1/ For new members of the $ASTS #Spacemob, I realize there can be a lot of noise on the internet. But, based on Friday's "news," it seems like we might have a seminal event shortly...albeit the first of what will be many accretive weddings with most of the world's MNOs
2/ While I had expected the next "event" to be a 'First Call' - which was pretty clearly disclosed in FCC filings (I'll keep the surprise so it maintains its full impact!), we might have an accelerated path to an unlock in the share price
3/ What do I mean by unlock? See below. Lots of false positives thus far - you'd have thought the stock would have meaningfully de-risked after launch, then unfurling, then capital raise. Like me, you'd have been wrong...until you're not
5/ As a FURU, I'll answer anyway. From $ASTS's original M&A presentation, we have some proxies for unit economics. Basically each satellite was expected to generate ~$30MM of EBITDA per year. This assumed crappy markets first (Equatorial)
6/ Now, let's juxtapose what we also know. $ASTS has said the first 5 birds (Block 1) will bring the company to EBITDA neutral. That's about $120-150MM of EBITDA, or $24 - $30MM per bird. Ties out.
7/ Whether prices go up, on net, or down after the first deal is anyone's guess. There should be strong "multi-tenant" upside here b/c you can resell underwritten capacity in new markets after initial markets are secured. I had assumed lower in my own modeling
8/ NPV is for suckers, but I did it anyway. So if I'm ballpark right, then the headline for Block 1 should be ~$120MM per year. Let's say it's a 5 year deal - the headline looks like $600MM gross. So what? Well, against $100MM of CAPEX and basically 80-90% margins...good
9/ SANITY CHECK! $GSAT's deal with $AAPL had ~$70MM/yr fixed fees + $450MM CAPEX reimbursement. GSAT's fleet was a POS and underutilized, so AAPL basically gave it life to do this basic SOS service. So take 5 years on the fixed part and we have like $800MM+ headline
10/ Remember, the iPhone 14 was heavily modified to make even this work. From a B. Riley report...
11/ I digress. If you want to know what a joke competing strategies are compared to the purpose-built first satellite based broadband network, please watch this instructional video:
12/ So we have $GSAT's headline number. What did it cost? What's the denominator in our return calculation? Gross cost in the 10K is the answer. Remember, they have to build new birds for $AAPL too, so factor in the +$450MM. All this to support SOS services.
13/ $ASTS management licks its chops. $GSAT put up ~$1.8bn (or we can say $1bn of depreciated value) to do basic SOS service. $ASTS can provide broadband video to the world for $2.5bn (and just $100MM for the 52 degree inclination). $ASTS thrives on pricing that killed $GSAT
14/ Success could easily look similar to the $GSAT topline press release, but represent just the first minutes of the first inning for the earnings power of what's to come with $ASTS. 2024 sell-side estimates basically include only Block 1
15/ Alas, haters hate. One thing to remember is that there is a big difference between a 'dreamer' and a 'big thinker.'
16/ Always a reminder of how things started. It takes specialized people at seminal moments to create the winners
17/ But will it work? In memory of @steve_larrison , let me just answer that with this conversation:
18/ And for those that recognize I'm a crappy trader, let me share how @steve_larrison thought about it.
Steve - We miss you, friend. It pains us you aren't here to celebrate this Company's future success. We know you really wouldn't have been surprised by it, though.
• • •
Missing some Tweet in this thread? You can try to
force a refresh
Now, would Google ever buy a mobile network infrastructure company? Well, they bought Motorola for $12.5BN in 2012. Unclear how smart that was, but it got them heavily into the game. Devices are one thing, but making those devices work everywhere are another
1/ Our next segment of #hardcoreDD for $ASTS focuses on the technology. Please DM me with any corrections, suggestions, or areas for me to modify in the next draft (modifying other sections with feedback received)
2/ Here is the simple overview with a schematic from an $ASTS patent filing
3/ Before getting lost in the weeds, let's zoom out with $ASTS and understand the basic problem Abel and team set out to solve
Sorry for the delay, but in response to popular demand, here is the B. Riley note on $ASTS
It's interesting that the analyst echoes the chorus from retail...maybe retail wasn't so unreasonable in their Philadelphia welcome of the Company's update
In what is literally what the halls of Twitter was saying, B. Riley states the obvious:
However, after the clamored for blood subside, we have a dawning realization that perhaps the Company has done something good?
1/ So you let the stock price write the news? Here is my summary of the $ASTS call and filings.
Since retail can be a bit in need of TLDR: Onlyfans creators are just going to have to wait before uploading at 5G. Downloading, though...blazing fast
2/ The 10K says simply that they are “continuing” the initial testing to achieve Cellular Broadband communications. This implies they have not yet achieved Cellular Broadband communications; “Cellular Broadband” refers to cellular communications at 4G LTE/5G speeds. 3G anyone?
3/ If testing is done in segments, then shaking out all the issues is an iterative issue. Importantly, we know the mechanics work. $ASTS was always a software company. It's just bent pipe in the sky, but brains on the ground. This was a good summary
First thing is this point, which is coincidence with the roadshow guidance from the December capital raise. FUNDED for production AND launch of Block 1. This means funded until first revenue, whereupon they should have break-even cash flow
The TAM is very large. Note the explicit mention of IOT, wearables, etc. "unmodified, standard, existing spectrum."
Here is the $ASTS update from B. Riley. Some important points
Remember that during the roadshow, management would have been giving presentations on a 1:1 basis and also setting the stage for revised messaging. B. Riley would be parroting that. So we read carefully. First tech risk: viewed as now basically gone
The next is new visibility in what the first commercial deployment is going to look like. This is the bridge from an R&D project to a business. This is what draws in the right holders