Kook's Weekly - October 6

[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: Good evening, everyone. I think it's the first time— it looks like I'm actually early, it's 8:29, but looks like it's the first time where a football game ended perfectly on time. That was a great Bills game, but even a better Mariners game for anyone that wasn't watching earlier. So now we get into the sport of being disruptive telecom investors, which many people said Wasn't possible, but here we are. So we had a really fun week. What's nuts about it is that it wasn't really a surprise that this would happen, but it goes to show you how important operational execution is in its final certainty. And so the big news we'd lead off with this week is FM-1 and FM-2 having firm ship dates. And so FM-1, which is Bluebird 6, is going to fly to India on an Antonov. That's pretty, pretty cool on October 12th. And so this was really the event everyone was waiting for, the kickoff of the next gen program. And then, you know, I think the thing that really caused the market to go, I think, berserk was that FM-2, which is also Bluebird 7, is going to be shipping to Cape Canaveral in October. So what does that mean? Indian rockets don't launch in Cape Canaveral.
[00:02:05] Speaker A: Blue Origin.
[00:02:08] Speaker B: does launch in Cape Canaveral and ironically is launching a rocket at the end of October, but is almost undoubtedly not launching Bluebird 7. And so the only real takeaway from this tweet the company put out is that FM2 is going to be going on Falcon 9, probably in November. So all of a sudden what people are seeing is that the debottlenecking of our satellite production has more or less concluded. I say more or less because of course they got the first 2 done and then there's, you know, a bunch of them that are in various stages of production. Once those get shaken out and And so hopefully those will just roll off the production line without a hitch. What we know is that as they were building these first next-gen satellites, it was quite difficult to engineer the control sat, but once you get it done, you can just pump them out. And so hopefully that's what's happening. And so then what we should then expect to have is start to get into the real launch cadence. And what I mean by real is actually Falcon 9s filled with 3 to 4 satellites and Blue Origin launches filled with 6 to 8 satellites. This is when you start to have the scale launch program kick off, and we're now on the precipice of that. And that's what the market, in my view, was largely reacting to because what we have is a stock that is not forgotten anymore. It has a real market cap. It's trading huge amounts of volumes. I know I'm personally getting a lot of inbound calls from friends that work in funds and finance. That's my world. So people that work at real firms are now really being forced to look at this and calling me. And what's interesting though, and they don't have the sort of malintent of expert consultants and things like that, but when they call, they are always asking, well, but what about SpaceX? So they're still in that early phase of their learning, which is fine, where the typical short soundbites are the things they sort of have to get their head around, but they are, and which is why they're calling me because they're basically being forced to get up to speed on this thing because it's going up. Stock price waits the news, as I've said for many a year, but this operational execution is important. And so Kevin Mack would say that the stock market is efficient. It is in some respects. And so let's take a Kevin Mack worldview that everything is priced in. And so on Monday before this tweet, what was priced in? The potential for more uncertainty and the potential for runaway delays and increased slippage was what was priced in. Now what's interesting is many of us had very, very high certainty levels that FM1 was complete and had cleared all the issues. We had alluded to that on last week's Spaces, and you could, there's some ways you could have really increased your confidence level of that. And we did, and that's why a lot of us have really big positions. But the market obviously didn't have that same confidence. And so then with this tweet that the company put out, that really de-risked this operational execution component, and then the market re-racked. Market efficient. What's interesting is strong form market efficiency would say that the market should have known what we felt like we knew, uh, but it didn't. And so it was only pricing in what was just press-released public news, um, but then it adjusted. And this kind of goes to my point, is there's so many cards to flip with this company that anyone that says, well, the market is efficient, it's kind of a silly thing you can spin circles around arguing. And I think it's kind of stupid. The market is competitive and a lot of people are trying to figure out the same thing, but companies are dynamic and we're not arguing about the value of a closed-end fund that owns dollar bills and you have a clear NAV. We're debating something that is dynamic, ever-changing, full of uncertainties, both good and bad. And it's very difficult for anyone to conclude that the stock price should be an exact certain number any day. when there's all sorts of changing news. And that's what was kind of interesting about the Kevin Mack comments a while back about Legato. And then what we're seeing in this sort of rapid rerating of this company, admittedly in a strong stock market too. And this is what Anpanman and I always sort of dreamed about. I mean, for the past 5 years, we'd always look and go, oh my God, this is like the best time for Scott to put out some news. We finally have a really good stock market. Well, we kind of have the granddaddy of them all right now. We have a company that is really now ending its news vacuum. Interest rates are going down. The secular backdrop for defense spending is crazy. The secular backdrop for strategic investments, things that are sort of, or not sort of, that are important to the US and national security and effectively defense arms race is very important. All of these things are happening at the same time, which is great. Which we'll get to in a second about what that could mean in terms of the valuation. But this operational de-risking is a very important point that could be easily overlooked by casual market participants. Could someone say, well, of course, you know, they obviously were going to have to deliver FM1, otherwise this company would not be worth anything. And the question is, were they going to have this runaway slippage? If you are a kind of an experienced investor, if you start to see a project go over time, that almost 100% means usually over budget. And the passage of time can sometimes not mean the closing of the risk, but sometimes it can be the expanding of the risk. And that's why as FM1 slipped from April to May to blah, blah, blah, that's why, you know, you, that's frankly why shorts probably piled in because the muscle memory of of similar and like-kind analogs would generally be problematic. And the reason why people like me and, you know, a lot of the other people that post on this company took the other side is we just had a lot of conviction that this was not a runaway to the downside project. And in fact, the opposite. So anyway, here we are. We have a really nice post on Reddit from Tanner, and I didn't realize his screen name on Reddit was TKO. Makes sense. Tanner Kirk Otway. But now I'm thinking about the guy that makes me do all these pushups every night. I think he's TKU. So now I don't know what to believe anymore. If Tanner has a burner account that's been making me do pushups all the time, maybe, maybe this is all one big joke. As I do this podcast, I'm questioning the reality as I know it. But anyway, Tanner on Reddit. put out a really interesting thread that was highlighted by Redrum, which is my second tweet. It's called Tanner on Operational Scaling. And so Tanner has, Tanner self-doxed. And so everyone knows who Tanner is and he's a petroleum engineer, which means he's very technical and he's very smart. He's a guy I talk to all the time. And so this tweet is really interesting because he goes through kind of what's changed. And you can easily see a stock price go from $2 to $70 and think, oh, I missed it. But it's also really important to understand the things that change. And so a year ago when they really didn't have very much cash, they didn't have the warrant exercise. If anyone remembers the advent calendar that I did, the warrant money to me was a game changer because that's what allowed them, the company, to step on the gas to scale. But the constraint for how this company could actually invest in its own capacity was self-limiting by its balance sheet. Now with these cash balances, as Tanner points out, they really have the ability to step on the gas and get to this faster cadence. And a point that I had made, I'm sure at some point, was when people would cry about dilution, you know, effectively the act of raising money, it was misguided. What you needed to look at is relative to the current stock price, is raising money accretive in that it helps facilitate NPV of future growth opportunities more than the slice of the company that you're giving away. And then you had Andrew Johnson, the CFO of the company, make similar comments in prior earnings calls of the faster we raise money, the faster we can invest in our constellation and pull forward this value. And then you started to actually see this happen with sell-side notes of realizing as the company grew its balance sheet, it could pull forward its buildout, pull forward its competitive moat, be first to market. And that's what we've now flipped into in terms of the market understanding that this company can be the winner. And as it invests faster, that is a good thing, not a bad thing. And so in theory, they just already, they've already done the capital raises. You can see how the capital raises were really well received because now the market knows that raising capital is not actually net dilutive. You are being diluted mechanically, but in terms of value, it's net accretive. And that's an exciting thing. And that's really one of the points Tanner made in this Reddit thread about how the operational scaling has taken place, how the balance sheet has really facilitated that, being able to run more shifts, hire a bunch of people, get all the testing equipment. All of this stuff has really changed what the operating capabilities of the company are versus just a year ago. It's very exciting. It's a much better company to own than it was You know, in what was really just a blink of an eye ago. And so going back to the sell side, so the sell side is taking note. Barclays upgraded their price target to $60. I'll say it once and I'll say it again. I don't really care about the sell side price targets that much. They're pretty near-term looking. They will generally follow the stock price. Rarely do you get sort of the big brain price targeting exercises. Ironically, Deutsche Bank was the one that came out and just sort of slapped us in the forehead and it's like, oh yeah, it might be worth $600.
[00:12:55] Speaker A: Bye.
[00:12:55] Speaker C: What?
[00:12:57] Speaker B: This was when the stock was like $10. It's like, wait, hold on, come again. And so it was one of the few instances where I think I've seen the sell side really kind of do the exercise that I do of really trying to squint and see the convergence between founder vision and financial reality. But even here with Barclays, they do show an upside case of $120 per share, And it's always just really useful to remember how dynamic this is. It changes as cards flip, and sometimes you do get the sell-side report that really just shows the realm of the possible, which I find really useful. I would love it if sell-side reports generally would just say, we're not going to give you a near-term price target. That's not what, you know, the kook is asking for. I really want to understand If everything goes according to the company's plan and you factor in some of the nonlinear elements of what it means to be successful, what type of opportunity am I playing for? And so, for example, I would've loved to have seen that type of analysis on Google back in 2005 when I actually looked at it. I would've loved to have seen that analysis on Meta. I would've loved to have seen that Analysis on Microsoft and Nvidia, and even things like Amphenol. Just to understand if things go really well, if I have a five ten plus year time horizon, what am I looking at? It would make investing so much easier because so many people would in fact ignore that analysis. But I wouldn't, and it's really the reason why I own so much Space Mobile is in this is one of the rare instances. I feel like I can really understand what the long-term vision is. And by contrast, this afternoon I was trying to study quantum stuff, just trying to get up to speed. And like, I get the soundbites, but I don't have this visceral understanding of really what that market looks like and what the business models look like and what the opportunity looks like. Those things right now, I categorize as like schmuck insurance, which is a term I use, And so to me, those are kind of like Bitcoin. It's like, I don't know if anyone really understood it, although in fairness to the Bitcoin bros, they did have that vision many years ago. And if you had asked them, they would've said, hey, we're going to replace money and replace God. You're like, oh, okay. You know, do you guys want to put a straitjacket on? And, you know, but I do want to hear those bull cases. And then if it does resonate sort of, you know, in the strings of my soul, then that's where I would, you know, really take a big bet. That's what happened to me with AST SpaceMobile. It's something that just sort of the cumulative experiences I've had in my career, I really understood what could happen there. And, you know, here we are Sunday night doing a podcast about it. And long way of saying the sell-side reports, you should always, in my view, like read them to try to understand the impact of vision and what's going on in terms of whether a company is creating and/or dominating a market that is or could become big and also be durable, thereby leading for good returns. Those are the things that I'm looking for because that's where time is your friend and you can just make one decision. And then, you know, in theory, you know, this would be an amazing way to live, but You could rewind the clock back to December 2000, saw a vision, saw a founder, you know, buy stock, go to bed, wake up in 5 years and boom, it worked. That's a great way to invest. Instead, you know, we've spilled infinite amount of ink and time doing analysis, which is fun, but it just goes to show you if you can zoom out correctly, time is really your friend and don't really overtrade things. So now let's get back to some more of the news we had. Vodafone come out. So literally Vodafone came out to go visit Midland. So to me, this was my tip off that FM1 was going to, was going to, um, not launch, was going to shift. Took a lot of crap for that on the internet. Of course, people were saying this is below you, kook.
[00:17:07] Speaker C: What?
[00:17:08] Speaker B: Guys, there's really nothing below me. I mean, did they, have they seen the ASC cheerleader memes? I mean, I, I don't know. I don't think I'm known for. Having a high bar, but anyway, that apparently was like too much. You know what I'm saying? Well, I bet they're—I bet they were at the facility because they were going to ship FM one, and people were up in arms about that. And then the next day, it's literally FM one is shipping. It was really nice to have Vodafone there to break a bottle of champagne on it. Spot on. And so then Vodafone comes out. Also, never mind the whole team thing, but then are out there talking more about how they're going to bring the whole solution to European market. So I want to point people to something that is a recurring trend. It's very, very important, actually. So in this second Vodafone tweet, then they go to the Vodafone page. So first thing is also all of this again is being corroborated with partners. And this is a point Tut was very wise to point on many, many moons ago is whenever AST SpaceMobile would put out a technical update, it's always in conjunction with their MNO partners. SpaceX doesn't do that. Do you remember this company called Link? They don't do that. Only SpaceMobile does that. It's very interesting. And this we now know really goes to the risk posture of the company. They literally think if they don't have all this verified with their partner, they're all going to jail. Like they're always, they're so careful. They're like, we do not want to trade black suits for orange suits. It's like, guys, you can also just put out a press release saying you're awesome. No one's gonna, no one's gonna be too upset with you. But anyway, they, they persist in being, uh, really credible by having the world's largest MNOs come out and back up everything they said. And so here you have the CTO of Vodafone explain why they partnered with AST SpaceMobile. Exciting, exciting, exciting. But what is also interesting, I'm looking for the exact quote, Is the concept of data sovereignty. National sovereignty is going to be a very important trend and characteristic of the systems that are successful versus those that are not. To take a quick side trip on something I didn't tweet about, I was I'm working on refreshing the DD document for anyone that's. new to the name, the DD document is still actually pretty current. So even though I put it out basically a year and 5 months ago, very, there's obviously positive milestones and updates, but if you're trying to get your head around the investment, that document is still good. I'm updating it so there'll be a refreshed one. Then I'm going to try to have that out by the time the launch happens, because I'm assuming there's going to be a lot of new people that are trying to learn about this as well. And I want to prevent people from, I really want to prevent people from buying ASTX, that double-levered ETF. I think they're going to get their brains blown out on that eventually. And I want to prevent people if I can from just buying short-term call options. And so even though they're in the right security, they somehow find a way to lose money. And I think the best way to do that is by sharing in-depth research so people can understand why it's okay to actually be patient. And Rome wasn't built in a day, and you can own a stock for more than 15 seconds. because that is not usually a suitable investment horizon for a secular winner. Um, but the long story short is I was reviewing IRIS², which is the European system, which is really this bastard of a system. Like, imagine a child that has like 7 dads. Very confusing. child has to overcome many obstacles. And so IRIS-2 is that. There are many, many fathers of this thing. And what's interesting about it is they're in Europe, which basically makes it, makes it an unusable system for anyone outside of Europe. Their data is no longer sovereign. The U.S. will not use it for, for one. They're definitely not going to use a European system, but if they were, they're not going to have, the DOD is not going to have their data go through.
[00:21:26] Speaker C: Yeah.
[00:21:27] Speaker B: Europe, no way, and and no other country will either. And so then what happens then is something like an Iris squared becomes sort of sort of like an economically dead dead system. And if you have a satellite constellation that can only be used over one country or one region, it's pretty stupid because these are economy of scale assets; they're multi-client assets. You want to be selling capacity as you go around the world. To depreciate it and amortize that that big fixed cost, and this data sovereignty piece is important. And the the account Mega Constellations, if if anyone follows it, is telecom-specific account, very technical, very good. And that person wrote a review on LinkedIn, which which I was basically just incorporating into the DD doc yesterday, and made many points about why this Iris Squared system is. Is going to suck, basically. And if it ever actually gets built, why it's just a total POS. And what you can see here is Vodafone is sitting there really just sort of like primping themselves, combing their hair, putting on cologne, doing all these things Europeans do that I certainly don't do. Clipping their nails, having an espresso, popping a couple of Zens. That's what SACTO is doing right now. They're just being their inner Peter Lindmark and being fancy from Liechtenstein. And why are they doing that? It's so that when Iris Squared hits the wall, Europe will have SATCO to fall back on for all of the government use cases, all of the emergency response. And in my view, probably a lot of military use cases as well. AST with their partnership with, with Vodafone has created a European sovereign system. based on the constellation that should check all the boxes. And Vodafone is no dummy and is doing everything right to be in that position. And this just goes to just how many billions of dollars of revenue do we have sitting around the world waiting to hit our account? We don't know, but we do know that we have a general economic setup to have it happen, which is what's exciting. And we'll get to that kind of extension of that logic in a second. So we also have Verizon. I was just watching, I think, I can't remember if it was the Mariners game. Yeah, it was the Mariners game. It was perhaps one of the most disturbing, disgusting, and stupid advertisements I've ever seen, which is this Verizon ad where a guy walks into a plastic surgery office where his mouth is right above his sternum, implying that the plastic surgeon removed his mouth and put his mouth right over his heart. And it's just very visually difficult to look at. And then they make the point that they should honor some plastic surgery contract, just like Verizon honors the contract of T-Mobile. And why is this plastic surgery firm not as cool as Verizon? I mean, if I, if I could have stabbed myself in the eye instead of watch that commercial, Like it would have been a viable option for me at that point. It was just the worst ad I've ever really seen. And so that brings us to Verizon. So Verizon still has this valid letter of consent with the lease, which means they are going down the line with AST Spillways Mobile. There will be a DA and God help us. Please Verizon, if you're listening to all, get rid of that ad agency and just Channel the Space Mob energy and copy some of our memes and our content. We won't charge you for it. Like just follow Corey and have that psychopath guy in the Lamborghini. You will sell more mobile phones than the stupid stuff you're doing and paying a lot of money on Major League Playoff baseball. I mean, God help you guys. That was a terrible ad, but at least despite your god awful instincts on marketing and how to make customers not even want to look at you, at least you're very smart technically. and you are having good FCC protocol to make sure that your STA is valid at the ACV6 model. So I guess it's kind of like a one step forward, one step back type of thing for those guys. We also, going back to the world of the FCC, we had Legato. So Legato got confirmed. Very exciting. The next step Is getting FD approval. So I added some stuff for people. Um, let me just pull it up on Twitter. Okay. So I added some slides called Legato Teach-In. So these are some of the documents that I will be adding to the DD document when I update it, but this is just a preview of it. I think it's really important for people to understand the Legato deal and just take, take a couple minutes and try to read these slides just to absorb it. If you can, because we talk about Legato a lot. People throw out some really big numbers, which we believe, frankly, but it's hard to sometimes contextualize it. You have anonymous accounts with profile pics of cartoons telling you that invisible energy waves that you got in bankruptcy are worth $20 billion. I can understand the basis of skepticism, but they are. And here's why. And so the refresh of this deal is all here. I'll just walk through slide 1, just gives you a basic background. January 6th, this was known to the world. Very exciting. I couldn't believe my luck. I had known Legato actually pretty well because a lot of my friends are distressed guys that do spectrum and they were all involved in Light Squared, which is the predecessor deal of, or the predecessor name of Legato. This company goes way back when my career. The next thing is just really an overview so people can understand, you know, what is the deal? So it's a long-term lease, 80 years for 40 megahertz of spectrum in US and Canada, plus an extra 5 megahertz sliver. Now they get a free GEO satellite. It's super exciting. It's like, if you buy now, you get not one, but actually just one extra GEO satellite for free, plus some ground station assets. Order now while supplies last. Only cheap price of 4.7 million penny warrants and $550 million and $80 million per year forever and a rev share. Buy now. And honestly, buy now. It was a good deal and very strategically important. And now we're at the point, there's, there's more background just for which bands there are. If anyone has really good insights into this spectrum, just always hit me up on DMs. I'll incorporate your comments if they're intelligible and intelligent. I'll put them into the DD doc and, uh, and give you a citation or footnote if you want. But then also really understanding the background of this. So this, this spectrum really is El Dorado or Shangri-La. People have known about it. They've heard about it. Many men have died trying to reach this destination, but all have believed in its promise. And so There came to be a view that this spectrum was just simply cursed. Anyone who had attempted to, you know, get the treasure somehow turned into dust for one reason or another. But that history is exactly why the opportunity was available. So many companies have been burned trying to use this spectrum for one reason or another that it just was like kryptonite. And the only company that could really do it with it was AST SpaceMobile, which is why this opportunity is so enormously value creative. And the background is plagued by a bunch of DOD disputes, which itself is very interesting. You know, basically you're going to the car dealership to pick a car and you have the Department of Defense sitting in the driver's seat, revving it, saying, this is the one we want. Well, there you go. So we know that ASC SpaceMobile has grand ambitions for dual-use government and military work, things like Golden Dome, things like PNT, position navigation and tracking, which is the backup GPS systems, all sorts of timing applications, um, the transport layer for the Proliferated Warfighter, whatever it's called. A lot of stuff going on. What better proof point than the fact that the DOD views this spectrum as so important, they actually drafted laws to prevent anyone from really using it? And Inmarsat, I found very interesting. Inmarsat had previously had agreements, one in 2020 for $700 million with the Navy, one in '22, which was a $600 million deal with the military, another billion-dollar deal with the Navy, another $400 million deal with the Army. I'd have to go back and tie this out to Inmarsat's actual numbers, which I have not done, but these numbers are jaw-dropping. And this is a reminder, this was for the use of the spectrum in narrowband sort of applications without the big bent pipe that AST SpaceMobile can use. And in fact, I don't think Inmarsat was necessarily providing, well, they were probably providing narrowband services, but it shows you just the realm of the TAM here. Which gets to be a really important part of the AST SpaceMobile growth story. One thing that I wanted to add to this discussion that people maybe not have thought about is really the value that AST SpaceMobile paid. So when we think about it, the relevant comparison we all have now is that SpaceX just paid $17 billion, really $19 billion for the EchoStar spectrum. And so initially when, when people like me were saying, I think that Ligado spectrum is worth $10 billion, I was sort of laughed out of the room. And then I secretly thought, well, maybe it's worth more. And SpaceX really just validated and printed the fact that lesser quality spectrum, roughly the same amount, is worth $20 billion to them. Well, that's a really amazing mark-to-market for the L-band spectrum we got. Now, what did we pay for it? And so at a $50 stock price, I mean, this is when I was updating, this stock was $50. I could update that fast. That was worth $235 of stock when this deal was struck. It was really like $130 million of stock. They're paying $520 million of cash. This is all non-recourse funded with debt. There's an alternative credit firm called SoundPoint, which is leading that loan. That loan is in an off-balance sheet bankruptcy remote SPV. That money then goes onward to MRSA, uh, and then there's the $80 million a year lease. I discount that and say, well, let's just discount that at 5%. Those— the present value of that lease payment is worth $1.5 billion. So when you add up everything, uh, AST spent about $2.3 billion for in present value for this spectrum. Then you add where I add the royalty. So we're all very optimistic about AST SpaceMobile. So if you assume the company's going to do $5 billion at some point of revenue in North America, just making up a number, that annual royalty would be a quarter of a billion dollars a year. Again, discount that forever. The PV of that royalty, which is consideration you know, paid in a way. It's money that's going to go to Legato. We're not necessarily at cost, but one way to think about this, which we'll get to next, is money that we share with others is maybe money that goes off the gross value. So if the gross value is $20 billion, but then you have a royalty that goes to someone else worth $5 billion, then the net value to you is $15 billion. So when you add the cash The lease, the shares, and then a real loosey-goosey estimate of the royalty, that takes the total consideration we paid on a present value basis at 5% of roughly $7 billion. So $7 billion versus $20 billion is a good deal. The next thing I wanted to introduce is a rough way of valuing Legato Spectrum. And so this is some math I need to sit down with Katsi around, but You can take the spectrum we got, 45 megahertz, and then you can go through some satellite math, which I won't do verbally on this call because I'm sure people will not be able to follow it. But you can start to understand that we have various spectral efficiency assumptions. So basically how efficient we can use this spectrum, how we can reuse it because we have a lot of satellites and they have different beams. And then we take some utilization factors and things like that. And we ultimately can say, well, where are we going to be selling capacity? In my view, we're selling capacity somewhere between $2 and $20 a gigabyte. We're seeing that monthly rates for crappy services are like $10 a month, but the people using SpaceX and Starlink are not using a gigabyte of data for intermittent texting. So when you actually think about the value of the data, $20 per gigabyte does not necessarily mean $20 per month, which is an important distinction. But the punchline is you can start to bridge revenue capacity against the logado spectrum of somewhere between $1.5 billion and $30 billion gross per month. So the difference between $2 per gigabyte and $20 per gigabyte, 2 bits per hertz, Versus four bits per hertz. You you can see these assumptions in the tweet. You get a very wide range, of course, but it ends up being very interesting. And I think this is the first time I've seen anyone try to put a number on the on the value. And then what I do is I say, well, what does this actually equate to in terms of value per hertz? In revenue per sorry revenue per megahertz. And then I compare that to AT&T in terms of their annual dollars. revenue per megahertz, which is roughly $250 billion a year of revenue per megahertz of spectrum. And Verizon, which is roughly $300— sorry, $250 million. And then Verizon is $300 million per megahertz. And then I checked that in terms of what my assumption ties out to, and that ties out to these big numbers of roughly $15 billion a year gross for AST SpaceMobile just on the North American Legato spectrum. Then that's when we can start to form the idea of, well, what's this company's revenue capacity going to be, which is a really important thing to have in the back of your mind. So where we started off with this conversation is the sell side being able to zoom out and really see what the future might hold if things go well. Now, no one's going to be putting out a $15 billion per year revenue estimate on the Legato spectrum alone. You truly would look like a kook. However, you can do that math to see the realm of the possible, just like you could have done some math to figure out what the search market opportunity was for Google in 2005. You could have done the ARPU math for Facebook in 2007. You could have done those things. You would have looked ridiculous. I, am ridiculous. I did that math for Tesla back in 2015 because I was trying to copy Ron Baron and I could see what he saw. Did I buy Tesla? No. But lesson learned. That's my Steve Larson moment, you know, really is seeing these things where if I had just looked at it in a different way, really dumbing it down frankly, and just seeing where the vision can collide with financial reality and then sticking to my guns and being long-term. The results can be astonishing, but the key is to figure out the right frameworks to apply, and then obviously you have to be right. But that's the punchline. I think I probably blabbered on too long about Legato, but we'll revisit this later. But you can see some of the math I put out. If people see mistakes in it, please DM me and I'll correct it. And but it's exciting to start to put some revenue potential numbers on this company now that we're getting really close to. And the other thing we have, only 6 stitches put out just, you know, the obligatory employee count estimates, which show we continue to really grow and scale and take the opportunity. Also this week we had Scott give an interview. It's really more of the same, which is great 'cause he has a great punchline to talk about and he's very excited. So I'd recommend people listen to him on Bloomberg. More people are being exposed to this. The more people hear Scott talk, even if he repeats himself every single time, it's great because if he repeats himself and he's right, then he's credible. But then Scott has to compete with Anpanman, who blew him away with a 2-hour talk. I didn't have time to listen to this because I decided I have to try to start living my life, but heard it was great. And so the link for Anpanman's Spaces is is linked here. You can listen to it if you want. And then we also had more tech validation. So going back to the way this company works is when they do things, they put it out with their partner. So we had some great releases with Vodafone. Oh, and this is actually where the national sovereignty might've been, but then we had Bell. So Bell Canada came out saying that they, similar to AT&T and Verizon, had achieved Canada's first ever space-based 4G A voice over LTE voice call, which is an accomplishment. And so again, this is where the use of an MNO's sovereign gateway infrastructure comes in. And this is different from an experimental satellite to phone test when you're using a specialized modem or narrowband protocols, which is really what SpaceX is doing a lot of. Doing voice over LTE is fully packetized. Low latency calls. They are using Bell. They're demonstrating sustained broadband throughput. They're integrating to the existing telecom backbones. They're using 3GPP protocols, and they're just proving that they can do this without modification on the MNO's core. No tricks. These press releases, I believe, are very important to partners. We see them and we go, yeah, of course we know it works. But I think these press releases are very important for partners. And then we also, going back to the tech that allows this to be possible, Only 6 Inches was also nice enough to share some excerpts from an expert, not an expert consultant, an actual former employee. And so I listened to this entire interview as a whole. I found it very interesting because it's a person that was early at the company and really knows it. Through and through. So I highly recommend to read what was shared in its entirety. But what I actually took away from this was really interesting observation that is obvious just to hear it. To hear it is important is when you're inventing something that was perceived as impossible, the ability to then leave a bunch of Patent landmines behind you is very high. There's wide breadth for you to just patent everything because no one else has really been trying to solve those problems. Because there's a first to all of this, there is a lot to invent and therefore a lot to patent. Very, very valuable down the line. And so what I do know for sure is AST SpaceMobile is a very litigious IP owner. The first time I met Abel, this was the first thing he was talking about is his plan to enforce and protect and litigate his patents. Top of mind. And so these guys have tried to close the door behind them on the IP. I think there's many other moats here, but what I liken it to is, um, this might seem like a crazy analog, but the Oura Ring. And so Oura was really first to come out with a wearable in the ring form, which had a lot of other problems to solve in terms of like how you make a battery work on a ring and things like that. And they've been extremely litigious too. And so anyone that tries to put out a ring product, they get sued by Oura. And there's a lot of differences, I think, between the relative IP, needless to say, a handheld ring versus the world's largest flying football field satellite array. But the learnings and the lessons from both are the same. And I think it's going to be very fascinating just to see the challenges people have, really SpaceX, of trying to have similar technology down the line when so many of the initial inventions were done and solved by AST SpaceMobile. And what that really means for someone trying to be a fast follower. So then we have Facebook. So Vodafone put out and said that in their, uh, I think it's in Malaga. Yeah, Malaga. They have this lab they've set up in partnership with AST SpaceMobile as part of SACCO. And one of the first projects will involve a collaborative effort with Meta. This initiative seeks to optimize and ensure the high quality of WhatsApp audio and video calls once the services are launched, guaranteeing excellent communications across hybrid space and terrestrial networks. Yeah, of course. This is what we've been saying the whole time is the, the, whatever they're called now, the Glorious 7, just big cap stocks that go up are all based on the delivery of digital services to human beings. They all ultimately have to run through MNOs. That's the critical path. If you don't have internet, either through fiber, through fixed satellite, through a cell phone tower, or through a non-terrestrial network tower like AST SpaceMobile, then you don't have connectivity. So my theory the whole time has been that AST SpaceMobile is Truly one of the world's most strategic assets, and it it should be no surprise. Well, we have Google as an investor. Now we're finding out that Meta is working on it. I think that Amazon well Amazon has already showed their hand. They're coming out with Kuiper, and I think they might potentially partner with Space Mobile. All these companies really need to have a relationship with Space Mobile because it is what solves first of all. A backup system so that everything is always connected, even when the terrestrial systems fail, which they do enough, and to cover the dead spots. And as we look to have more systems that are running autonomously, which are going through areas with dead spots, the, the, this system allows you to have positive control the whole time, which I'd never really thought about, but is a very important attribute. So it's nice to see. That we're once again showing that we're strategically important. We're having some of the world's largest companies start to experiment and work with us to support their own critical, really franchise assets. WhatsApp, for example, clearly WhatsApp is a great candidate for this. You want to have this working really well with SpaceMobile because a lot of WhatsApp customers are in developing countries. Makes sense. And then it's also important just to realize just how broad SpaceMobile Is applicable. And so just in that interview with Scott with Bloomberg, he said that this will be used inside a plane. Well, adios, Gogo. Your business just was rendered potentially useless. And I get that question a lot is, you know, do you have to have line of sight for this? Do you have to be out in a field? Will this work through walls? Well, that's the benefit here of the low band spectrum we're using is it propagates really well through walls. It's the good stuff. And we know that SpaceMobile has talked many times about being used on planes, boats, cars, trains, buildings, wherever. So it's going to just start to rip apart the TAMs of all these little point solutions that previously had solved some of these problems and gobble that up individually. A lot of those markets are worth a lot. There's lots of these hundred To a billion dollar revenue a year markets that we should be able just to swipe and take. Iridium, you know, has a target on her back, for example. And then we also continue just to have Scott telling us that defense is going to be a big opportunity. And so Redrum put out a cool thread just highlighting what they say in Q2 2025. You know, they brought up government a lot, and then Scott was just talking about it in the fireside chat. On September third, he's specifically talking about Golden Dome, but he also consistently says we are working on I believe it's eight to ten projects, programs of record, each of which are hundred million dollar plus opportunities per year. These are big numbers, and then we have more proof. And I got some comments about this in my DM, so I don't want to hang my hat too much on saying that I really understand. the nuances of this, but we have AST SpaceMobile continually posting for job, jobs that have top secret security clearance requirements. And some of the analysis behind this from people is that you're not asking for these people unless you already have this work. Well, this isn't necessarily a golden dome giveaway because we know that they have other defense work, but it's consistent again with a lot of defense work. And a commitment to it. So it's not one-off. And it is exciting to see some of these jobs that really do track pretty well with the type of descriptions you'd expect for Golden Dome. And I just saw actually, because the government shutdown, Golden Dome announcement might be delayed a little bit more again till seemingly next week. I really don't know how Golden Dome is going to be brought to the market, but You know, it seems like it's happening. And Mike, Dr. Mike put out a tweet that just showed a little bit about how the SDA, the Space Development Agency, is being hit by some of this government shutdown delay and things like that. So I don't know, we've had a lot of good news lately. It's fine if some of this news gets spaced out a bit. But then others are pointing out that L3Harris is out there openly talking about Golden Dome. And so L3 put out a tweet, as the industry's trusted disruptor, we're uniquely positioned to deliver American-made capabilities at the pace and scale required for America's golden dome. And so people are really indicating that this is happening, and I believe it is. So then we get to really this question, stock goes up a lot, and I know I have a lot of people ask me, well, did you sell? What do you think it's worth? I remember when the stock was $20. People call me like, well, you can't possibly like it as much now as you did when it was $5. Stock is $20, you know, it's gone up a lot. And I'm like, oh, I don't know. Like, yeah, obviously with the same set of facts, you know, it's better at a lower price, but the facts change and they get better and it de-risks. And so it's also less risky than it was. You know, frankly, this stock is now a less risky enterprise, whether it's a less risky investment, is a more dangerous statement that I will not make, but it's a less risky company now than at any other previous moment. And now whether it's a— I think it's a good investment still. I think it is going much, much higher. And over time, you know, you want to see what Abel's going to do. I was thinking about this today when I was walking back, you know, when you start to think, well, what if they lob in you know, ton more spectrum around the world because they're the only real buyer of it and can gobble up, you know, this global spectrum monopoly that only they can really monetize. And they have all the MNOs wrapped up who are addicted to them because then the MNOs get access to spectrum without having to spend $20 billion on it. What could happen here in terms of what this is worth? And I don't know the answer But it is a big number and that's what gets really exciting. And ultimately, you know, there's some people I know that I talk to, they're in the space mob, they're literally just locking away their shares and they're just convinced this is going to $1,500 per share. They're going to be a billionaire and you're not going to convince them one way or another. And good for them. You know, there's a lot of people that do really well holding stock for 35 years. You know, here's to you, Larry Ellison. It worked out. and Steve Ballmer, you know, it worked out and great. But in the meantime, you know, the rest of us have to do math and try to figure out what we want to do. And it's just going back to the Deutsche Bank type of analysis, it shows, you know, some further out estimates of what they think the free cash flow could be. And so they think that we're going to be able to hit these, you know, multiple billion dollar free cash flow type estimates. It's been pushed out in terms of the timing, which of course we know stock has experienced delays. But, you know, now we're getting to a point where we're right there at the ramp and we might have a company doing, you know, $1, $2 billion of cash flow pretty, you know, in the investable time horizon, which is exciting. So then what multiple is that going to trade at? I don't know. You know, and that's where we start to look at the Palantir examples of why does Palantir trade at 100 times revenue? It's a mystery. You know, obviously the conclusion in the market is that its revenue is going to grow a lot and that they will not get displaced. So there's just a lot of, you know, maybe it's a meme stock, but there's a The market is telling you that there is a lot of conviction and visibility that that revenue number is going to grow quite a lot. And I think that that type of conviction will likely be present with SpaceMobile as well, where when we very quickly turn on a billion dollars of revenue, the stock market will go, well, yeah, now we're going to go to $10 billion of revenue. And then you start to argue over the multiple because at some point when there's no more growth, and I don't know why that would be the case, but in theory, when there's no more growth, something's going to trade like AT&T trades. It's going to trade at a yield, you know, and so trade it, you know, 15 times cash flow or something like that. You just don't know what that terminal cash flow number is. That's the art of this. And, you know, I've tried to put some numbers around the Legato spectrum, for example, to help. And that's the type of math we're going to have to do over the next couple years as we get more information. But then when you just think about the lessons learned, I just reposted this exchange, which I remember vividly from Steve Larison. He was one of the real original Space Mob people that, for people that don't know, he very sadly passed away from natural causes 2 years ago now. But he was a software engineer, a very smart guy, had educated me a lot about AI and NVIDIA and things like that. Spoke to him about a lot of things outside of Space Mobile and got to be friends with him. And he would always share his story about really being totally on top of Amazon back in 2001 and day trading it. Like, I know, you know, a lot of people will do that thinking, well, we're going to scalp some stuff. And I'm a quote unquote swing trader, like a stupid child going to a swing set. I mean, I hear swing trader and I was like, it sounds cool. Then you sound like a kid going to a swing set. But he did that and then Amazon got away from him. And if he had had, forget the math he had, but he would've been worth hundreds of millions of dollars if he had just held his Amazon stock. And he was adamant that he was never going to have that happen to him again and was locked in on AST SpaceMobile to see it through. And it's just always good to take a step back. And I just will remind people, if you can see the intersection between a founder's vision and a financial reality and be right, which is the or second component of that, and you don't see a cycle that will take you out, or you don't see a secular disruption that will take you out, then in my experience, the general answer with these things is just chill out, own stuff, go live your life and let compounding work. The hard part is knowing if you're right and correctly seeing a high magnitude founder vision that intersects with a high conviction financial reality. If that were easy, everyone would do it. It's not easy. But it sure looks like it could happen here. And that's where we go into the, this is very hard to value. And so we have a tweet from Alex from Babylon and, you know, he just put out some reasons why he's exciting and just, you know, talks about the sales model. It is exciting to have what's called a go-to-market where you can effectively instantly reach 3 billion customers. Without cap customer acquisition costs because you have these partnerships. It is exciting when you have a technical lead on the boogeyman SpaceX of of years potentially, and then of unknown patent difficulty to copy you. But certainly not easy. It is exciting when at worst you have what looks like a duopoly. It is exciting as we get more de-risked, especially with FM1 and FM2 shipping. It is exciting when a brand new car basically rewrites the regulatory rules for you. It's exciting when you get 45 megahertz of spectrum for really nothing. There's a lot of really neat things happening here. And now we're starting to see really some of the fruits of our labor coming. And so then also this week, just to show you how important this company is becoming, it's really no longer on the fringe. Jennifer Manor, who's our spectrum guru from EchoStar, she's joined the 3GPP consortium. So she's right there at the high table, helping to write the future protocols of the open standards that everyone uses. This, I think, is far more important than a layman would really understand. And this is really an acceptance to, you know, the adult table. And so she's going to be a board member of the US ITU Association. She's very accomplished. She's a thought leader in the industry for spectrum, a crucial executive at AST SpaceMobile as we navigate very complex spectrum issues all over the world. And now we have full front seat to everything. We're also just seeing little things clean up back in the day in this you know, just tells you where we were. People would freak out when there were these like random ambulance chasers filing lawsuits of class actions. These things are dismissed. I want to see someone sue some, you know, sue AST Management now for having the stock be one of the best performing stocks in America. Case dismissed. And then the space mob is really starting to correct misinformation. I always thought it was awesome how we were able to community note the Starlink VP of engineering when he put out a totally false statement around them being first. And we got community noted to correct that so that the world could see, you know, there are a lot of people that follow SpaceX posts and now have a community note that says, well, actually AST SpaceMobile did that. Hopefully, you know, there's some conversion rate of people that'll go, I wonder what AST SpaceMobile is. I'm going to look into that. But of course we got censored and Elon took away the community note or we just got brigaded by all the SpaceX bros. But one way or another, we're trying to shed light on all that is good. And then the last thing we have is just a really cool video from, uh, Chris. Yep, Chris put out a really cool video he has from time to time just to get people, you know, kind of in a celebratory mood. And there was a lot to celebrate with the stock price performance, then, you know, just be careful out there. I know a lot of us have lived through quite a lot of these rapid appreciable moments in the stock. Very, very fun when it goes up. Stocks sometimes correct, they consolidate. And I don't know, I don't know if we're going straight to $100. I have no idea. Um, but that's why also, you know, when the stock is ripping like this, I tend to go pretty quiet. Because my mental sort of constitution in markets that are so happy is not really what I was built for. I'm more of like a battle in the mud type of guy. And so when it's all kind of working, I just figure I'm just going to shut up, let people enjoy the moment and work on my DD update. And I also, I don't want to be end zone dancing, one, because it's bad luck. And 2, I don't want people then getting kind of imprudently excited and start to bet real money that they can't afford to lose in options and things like that. I don't want to encourage any of that because we've all seen the negative consequences when people get blown up. But I have a massive position. I'm very excited about it. And I think not in terms of share price, but I think in terms of market cap. And so when we zoom out, we've got, you know, roughly a $20— what do we have, $25 billion more or less market cap company. And you start to go, well, okay, what is the size of my secular opportunity? Will I win it? And will it be a growth market from there and an important market from there? And I'm still of the view as people say, well, you know, it's not going to be a winner-take-all market. And I corrected my friend that called me today. I went, yeah, I agree. Starlink might have a chance at having some small secondary role. And so to me it's a winner-take-most market. I don't know why people don't say that. People always say it's not going to be a winner-take-all market. And it's like, yeah, duh. Sure. It's going to be winner-take-most. And that is to me a crucial distinction when I think about my position is I think it's going to be winner-take-most. I think ASTS is going to take most. I think Starlink is going to be a distant second that has certainly a lot of advantages that it can bring to bear, but this is a different market. There's nuances that are different from the ways in which Elon has previously been successful. I think it is going to be a very big market. We've seen the rough estimates of what the annual revenue estimate is for this. I think that's going to be low. That number for context is like a $30 billion market per year. Assume we take 2/3 of it, that's $20 billion of revenue per year. I think that is going to be a bigger market because I think people are going to invent uses for this technology that don't exist today. And that's what's exciting about being this type of investor. And so then you go, well, what's that worth? People throw out these like 90% EBITDA margins. I don't know, you know, there's going to be costs. This company is going to want to be spending R&D and having people and things like that. We'll see where the margins really stack out. I guess it's theoretically possible because the way the accounting works is a 90% EBITDA margin is already taking into account the revenue shares that they have. So it really, you can kind of say why it actually is 90% margin, but ultimately the company isn't sort of violating the laws of nature. There's really a way it can all make sense. Then you get these big numbers and is that going to be worth 10 times revenue? Sure. Why not? And that's $500 per share. So that gives you a really nice, you know, return profile from here, which is nice to have. You always want someone that's buying the stock at the all-time high price. You want them to make money. And I hope that they will, and I think that they will. So I'll end here. Thanks everyone for joining me. We have, God knows what this company's gonna announce next. I mean, they seem to be really on a roll, but we have next week we will have FM1 get on an airplane and that will be really exciting for a lot of us. And then followed shortly thereafter, we're gonna have FM2 get on a truck. And at this point, I almost wanna volunteer to like escort it just to make sure, just kinda lead the way in like a safe car, like a Volvo or something. So if something gets in our way, at least we can— You know, convincingly take out an obstacle and know the Volvo will survive. So, Abel, if you're listening to this and you need like a caravan of people that rent Volvos to clear the way for you, consider us down to get you to the Cape. So some good news there and maybe some gold in the dome updates, but my hopes frankly are not that high. I think that might just take a little bit of time to percolate. So have a great weekend everyone, or a great rest of your week, and we will reconvene next week. I'm going to be camping again next week, so I'll be rolling into this pretty tired. But I will, I will be here in some way, shape, or form. Talk to everyone soon.
[01:03:19] Speaker C: Let's go. Bluebirds in the sky, launch a satellite, beam steering tech got the world in control. Cable got the vision, they flying high and wide, steering no beams covering nations worldwide. Power in the orbit, can't nobody compete with the bluebirds up there, yeah, they can't be beat. He's taking it further, satellites aligned with those birds in the sky. Future predefined, okay, space buds, sing it with me. Let's go! Changing the game, leaving the world better, that's the reason he came. Bringing people closer, connecting the globe with the bluebirds flying. The vision unfolds, building up tomorrow like no one did before. Every move Abel makes is to open new doors, like seeing the stars written bold and clear. He's changing the world, that's the mission right here from Togo. Hey! Doing all in, he's on a mission for success. Watch him break the mold, making history again. A leader like Abel left where you should spend. One more time, baseball! Come on, I want to hear you. Let's go! From 2 to 68, yeah, we on the rise. Abel built it up, never sold, no surprise. He don't know salary. Moving, flying high. Steer the beams, make 'em shine. Largest in the game. Satellites redefine. Able's changing the world. Future on his mind. Leaving it better, one satellite at a time. Let's go, Space Mob! We fucking unfurling. Time to connect the unconnected. Let's fucking go!
[01:08:06] Speaker A: 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 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 technology to deliver cellular broadband connectivity directly from space to every 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. Mmm, waffles.
[01:09:10] Speaker C: Mmm, waffles.