Is AST SpaceMobile ($ASTS) going to dilute me?
A thead
1/n
A thead
1/n
I don't know if it is people getting nervous about the potential for a delay in the March/April launch window for Blue Walker 3 (ASTS needs to notify SpaceX by December 1st if they need to reschedule).
Or if people are looking at the cash on hand and wondering if the company
2/n
Or if people are looking at the cash on hand and wondering if the company
2/n
can build out phase 1 of SpaceMobile without extra funding.
Or maybe people have put money in penny stocks in the past and suffered the bad kind of dilution.
Or maybe people are just weary of living in these pandemic times.
But whatever the cause, I have been asked about
3/n
Or maybe people have put money in penny stocks in the past and suffered the bad kind of dilution.
Or maybe people are just weary of living in these pandemic times.
But whatever the cause, I have been asked about
3/n
dilution a few times recently, plus have seen the question raised in other public venues, so I wanted to put my thoughts on public display to help calm some frazzled nerves.
First, let's look at a few numbers.
The company had 360.4 million in cash and equivalents on hand at
4/n
First, let's look at a few numbers.
The company had 360.4 million in cash and equivalents on hand at
4/n
end of Q3.
Operating expenses were about $23 million last quarter, but with increased hiring, that number should go up.
It is not clear if the new 100,000 square foot facility in Midland was acquired before or after the close of Q3, so that may impact the cash on hand.
5/n
Operating expenses were about $23 million last quarter, but with increased hiring, that number should go up.
It is not clear if the new 100,000 square foot facility in Midland was acquired before or after the close of Q3, so that may impact the cash on hand.
5/n
It is also unclear what the cost to lease the new 16,000 square foot satellite and network operations center in Maryland is. But given that we are talking about a budget in excess of a quarter billion dollars, the added expenses are probably not material.
We also know that
6/n
We also know that
6/n
the price per BlueBird1 satellite is now estimated to be in the $13 to $15 million dollar range.
We also know that all of the components to complete the build of BlueWalker 3 have been acquired. I also *THINK* that some of the components for the BlueBird1 satellites have
7/n
We also know that all of the components to complete the build of BlueWalker 3 have been acquired. I also *THINK* that some of the components for the BlueBird1 satellites have
7/n
been acquired, but I am not certain of that, nor do I have a dollar figure for any component inventory on hand, so I will assume that they are going to cost $13 to $15 million per satellite to get them in orbit, and all of that cash will have to come from available resources
8/n
8/n
So if we build and launch 20 satellites at $13 million per satellite, it comes out to $260 million.
4 quarters of operating expenses at $23 million per quarter (1 quarter before Blue Walker 3 launches, 6 months of testing, and another quarter to start launching BB1
9/n
4 quarters of operating expenses at $23 million per quarter (1 quarter before Blue Walker 3 launches, 6 months of testing, and another quarter to start launching BB1
9/n
satellites), and we have consumed $352 million of the $360.4 million they have in cash on hand.
Raise the cost per BB1 to $15 million, and $ASTS will have exceeded the amount of cash that they have on hand
Starting to wish that Abel had YOLOed into $DWACW at $3 per warrant
10/n
Raise the cost per BB1 to $15 million, and $ASTS will have exceeded the amount of cash that they have on hand
Starting to wish that Abel had YOLOed into $DWACW at $3 per warrant
10/n
sold at $79?
Stopped reading this thread so you could run around in circles in panic because the sky is falling?
After you calm down a bit, this thread is worth continuing.
There are easy alternatives to obtain non-dilutive funding.
11/n
Stopped reading this thread so you could run around in circles in panic because the sky is falling?
After you calm down a bit, this thread is worth continuing.
There are easy alternatives to obtain non-dilutive funding.
11/n
The first thing that we need to look at are warrants.
Stock warrants are essentially contracts between warrant holders (or in the case of a few friends of mine, warrant hoarders) and the company that allow the warrant hoarder to exchange $11.50 in cash plus one warrant for
12/n
Stock warrants are essentially contracts between warrant holders (or in the case of a few friends of mine, warrant hoarders) and the company that allow the warrant hoarder to exchange $11.50 in cash plus one warrant for
12/n
For one share of common stock.
Between the SPAC warrants (11.5 million warrants) and the PIPE warrants (6.1 million warrants), there are a total of 17.6 million warrants outstanding.
Multiply 17.6 million by $11.50, and you get $202,400,000.
Enough money that I can gloss
13/n
Between the SPAC warrants (11.5 million warrants) and the PIPE warrants (6.1 million warrants), there are a total of 17.6 million warrants outstanding.
Multiply 17.6 million by $11.50, and you get $202,400,000.
Enough money that I can gloss
13/n
ignore details like the cost of the Maryland facility or worry about whether it takes an additional quarter or two to get phase 1 operational.
In order for that $202.4 million to become available to the company, the stock price needs to close above $18 for 20 of 30
14/n
In order for that $202.4 million to become available to the company, the stock price needs to close above $18 for 20 of 30
14/n
consecutive trading days.
Knowing what I know about the company and taking an educated guess about when the stock price is likely to close in a range that will make the warrants callable, there are two events coming soon that are likely to get the stock price in the range
15/n
Knowing what I know about the company and taking an educated guess about when the stock price is likely to close in a range that will make the warrants callable, there are two events coming soon that are likely to get the stock price in the range
15/n
needed to make the warrants callable.
1) A runup in stock price prior to the launch of BlueWalker 3
2) The announcement that the testing process of BlueWalker 3 is successful and that the BlueBird1 satellites have a green light.
16/n
1) A runup in stock price prior to the launch of BlueWalker 3
2) The announcement that the testing process of BlueWalker 3 is successful and that the BlueBird1 satellites have a green light.
16/n
Now I wouldn't be able to consider this a good thread if I didn't consider all possible angles.
It is possible that there won't be a gradual run up in stock price prior to the launch of BW3. There have been times when event specific catalysts result in no runup, and then a
17/n
It is possible that there won't be a gradual run up in stock price prior to the launch of BW3. There have been times when event specific catalysts result in no runup, and then a
17/n
pop in stock price when the event happens.
The potential problem I see if the stock price follows this pattern is that during a 6 month long testing process (that also could take longer than expected), the public will begin to lose interest, and the stock price will fall to
18/n
The potential problem I see if the stock price follows this pattern is that during a 6 month long testing process (that also could take longer than expected), the public will begin to lose interest, and the stock price will fall to
18/n
earth.
But successful conclusion of BW3 testing will right the stock price, and once the warrants are callable, the company will have all the money it needs to build out phase 1.
Right?
The answer to these/this question is Yes and No.
I will handle the "No" part first.
19/n
But successful conclusion of BW3 testing will right the stock price, and once the warrants are callable, the company will have all the money it needs to build out phase 1.
Right?
The answer to these/this question is Yes and No.
I will handle the "No" part first.
19/n
It's not a foregone conclusion that Blue Walker 3 will pass all of the tests in the testing process. If it were a given, there would be no need to build and test Blue Walker 3 - AST could go straight to building BlueBird1s.
Though my research into the company and the
20/n
Though my research into the company and the
20/n
technologies lead me to believe that the testing process will be successful, there is still some uncertainty.
But successful testing of a Blue Walker satellite will likely lead to warrants being callable.
And quick back-of-the-envelope math tells me that if Blue Walker 3
21/n
But successful testing of a Blue Walker satellite will likely lead to warrants being callable.
And quick back-of-the-envelope math tells me that if Blue Walker 3
21/n
is not successful, between the cash on hand, the cash from warrants coming in once any Blue Walker iteration passes testing, and the timing of when cash has to be spent, there is enough cash on hand and cash that is likely to be acquired to fund a Blue Walker 4 and 5 if
22/n
22/n
needed, plus build out phase 1 of SpaceMobile WITHOUT ACQUIRING ANY DEBT.
So if you were wondering, my keyboard did not get stuck. I mentioned that the buildout of SpaceMobile can happen without acquiring any debt for a couple of reasons.
First - AST doesn't have any
23/n
So if you were wondering, my keyboard did not get stuck. I mentioned that the buildout of SpaceMobile can happen without acquiring any debt for a couple of reasons.
First - AST doesn't have any
23/n
debt on their books.
Second - the reason that companies like AT&T, Vodafone and Rakuten invested $110 million into the company before it came public through the SPAC process is because they need the product that AST is developing.
As long as the technology is de-risked
24/n
Second - the reason that companies like AT&T, Vodafone and Rakuten invested $110 million into the company before it came public through the SPAC process is because they need the product that AST is developing.
As long as the technology is de-risked
24/n
through the testing of BlueWaler 3, 4, or 5, they are likely to find it easy to raise debt through their existing partners.
Keep in mind that Abel Avellan is the largest shareholder in the company.
He also owns shares controlling 88% of the voting rights.
Abel isn't
25/n
Keep in mind that Abel Avellan is the largest shareholder in the company.
He also owns shares controlling 88% of the voting rights.
Abel isn't
25/n
likely to want to dilute himself when the shares are so inexpensive.
26/n
26/n
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