in the report. I'm just clicking through these links I had. But, you know, he just says things that are kind of obvious. It's like without yet a single retail customer, Yeah, they haven't launched yet, guy. And faced by the challenge of orbiting 50 satellites, yeah, we're, we're, dude, we're on it. We're tracking delivery of satellites, you know, like a child tracks Santa Claus. I don't know what to tell you. And then he says evidence of slow user adoption in the US and Japan. I'm not quite sure what evidence he's suggesting, but, you know, sort of an uninspired, uninspired piece. You know, he does sort of say the quiet part out loud. It's almost like I wrote this report on a, on a down day when I'm complaining to Tut. Because he went, quote, the technology is impressive, but we cannot remember a single time when the company got timing right. Well, yeah, that's true. It's like Scott will tell you generally when they're going to do something, but maybe not the year in which they're going to do it. Although I do believe that guidance issue will change in the next 3 to 6 months when everything's shaking down. But anyway, this report really took the steam out of things. I had frankly just thought the stock was going to correct for a week or two. Usually when it gets hit in the face like this, there's so many call options that have been built up, there's so much heat that the unwind tends to just take a little bit of time to work out. I was actually pretty emotionally conditioned for that to happen, but then was very honestly surprised to see just how fast That decline got bought up, and so Bank of America just reminded people that yeah, sure, this you know guy in Canada can sort of nitpick on some things that are just maybe not all factually inaccurate. Like yeah, sure, we don't have a we don't have a consumer yet because the the service literally has not been launched. Bank of America zooms out really kind of the way Reformed Trader has been educating me on his own thinking. It's just like, hey, zoom out. 2026 is going to be the year SpaceX is going to IPO. All the regulatory things are changing. These services are going to come live. They're all ramping. Space is getting federal support. It's becoming critical to the warfighter as evidenced in an increasingly hostile environment where these technologies are being used and deployed. Bamble just kind of zooms out and reminds people, you just, You know, don't overthink it. And the market sort of said, yep, and gobbled it all up. Now, I don't know what will happen next week. If I did, that'd be wonderful. But it was surprising to me to see that this time people just totally ran over Scotiabank. And I think that makes sense. It's a new year. So people positioning in event-driven names are going to see that this is going to be The mother of all event-driven names, and that the space backdrop, the SpaceX backdrop are all really great, and that AST SpaceMobile is positioned in a super duper way. So makes sense that the stock was strong. Meanwhile though, people still continue to fight it. And so I've been trying to get more of these shorts to engage with me. Really, I don't care. I feel like I really understand this investment at this point, but I know, and I think it is really helpful to have that other voice so people can see what shorts either know or don't know. Sometimes, you know, the big bad short in the shadows can be scary. You know, when this Anthony Boza guy, for free, it was fun, was presenting at some conference and all that came out is a tweet going, Boza shorting ASTS. People were like, Oh shit, what does he know? But then, you know, you want to hear these guys talk. So sure, you know, someone with a great reputation can be short the stock. Let's hear it. You know, that's the key is what do they got? And I want to have these people come out and explain to us what do they see that we don't see? And engage them in a thoughtful way. I'm not going to be condescending to them unless they're sort of deserving it, or it's sort of, you know, it's like the doctor with his one call option that he's short. But this guy, Valuations, seems like a real person and did, you know, take the time to write a Substack. I read it, I thought it was well written just in terms of the diction. I actually thought it was pretty funny with the, you know, Ken Griffin can buy another dinosaur fossil. So I had a good chuckle with it. And then I presented it for everyone. But, you know, it would be, you know, useful just to point out that a lot of his thesis is really sort of driven by behavioral pattern recognition, which is fine. He's entitled to do it. So as a screening mechanism, when you see something on the outside like Space Mob before you dig in, I, you know, I see his point, usually kind of frenetic activity. you know, if you see a boil in the water with retail, like, you know, there you go, there's your next sort of crazy stock. The Space Mob, as we all know, is built different as a community in terms of the expectations of research and the quality and the length people have been doing this. So that's where I think he doesn't really understand the depth of the cult, but it's for him to learn. And he also concedes that he just doesn't understand the technology, uh, which is also fine. And I appreciate his honesty. He didn't like, Caristel made up things that were incorrect about technology. For instance, when I, when I knew that, uh, Caristel was full of crap is when their short thesis included, uh, the cost curve of galladium solar panels, which I knew factually ASTS was not using. And so when they had some experts say, oh, you know, those gallium arsenide solar panels are really expensive, it cannot possibly work economically. That's when I went, oh, you just showed your hand. And that's why it's important to get the shorts to talk because in that moment I knew that they didn't know what they were doing. They were wrong. They just fundamentally were black and white wrong. And so then I knew that they didn't have the jump on me. Funny story, stock still went down 90%. So they kind of had the jump on me, but at least I knew that I was not wrong on my fundamentals and that gave me the wherewithal to fight. To live another day. So the space mob did chime in. There were some really nice rebuttals of his report. I included some of them, but it also is interesting to think about the quote unquote risks to the short, which which is neat. You know, what are the things? You know, when we think about our long investment, the ifs versus unlesses. You know, if The company does not launch satellites, our company is not going to be a great investment. That's an if statement versus we're very shortly going to be flipping that to unless there's a material change in the production cadence and launch cadence of our satellites. Think about me talking this time in May of 2026 where we're launching satellites regularly. If I say, well, unless something bad happens, we're going to launch 243 satellites. Then that means our long thesis is pretty good. So here he's saying, well, my short is great, but the risks are that AT&T may offer beta service with FirstNet in the first half. Well, they are, they just announced it. My short thesis is great unless they have successful satellite launches. Well, yeah, they're going to have successful satellite launches. My short thesis is great unless SpaceX IPOs at $1.5 trillion create an increased sector FOMO. Well, they probably are going to do that. They announced that, so on and so forth. And so his upside risks are, you know, he would say, well, you guys are so specky. I mean, I think those things are, you know, like done, but we'll see. And that's again, really nice to know what they're thinking.
[00:47:11] Speaker B: And Great.
[00:47:13] Speaker C: Show me your cards. I'll show you mine. I published them. You know, it's kind of like, Rommel, you inglorious bastard. I read your book. Well, I published my book. You know, if people want to know the long thesis of AST Space Bubble, it's on my pinned tweet. And so we got some other write-ups, which I've included. Now Space Mob has vibe-coded evaluation model, which is pretty cool. I've included that as well. And Panman spent a lot of time checking it. I have not. And then you even have Kevin Mack apparently willing to capitulate and say that ASTS is going to go to $1,000. And so I don't, I can't keep up with Kevin Mack's ever-changing risk regimes, but I will say this about Kevin Mack, his returns are sick. And so that guy has put up some incredible numbers. So a lot of respect and a lot of, you know, frankly envy to him being able to do that. But if you were trying to do returns like Kevin Mack, please, please, please, be careful before you start using leveraged ETFs. And so I'll just include a tweet someone else included where if you had bought ASTX, which is the double X leveraged ETF, when the stock peaked the last time ASTX had hit 100, you'd actually be down about 30% because of the gamma burn there. Just so you know what that means, it's With these levered vehicles, whenever the stock goes up, it's buying more of that security to maintain its tracking error on the short term. When it goes down, it's selling that asset again to maintain its tracking error. So what does that really mean? It buys high and sells low. If you do that rinse, wash, and repeat, buying high and selling low is generally not a recipe for success. And that's why that vehicle ends up underperforming. I've also— well, it does underperform. It will underperform, um, in almost every scenario unless the stock is just straight up and to the right. Uh, that's the scenario where you, where you crush it on those levered vehicles because the gamma doesn't hit you. You're buying high, buying more higher, buying more even yet higher. You know, that, that's okay. It's the volatility that wipes you out in those things. And so then lastly, I've included the, uh, CES sessions for some of the other satellite players. I think it's Globalstar and then Iridium. I can't remember, haven't had a chance to watch them yet. So that's all we have for this week. Thank you very much for joining me, and we'll hope that we have some other cool fundamental research that happens over the course of the week, which I'm pretty sure we will given that we've been able to now hit this for over a year and a half. And I haven't ever had to say, well, there's no weekly, guys. There's nothing happened. So I'm sure that the streak will continue. Take care.
[00:50:03] Speaker B: Bye.
[00:50:03] 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.
[00:50:27] Speaker B: We're doing something very, very big, and I think with this technology we can really affect billion lives. AST SpaceMobile is the only company that has proven technology to deliver cellular mobile connectivity directly from space to the everyday smartphone. People will just basically turn 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 NMO.
[00:51:00] Speaker A: Listen.
[00:51:08] Speaker C: Mmm, waffles.