If you follow me, you probably already know by know that AST SpaceMobile filed an 8-K on Friday after market close announcing a delay in the launch of BlueWalker 3.
investors.ast-science.com/node/7516/html
2/n
investors.ast-science.com/node/7516/html
2/n
The market did not like the news on Friday.
In the after hours, the common shares declined 12.99% from the close to finish after hours at $8.04, and the warrants closed down 18.5% to close at $3.26.
These price drops were on top of what was already a down day during
3/n
In the after hours, the common shares declined 12.99% from the close to finish after hours at $8.04, and the warrants closed down 18.5% to close at $3.26.
These price drops were on top of what was already a down day during
3/n
trading hours.
Of course, Friday was a bad day for the Nasdaq in general, and speculative stocks in particular. And it came at the end of a bad week.
Though I typically don't focus on technical analysis of stocks, it is worth noting that ASTS is extremely oversold.
4/n
Of course, Friday was a bad day for the Nasdaq in general, and speculative stocks in particular. And it came at the end of a bad week.
Though I typically don't focus on technical analysis of stocks, it is worth noting that ASTS is extremely oversold.
4/n
The Relative Strength Indicator (RSI) on the daily price chart is at 4.19
But even if you aren't into technical analysis, all you need to do is remember that the stock was crossing $13 to the upside the day that earnings were announced on 11/15, and now here we are in the 8s
5/n
But even if you aren't into technical analysis, all you need to do is remember that the stock was crossing $13 to the upside the day that earnings were announced on 11/15, and now here we are in the 8s
5/n
But the focus of this thread isn't technical analysis - that isn't my style.
Rather, the focus is on what the news we received on Friday should mean to investors, things that investors are likely to see in the future, and hopefully teachable moments that the company can gain
6/n
Rather, the focus is on what the news we received on Friday should mean to investors, things that investors are likely to see in the future, and hopefully teachable moments that the company can gain
6/n
gain from recent events.
First, more about the delay and what it means for investors.
The rescheduled timeframe is listed as the summer of 2022.
I have seen numerous people express frustration about lack of a more precise date for the rescheduled launch.
Frankly, that is
7/n
First, more about the delay and what it means for investors.
The rescheduled timeframe is listed as the summer of 2022.
I have seen numerous people express frustration about lack of a more precise date for the rescheduled launch.
Frankly, that is
7/n
the most precise time frame that the company can give people right now. Booking a launch into space isn't as easy as getting an Uber or Lyft to show up to give you a ride.
When you request a rescheduled launch date with SpaceX, they pick the date.
8/n
When you request a rescheduled launch date with SpaceX, they pick the date.
8/n
Another thing that I have seen people express on and off Twitter is fear of dilution.
It just so happens that I wrote a thread on the subject of dilution a little while ago. The only thing that has changed since that thread was written is that we
9/n
It just so happens that I wrote a thread on the subject of dilution a little while ago. The only thing that has changed since that thread was written is that we
https://twitter.com/steve_larrison/status/1464709168661766145
9/n
know that there is a 3 month delay.
From looking at the numbers from the earnings report on 11/15, we know that the operating expenses the company is incurring at current staffing levels are about $23 million a quarter.
So when you read through that thread, just imagine
10/n
From looking at the numbers from the earnings report on 11/15, we know that the operating expenses the company is incurring at current staffing levels are about $23 million a quarter.
So when you read through that thread, just imagine
10/n
the company only has 337 million in cash on hand instead of 360 million.
At a cost of $13 million per BlueBird1, the company would need to spend $260 million building out the satellites for phase 1.
Bump it up to the high end of the estimated range - $15 million, and
11/n
At a cost of $13 million per BlueBird1, the company would need to spend $260 million building out the satellites for phase 1.
Bump it up to the high end of the estimated range - $15 million, and
11/n
they need $300 million to build out and launch phase 1.
So if they had no other sources of cash, things would be tight to build and launch phase 1.
But they can raise $202.4 million by converting warrants to commons, so I have no fear of the company selling stock to build
12/n
So if they had no other sources of cash, things would be tight to build and launch phase 1.
But they can raise $202.4 million by converting warrants to commons, so I have no fear of the company selling stock to build
12/n
out phase 1 as long as the testing process of BlueWalker 3 is successful.
And as mentioned in the dilution thread, BlueWalker 3 could fail and they should still have enough money to build SpaceMobile if BlueWalker 4 or 5 is successful.
So dilution is a misguided fear - at
13/n
And as mentioned in the dilution thread, BlueWalker 3 could fail and they should still have enough money to build SpaceMobile if BlueWalker 4 or 5 is successful.
So dilution is a misguided fear - at
13/n
least with what is known and what is reasonably foreseeable.
As I mentioned before, the focus shouldn't be on dilution. The focus should be on making BlueWalker 3 a success.
I am just as disappointed as everyone else by the delay. But if it means that there will never be
14/n
As I mentioned before, the focus shouldn't be on dilution. The focus should be on making BlueWalker 3 a success.
I am just as disappointed as everyone else by the delay. But if it means that there will never be
14/n
a BlueWalker 4, then it is worth it.
So what comes next?
From the standpoint of the company, the primary task is doing whatever is needed to get BlueWalker 3 in orbit.
In a tweet yesterday, @AbelAvellan said that the technology is on track, and that the focus is on
15/n
So what comes next?
From the standpoint of the company, the primary task is doing whatever is needed to get BlueWalker 3 in orbit.
In a tweet yesterday, @AbelAvellan said that the technology is on track, and that the focus is on
15/n
assembly and testing.
I am not an insider, nor do I have access to anyone with firsthand knowledge, but I have worked in the industry and have done quite a bit of research on the company.
The following is PURELY A GUESS.
I am guessing that the
16/n
I am not an insider, nor do I have access to anyone with firsthand knowledge, but I have worked in the industry and have done quite a bit of research on the company.
The following is PURELY A GUESS.
I am guessing that the
https://twitter.com/AbelAvellan/status/1466995904649568260
16/n
unfolding deployment mechanism is the most likely candidate to be the cause of the delay.
I have stated before that I think that deployment has the highest chance of failure of all the things that will be tested when BW3 is launched.
I do understand that the deployment
17/n
I have stated before that I think that deployment has the highest chance of failure of all the things that will be tested when BW3 is launched.
I do understand that the deployment
17/n
mechanism has been extensively tested, and that the people who designed the mechanism have more experience in the relevant subject areas than I do.
But I also understand that gravity impacts testing, and that adds some uncertainty in my mind.
18/n
But I also understand that gravity impacts testing, and that adds some uncertainty in my mind.
18/n
so if I read between the lines correctly and the complexity of the unfolding mechanism is the cause of the delay, then I am glad that they are taking the time necessary to get it right
Though there is room in the budget (counting warrant conversion money) for a BlueWalker 4
19/n
Though there is room in the budget (counting warrant conversion money) for a BlueWalker 4
19/n
, I really hope that there is never a need for a BlueWalker 4.
So if my guess for the cause of the delay is right - great.
And if it's wrong, that's also great - I am guessing here.
What is important is that BlueWalker 3 is the last of the BlueWalker line of satellites.
20/n
So if my guess for the cause of the delay is right - great.
And if it's wrong, that's also great - I am guessing here.
What is important is that BlueWalker 3 is the last of the BlueWalker line of satellites.
20/n
But things aren't all puppy dogs and unicorns here.
Frankly, I think that the company did a bad job of communicating what was happening with share holders.
The first inkling of the possibility of a delay in the launch of BW3 was made during the earnings call on 11/15.
21/n
Frankly, I think that the company did a bad job of communicating what was happening with share holders.
The first inkling of the possibility of a delay in the launch of BW3 was made during the earnings call on 11/15.
21/n
That possibility was brought up 2 weeks and 1 day before the last day they had to notify SpaceX on whether they were ready or not
Given the timing of everything, I personally believe that stronger words on the delay should have been used. At that point in time, the company
22/n
Given the timing of everything, I personally believe that stronger words on the delay should have been used. At that point in time, the company
22/n
probably knew that a delay was likely, not just possible.
Also, the length of the potential delay was mentioned as being a month or two.
As I mentioned earlier, SpaceX is picking the rescheduled launch date, not AST.
If you take the tail end of the March/April launch
23/n
Also, the length of the potential delay was mentioned as being a month or two.
As I mentioned earlier, SpaceX is picking the rescheduled launch date, not AST.
If you take the tail end of the March/April launch
23/n
window (April 30) and add two months to it, you are at the beginning of the "summer 2022" launch window (June 21 through Sept 21)
But that's the most optimistic case.
It would have been better to say that a delay was likely, and that they would have to work with SpaceX on
24/n
But that's the most optimistic case.
It would have been better to say that a delay was likely, and that they would have to work with SpaceX on
24/n
a new launch date.
But that's not the only problem that I have with communication.
From my understanding of the language of the contract that I have looked at, Nov 30th was the last date possible to notify SpaceX that the March/April launch window wasn't going to work.
25/n
But that's not the only problem that I have with communication.
From my understanding of the language of the contract that I have looked at, Nov 30th was the last date possible to notify SpaceX that the March/April launch window wasn't going to work.
25/n
I realize that the SEC allows up to 4 days to file an 8-K when events warrant it. But they don't require companies to wait 4 days.
Dropping bad news on a Friday after close or market just doesn't feel right. As the after hours price action clearly showed, people were
26/n
Dropping bad news on a Friday after close or market just doesn't feel right. As the after hours price action clearly showed, people were
26/n
paying attention.
The best way to handle bad news is openly and honestly.
Also, I believe that most investors realize that AST is a space company, and that delays are common in the industry.
In fact, I am about to do a service for fellow members of SpaceMob - following
27/n
The best way to handle bad news is openly and honestly.
Also, I believe that most investors realize that AST is a space company, and that delays are common in the industry.
In fact, I am about to do a service for fellow members of SpaceMob - following
27/n
is a list of things that can cause delays that will interfere with planned events.
This list of predictions is NOT based on any inside knowledge, it is pure speculation.
1) Testing the software onboard BlueWalker 3 may take longer than the projected 6 months. Like space,
28/n
This list of predictions is NOT based on any inside knowledge, it is pure speculation.
1) Testing the software onboard BlueWalker 3 may take longer than the projected 6 months. Like space,
28/n
software is complex too, and delays are common.
2) Build out of the BlueBird1 satellites needed for phase 1 or any subsequent phase may take longer than expected - Phase 1 is the iteration most likely to run schedule overruns in my opinion. There are a few reasons for that
29/n
2) Build out of the BlueBird1 satellites needed for phase 1 or any subsequent phase may take longer than expected - Phase 1 is the iteration most likely to run schedule overruns in my opinion. There are a few reasons for that
29/n
a) the manufacturing plant is being expanded, and automation to the build and testing processes is being added - the potential for schedule overruns from this expansion are kind of obvious.
b) we are still living during pandemic times. Omicron is reminding us all of that.
30/n
b) we are still living during pandemic times. Omicron is reminding us all of that.
30/n
One unique factor of the era that we live in is supply chains buckling under pressure everywhere.
As long as that is a reality in the world we live in, the possibility of shortages of critical components impacting build schedules is real.
We are more likely to have supply
31/n
As long as that is a reality in the world we live in, the possibility of shortages of critical components impacting build schedules is real.
We are more likely to have supply
31/n
chain problems during the build of phase 1 than in any other phase.
c) Available space on launch vehicles may not align to long term plans - though the increasing number of launch providers make this less likely, as long as you depend on the service of other companies,
32/n
c) Available space on launch vehicles may not align to long term plans - though the increasing number of launch providers make this less likely, as long as you depend on the service of other companies,
32/n
scheduling delays can happen.
d) Catastrophic accidents - though SpaceX has a great track record, this is a game of probabilities.
Rockets can explode on launch.
Also, probabilities and the possibility of bad things happening during launch and deployment will always
33/n
d) Catastrophic accidents - though SpaceX has a great track record, this is a game of probabilities.
Rockets can explode on launch.
Also, probabilities and the possibility of bad things happening during launch and deployment will always
33/n
exist.
There is a reason that people always say that "space is hard". It's because space is hard.
There will be problems in the future.
There will be schedule delays in the future.
The company simply needs to work through them and communicate with their shareholders
34/n
There is a reason that people always say that "space is hard". It's because space is hard.
There will be problems in the future.
There will be schedule delays in the future.
The company simply needs to work through them and communicate with their shareholders
34/n
what is going on.
35/n
35/n
• • •
Missing some Tweet in this thread? You can try to
force a refresh
