2/113 I have often said that if the technology works and that AST continues to execute, everything else will take care of itself. With the start of the new year upon us, it's only natural to take a step back and look at what AST has accomplished over the last year.
3/113 That is even more true today.
While the stock price has gained 36.62% from the lows of the trading day on Wednesday to the close on Friday, unless you just entered into a position this week, it is difficult to be happy with the stock price performance.
While the stock price has gained 36.62% from the lows of the trading day on Wednesday to the close on Friday, unless you just entered into a position this week, it is difficult to be happy with the stock price performance.
4/113 Fortunately the same is not true of the performance of the company itself. As I have said many times before, if the technology works and the company continues to execute, everything else just takes care of itself.
5/113 Oddly enough, the story of 2022 for AST actually began in 2021 - on November 15th 2021 to be a bit more specific. This was the date that the earnings call for the 3rd quarter of 2021 was scheduled.
6/113 It was also the first time we heard that the company *MIGHT* not make the scheduled Spring 2022 launch window.
The following snippet is from something that @AbelAvellan said during the call - the complete transcript can be found at seekingalpha.com/article/446974…
The following snippet is from something that @AbelAvellan said during the call - the complete transcript can be found at seekingalpha.com/article/446974…
7/113 I remember not being certain if there was going to be a delay or not at the time. AST had until 12/1 to make a go/no go decision, and half of November had already passed.
8/113 Ultimately I decided that if there wasn't an announcement to reschedule right there and then, in all probability the Spring '22 launch window would hold.
I was wrong.
I was wrong.
9/113 Also, though information learned after the fact reveals that the decision to delay was a VERY GOOD DECISION, the way the decision was communicated was sub-optimal to say the least.
10/113 It is my hope that in the new year, AST will use lessons learned from this experience to avoid repeating mistakes of the past.
I wasn't the only one who thought that the communication was poor.
I wasn't the only one who thought that the communication was poor.
11/113 As you can see from the stock chart below, the market didn't like the way minimal information about a potential delay was entered into the earnings report, and the market certainly wasn't happy with the 8-K that was released on Friday 12/3/21 after market closed (3 weeks…
12/113 …before Christmas) - the gap down and continuation of the downtrend started on 11/15 will tell you everything about the sentiment at the time that you need to know.
13/113 Let the stock prices sink in for a minute here.
On 11/15/21, the stock closed at $12.52 before the earnings call.
It opened down some at $11.82 the next day, but given earnings volatility, nothing extreme.
On 11/15/21, the stock closed at $12.52 before the earnings call.
It opened down some at $11.82 the next day, but given earnings volatility, nothing extreme.
14/113 But by market close on 12/3 - the day the 8-K announcing the delay was filed, $ASTS closed at $9.24 - a drop of $3.28, or 26.2% over 13 trading days.
But the bottom was just starting to fall out.
But the bottom was just starting to fall out.
15/113 The stock price gapped down when the market re-opened on Monday 12/6, recovered from the fall a little, and then resumed the downtrend it started on 11/16 until it reached a low of $4.84 on 1/28/22.
16/113 I do not believe that the date that the downtrend ended was a coincidence.
On 1/18/2022, AST filed an 8-K with the SEC establishing the Summer '22 Launch Window.
The same date had been floated around before, but SEC filings carry more weight.
On 1/18/2022, AST filed an 8-K with the SEC establishing the Summer '22 Launch Window.
The same date had been floated around before, but SEC filings carry more weight.
17/113 The market began to regain trust, and the bottom was in.
By early March, all of the losses that occurred after the 8-K announcing the launch delay was official were reversed.
By early March, all of the losses that occurred after the 8-K announcing the launch delay was official were reversed.
18/113 But the stock did not take out the pre-earnings highs until the run-up in the stock price prior to the 9/10/22 launch.
Just for the record, I know people who were skeptical of AST's ability to make the Summer '22 launch window right up until the actual launch.
Just for the record, I know people who were skeptical of AST's ability to make the Summer '22 launch window right up until the actual launch.
19/113 So why am I reviewing this in a year-in-review thread primary focused on execution?
The answer is simple.
Though the focus here is on poor execution (poor communications, not operations), there are lessons to be learned from this experience.
The answer is simple.
Though the focus here is on poor execution (poor communications, not operations), there are lessons to be learned from this experience.
20/113 And I think that there are New Year's Resolutions for both share holders and management that can come from this experience.
Investor Resolutions - if you invest in AST or any space company, there are going to be delays.
Investor Resolutions - if you invest in AST or any space company, there are going to be delays.
21/113 Recognize this going in and don't panic when the inevitable happens.
Instead, look at the nature of the problem.
Does it change the thesis that led to your investment? Or does it simply reduce the timing of the payback to the right some?
Instead, look at the nature of the problem.
Does it change the thesis that led to your investment? Or does it simply reduce the timing of the payback to the right some?
22/113 Management Resolutions - Trust has an impact on your share price - especially as a pre-revenue company. The best way to preserve trust is by communicating openly with investors.
From having done research, I know the reason why the Spring '22 launch window was missed.
From having done research, I know the reason why the Spring '22 launch window was missed.
23/113 There was a technical problem that was discovered during reliability testing that required a change in materials of the frame of microns (the antenna elements) of BlueWalker 3 from aluminum to FE invar.
The decision to delay the launch was correct.
The decision to delay the launch was correct.
24/113 But maybe trust could have been regained a little faster with more open communications.
The lessons learned from the delay of the launch of BlueWalker 3 are relevant to what we are experiencing with the stock price today.
The lessons learned from the delay of the launch of BlueWalker 3 are relevant to what we are experiencing with the stock price today.
25/113 In my opinion, in addition to general weakness for growth stocks in the market, weakness in AST's stock price is being caused by 3 things.
1) Entrance of new competition in the satellite Direct to Device market segment
2) The Kerrisdale Short report
1) Entrance of new competition in the satellite Direct to Device market segment
2) The Kerrisdale Short report
26/113 3) The secondary stock offering
The entrance of new competition into the marketplace occurred on 8/25 when StarLink held a press conference with T-Mobile and announced the creation of "Above and Beyond".
The entrance of new competition into the marketplace occurred on 8/25 when StarLink held a press conference with T-Mobile and announced the creation of "Above and Beyond".
27/113 Above and Beyond is a satellite Direct to Device offering being talked about by StarLink. At present time, StarLink intends to launch the first D2D capable satellites towards the end of 2023.
The initial launch will be test satellites.
The initial launch will be test satellites.
28/113 The initial service offered will come at some indeterminate point after testing and will be limited to intermittent text.
Possibility of text with images will exist in cells without too many users.
Possibility of text with images will exist in cells without too many users.
29/113 Initial bandwidth per cell (not per user - total bandwidth to be shared by an entire cell) is expected to be 2 to 4 mbps.
30/113 Though no information is publicly available on cell size, in the press conference announcing "Above and Beyond", Elon Musk described the cells as "quite large".
Voice will eventually become possible.
Apple/GlobalStar
Voice will eventually become possible.
Apple/GlobalStar
31/113 Shortly after the StarLink/T Mobile announcement, Apple announced a satellite Direct to Device offering that utilizes the existing GlobalStar satellite network that would allow emergency use of text messages for people who were outside of connected areas.
32/113 (This network is being expanded thanks to funding from Apple)
This service is currently available in the United States and Canada, and will be expanding to a handful of European countries soon.
This service is currently available in the United States and Canada, and will be expanding to a handful of European countries soon.
33/113 Not wanting to be left behind, Huawei offered a satellite Direct to Device phone with service in China that allowed text messages of up to 70 characters to be sent (but no receive capability is available)
pocket-lint.com/phones/news/hu…
pocket-lint.com/phones/news/hu…
34/113 Finally, there are rumors that Samsung will soon announce some sort of emergency only text messaging partnership with Iridium that will enable some form of text messaging.
35/113 Note: This is still a rumor, and not only can my details be wrong, but so can the existence of any talks between the two companies.
With that disclaimer out of the way, here is a recent link to the rumor
tomsguide.com/news/samsung-g…
The Kerrisdale Short Report
With that disclaimer out of the way, here is a recent link to the rumor
tomsguide.com/news/samsung-g…
The Kerrisdale Short Report
36/113 First let me say that I have been thinking about writing a rebuttal to the report. In my opinion, it hasn't aged well.
Next, let me say that AST management was ABSOLUTELY right to ignore the report.
I'm old enough to have shorted Enron back in the day.
Next, let me say that AST management was ABSOLUTELY right to ignore the report.
I'm old enough to have shorted Enron back in the day.
37/113 One of the red flags that attracted numerous short sellers is the amount of time that management spent attacking short sellers.
That is ALWAYS a red flag.
That is ALWAYS a red flag.
38/113 Abel is doing exactly what he should be doing - concentrating on the execution of the mission that BlueWalker 3 is on. Testing is a process, and not an event. And he needs to lead this process to a successful conclusion.
39/113 Outside of the BlueWalker 3 mission, ensuring that the second manufacturing facility in Midland is brought online, and that manufacturing capacity is in place to build the initial 5 BlueBirds on schedule is his top priority.
40/113 Beyond that, deals for the initial intermittent capacity that those 5 BlueBirds will provide is his third highest priority.
He doesn't have time for flame wars with short sellers.
Secondary Stock Offering
He doesn't have time for flame wars with short sellers.
Secondary Stock Offering
41/113 Finally, on November 30th, the secondary stock offering was announced.
I'll be blunt - right now is a terrible time to try to raise funds for a pre-revenue company.
Ask anyone you know who works in VC.
Or look at people in the VC industry on Twitter.
I'll be blunt - right now is a terrible time to try to raise funds for a pre-revenue company.
Ask anyone you know who works in VC.
Or look at people in the VC industry on Twitter.
42/113 Or simply do a search on Google.
It's difficult to get good terms. But at the same time, the $75 million raised gave AST all the money they need to build and launch the first 5 BlueBirds plus maintain continuity of business while they bring that capacity online.
It's difficult to get good terms. But at the same time, the $75 million raised gave AST all the money they need to build and launch the first 5 BlueBirds plus maintain continuity of business while they bring that capacity online.
43/113 Now let's take a look at a more recent stock price chart and see if any New Year's resolutions can be applied.
44/113 We hit the 52 week high of $14.27 about a week (8/17) before the StarLink / T Mobile announcement, but rumors were already swirling about a potential satellite Direct to Device offering from StarLink.
45/113 Given the technical specs of the satellites (StarLink 5m x 5m versus full sized BlueBirds 20m x 20m) and the importance to the application at hand, the expectations for bandwidth and users supported and quality of service from a multi band satellite versus a mid-band…
46/113 …only satellite, communication about the differences between what AST was doing and what StarLink is promising in the future should have been communicated clearly in prereleases from the company.
47/113 In addition to pointing out technical differences and the real world impact they have on usage of the services offered, the entrance of competition into the market signaled that not only was satellite Direct to Device communication possible, and not only was it…
48/113 …inevitable, but that it is coming soon.
When I first started buying AST stock, almost no one I knew believed that the technology was possible. Now they all believe that it is going to happen. Some of them are even following me on Twitter.
When I first started buying AST stock, almost no one I knew believed that the technology was possible. Now they all believe that it is going to happen. Some of them are even following me on Twitter.
49/113 Could it have stopped the downtrend that started with the StarLink/T-Mobile announcement?
No one will ever know.
No one will ever know.
50/113 But given that that stock price was within striking distance of making AST stock warrants callable and unlocking $202.4 million in funding for the company, the cost of a few press releases certainly seems to be worth the price of admission.
51/113 The fact is that AST is ahead of the competition. Offerings by the competition simply don't sound very compelling. Management should not be shy about amplifying the noise that comes from announcements from weaker competition.
52/113 Next - the Kerrisdale Short Report
The drop from an open of $10.10 to a close of $9.00 on the day that the short report was released, and an eventual fall of around 30% in stock price shows just how powerful the impact of the report was.
The drop from an open of $10.10 to a close of $9.00 on the day that the short report was released, and an eventual fall of around 30% in stock price shows just how powerful the impact of the report was.
53/113 I personally believe that one of the reasons that the report was as powerful as it was is because it was released while the stock was already in a strong downtrend that started with the StarLink/T Mobile announcement.
54/113 So while the decision not to go after short sellers was a wise decision, not communicating enough when competition entered the marketplace likely would have helped the situation.
55/113 (Also, as a side note, the entry of competition into the marketplace was one of the points of the Kerrisdale report. Frankly, if you come up with a novel good or service that doesn't attract competition, it probably wasn't a good idea to start with)
56/113 The secondary stock offering
Finally, the secondard stock offering - the gap down from the $6s and continuation of the downtrend is the signal that the market didn't like the pricing below market ($5.50 a share) of a stock that was already too cheap to begin with.
Finally, the secondard stock offering - the gap down from the $6s and continuation of the downtrend is the signal that the market didn't like the pricing below market ($5.50 a share) of a stock that was already too cheap to begin with.
57/113 Personally, I didn't like the deal either.
But the stock probably wouldn't have gone as low as $3.55 a share if management had done a better job of explaining why they did the deal.
But the stock probably wouldn't have gone as low as $3.55 a share if management had done a better job of explaining why they did the deal.
58/113 Even though the terms of the deal were suboptimal, it gets the company to a point where they can begin generating revenue from the initial 5 BlueBirds.
59/113 B Riley has estimated that the revenue from the first year of offering intermittent services will be around $81 million.
Based on the deal that GlobalStar got with Apple, that sounds on the low side to me.
Based on the deal that GlobalStar got with Apple, that sounds on the low side to me.
60/113 But it would have been good to hear more from management on the reasoning behind the deal and what deals for intermittent services may look like.
But there are signs that AST management may have learned from mistakes of the past.
But there are signs that AST management may have learned from mistakes of the past.
61/113 On December 13th, AST released an information dense press release with updates on testing of BlueWalker 3 and plans for the future:
62/113 ast-science.com/2022/12/13/ast…
This is a great start, but they need to expand on that start.
Each of the bullet points could easily be expanded into a separate press release.
This is a great start, but they need to expand on that start.
Each of the bullet points could easily be expanded into a separate press release.
63/113 (And had AST expanded on those items as they occured, the stock price would have probably never gotten down to $3.55 a share in the first place)
64/113 There is enough material from the testing that has taken place since the September 10th launch to flood the newswires with good news.
And since satellite operations is a 7 day by 24 hour a day business, more news is coming in all of the time.
And since satellite operations is a 7 day by 24 hour a day business, more news is coming in all of the time.
65/113 My advice to AST management - keep it coming and the stock price is likely to begin to reflect the value of the company.
Evidence of Execution
Evidence of Execution
66/113 So since this is a thread about execution and accomplishments over the past year, let's talk more about what the company has accomplished.
BlueWalker 3
BlueWalker 3
67/113 It all begins with BlueWalker 3 - not just because it is the largest antenna deployed by a commercial organization ever, but also because it is the first release of a radical new satellite design.
68/113 The modular design of BlueWalker 3 lowers the cost of building and testing the satellite, while enabling capabilities that aren't possible with satellites with a smaller aperture.
69/113 But it isn't just the size of the satellite that makes BlueWalker 3, and it's not just the relatively low cost of the satellite.
The form factor of the satellite make guidance and control of the satellite in orbit different from that of a more conventional satellite.
The form factor of the satellite make guidance and control of the satellite in orbit different from that of a more conventional satellite.
70/113 Steering and propulsion systems had to be designed and built into the system that allow the satellite to make maneuvers that are necessary to perform missions possible.
And it's not like AST had the luxury of flying BlueWalker 3 around the plant in Midland.
And it's not like AST had the luxury of flying BlueWalker 3 around the plant in Midland.
71/113 They had to wait until the satellite was launched. Also, as you can see in the press release I linked to earlier, a software patch has already been uploaded to BlueWalker 3.
72/113 While I have no access to internal information on the subject, I wouldn't be surprised to find out that the patch was related to navigating the satellite.
BlueWalker 3 is a test satellite, and AST is learning from the satellite as it executes its mission.
BlueWalker 3 is a test satellite, and AST is learning from the satellite as it executes its mission.
73/113 And unlike StarLink, which has to wait until StarShip comes online before they can launch the V2 version of their satellites needed for Direct to Device communications because they can't make a 5m by 5m antenna fit in the nose cone of a Falcon 9, AST has perfected the…
74/113 …design, and process of packing an antenna structure up to 20m x 20m and can fit the folded satellite in the nose cone of a Falcon 9 rocket.
75/113 In addition to guidance and control of the satellite and satellite oragami, this new form factor also required an entirely new design for satellite thermal control.
At the altitude that BlueWalker 3 is orbiting the earth (525 km), it circles the globe every 90 minutes.
At the altitude that BlueWalker 3 is orbiting the earth (525 km), it circles the globe every 90 minutes.
76/113 Put another way, BlueWalker 3 is going from cycles of being in the sun to being in complete darkness every 90 minutes.
Put yet another way, BlueWalker 3 is experiencing temperature ranges between -65C and +125C every 90 minutes.
Put yet another way, BlueWalker 3 is experiencing temperature ranges between -65C and +125C every 90 minutes.
77/113 Below is a quote from the Kerrisdale short report:
78/113 After that quote, the report goes on to describe standard cooling systems for GEO satellites.
79/113 The report never mentions that satellites in GeoSynchronous orbits face different temperature extremes than satellites in Low Earth Orbits because GEO satellites don't have the frequent short-duration heating and cooling cycles that LEO satellites have.
80/113 But that notwithstanding, information on the thermal control system that AST designed, built, and is successfully using (BlueWalker 3 would be a dead satellite by now if there was no thermal control) is readily available via a quick patent search.
81/113 You can find the relevant patent at patents.justia.com/patent/11021270
So among the long lists of things that AST has successfully executed during 2022 is the build and testing of the cooling system for a large phased array antenna in space.
So among the long lists of things that AST has successfully executed during 2022 is the build and testing of the cooling system for a large phased array antenna in space.
82/113 (The patent was granted in 2020, so it isn't fair to give AST credit for the design work last year)
83/113 There are numerous other innovations that AST has built into this new form factor for satellites, the ground stations talking to the satellites, and the Space and Network Operations Centers (SNOCs) talking to those satellites.
84/113 The count of patented and patent pending innovations rises every earnings call. It stood at 2,600 at the November earnings call. The fact that BlueWalker 3 is performing well is evidence of execution of the design, build and deployment of numerous engineering innovations.
85/113 When discussing execution during 2022, I would be remiss if I didn't mention the Nokia agreement.
86/113 Based on research that I have done as well as the research of others, this doesn't appear to be just a contractual agreement to use Nokia hardware and software in ground stations providing service to the SpaceMobile network.
87/113 AST has been working with Nokia's Bell Labs for over 2 years. Patent applications strongly imply the use of Nokia AirScale hardware in the logic used for beamforming among other things.
88/113 In addition to the choreography between hardware that was designed for terrestrial networks and satellites, the design of the ground stations also required integration between the Nokia hardware and software and AltioStar VRAN software.
89/113 In addition to that integration, the system had to be integrated with custom AST software to handle Doppler compensation and delay from satellite communications in a noisy signal within the ground stations.
90/113 This work is described in an AST patent available at patents.google.com/patent/US75228…
I could go on about execution of technical innovations necessary to bring SpaceMobile to fruition, but this thread is getting a bit long.
I could go on about execution of technical innovations necessary to bring SpaceMobile to fruition, but this thread is getting a bit long.
91/113 Therefore I am going to switch to some other meaningful business deals.
The first business deal that comes to mind is the agreement with Sabre Astronautics.
saberastro.com/pr/2022-10-24_…
Sabre provides Satellite Operations Centers as a service.
The first business deal that comes to mind is the agreement with Sabre Astronautics.
saberastro.com/pr/2022-10-24_…
Sabre provides Satellite Operations Centers as a service.
92/113 This is a subject that is near and dear to me.
I have mentioned before working on a project for NASA through General Dynamics involving Satellite Command, Communications and Control.
I have mentioned before working on a project for NASA through General Dynamics involving Satellite Command, Communications and Control.
93/113 More specifically, the program involved acquiring hardware and integrating it with custom and COTS software to for the Space Network, Ground Segment and Bearer Plane used by TDRS satellites ( nasa.gov/directorates/h… )
94/113 The ground segment portion of that contract is similar to the services that Sabre is providing to AST.
95/113 Without being on the inside, I can tell you categorically that being able to use Sabre for Satellite Operations involves some level of software integration between AST satellites and ground stations.
96/113 So contracting with a vendor as well as integration work necessary to make the system work are included on the list of things that AST successfully executed during 2022.
97/113 Similarly, AST contracted with and did some level of integration with Leaf Aerospace to use Leaf's services for Ground Stations as a service ( prnewswire.com/news-releases/… )
98/113 This work is essential to expand AST's testing footprint as they test BlueWalker 3 from 6 different continents and maximize the amount of time per day that they can test while within a Field of View of BlueWalker 3.
99/113 (With an orbit time of 90 minutes, a given point on earth will only remain within the field of view of BlueWalker 3 for 4 or 5 minutes)
So I have mentioned quite a few things that AST has successfully executed on during 2022, but no new New Years resolutions lately.
So I have mentioned quite a few things that AST has successfully executed on during 2022, but no new New Years resolutions lately.
100/113 There is a reason for that.
AST is performing admirably.
If there is a resolution related to the most recent accomplishments listed, it is "Keep on keeping on".
AST is performing admirably.
If there is a resolution related to the most recent accomplishments listed, it is "Keep on keeping on".
101/113 AST is an engineering company, and success or failure of the testing process that is taking place right now, and the build of the initial 5 BlueBirds are going to be what makes or breaks this company.
It's easy to get distracted.
But getting distracted is also fatal.
It's easy to get distracted.
But getting distracted is also fatal.
102/113 So keep your collective heads down, and keep on focusing on the important things.
Memorandums of Understanding (MoUs)
OK, it is after 5:00 am on New Years Day and I am still writing a thread that I began writing yesterday.
Memorandums of Understanding (MoUs)
OK, it is after 5:00 am on New Years Day and I am still writing a thread that I began writing yesterday.
103/113 I know that part of the list of things that AST has executed succssfully includes Memorandums of Understandings (MoU) with various Mobile Network Operators (MNO).
Off the top of my head, the MoU with Orange stands out.
Off the top of my head, the MoU with Orange stands out.
104/113 They stand out mainly because of the way the information became public. I think that AST intended to make an announcement about the Orange MoU at an earnings call, but it was apparently leaked accidentally by a VP at Orange a few days before the earnings report.
105/113 (I could be wrong, but the timing of the news, then AST confirming the MoU after initial word came out make me suspicious)
Also, the number 2 billion stands out - as in AST has MoUs with MNOs representing some 2 billion customers.
Also, the number 2 billion stands out - as in AST has MoUs with MNOs representing some 2 billion customers.
106/113 There have been annoujcements of SOME (but not all) new MoUs made during earnings calls.
107/113 But at this point in time, I don't feel like checking all the transcripts for earnings calls to make ensure that I don't give credit for execution for MoUs that were signed before 2022 started.
108/113 So while I am not going to provide a complete list of new MoUs signed during the year, I am going to give AST management 2 new New Years Resolutions that they need to make.
1) Don't be shy. I understand if you can't release information about an MoU immediately.
1) Don't be shy. I understand if you can't release information about an MoU immediately.
109/113 But it doesn't mean that you can't release information about an MoU eventually.
Take advantage of the PR opportunity.
You won't need to expend any engineering resources. The type of people who write PRs can be obtained relatively cheaply.
Take advantage of the PR opportunity.
You won't need to expend any engineering resources. The type of people who write PRs can be obtained relatively cheaply.
110/113 In addition to releasing every MoU through a press release (even if eventually instead of immediately), there should be a section on your website touting all of the MoUs so that investors and potential investors can easily find this information.
111/113 2) Start making these MoUs binding agreements that produce revenue. Apparently the first 5 BlueBirds are going to be launched at a 22 degree inclination. Knowing this information makes it easy to project orbital paths.
112/113 Someone with a current list of MoUs and knowledge of the level of service that will be provided could take that information and start signing binding contracts that bring in revenue.
And your shareholders will LOVE you for it.
And your shareholders will LOVE you for it.
113/113 In closing, I'd like to thank @AbelAvellan, @scottwisniews, @cisnerosadriana and the rest of the team @AST_SpaceMobile.
Your hard work and dedication is making the world a better place.
I wish you all a happy and successful new year.
Your hard work and dedication is making the world a better place.
I wish you all a happy and successful new year.
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