$ASTS: Intermittent Service Is A Go

you know, influx of revenue, right? And so anyway, but I think that's kind of driving things. You know, some people asked, well, why is Rockalab trading better? Well, Rockalab is further along in their maturity, right? They actually are a more mature business. And by buying a medium, they are able to bring in this legacy company that generates revenue and EBITDA, and so they can get to profitably faster. And so I think the valuation there in periods like we are now is a bit more defensible. And you know, that bringing in a radium that there's probably cost savings there that they can drive as well. But at the same time, you know, the growth of a radium is slowed. And so these are all, you know, puts and takes that you have. But, but I think for Rockalab, that was a very smart acquisition, contrary to what other people have said. I guess we were skeptics, but I think it's a good deal for them. But until we kind of exit this period of where the macro is overwhelming fundamentals of companies, you know, we're kind of at the whims of the market. And so I was saying earlier, you know, I think Citadel can use to be the top trader in space stocks and they're just having a field day like algorithms too, where this morning when the stock opened down and went lower, there were some people who were telling me like, all that matters is launch and, you know, the market's telling you, you know, it's focused on the negative things, which is true. Like when you have a company that has issues, they become more acute and as the stock race goes down, because that's what people are focused on. It's a coping mechanism where if your investment is going against you, you then resort to doing more due diligence and work and like, what did I miss possibly? And then of course, the stock rebounded and it's green. Those things quiet down. But those are valid concerns and I think the company will address them in due time. And we've got three satellites that are being integrated down Cape Canaveral. They're going to launch soon. And so once we do get a launch date, then that will then people can worry about the next thing, which is what we all do, right? So, but I didn't want to talk first about the hedge fund trade. And so one of a friend of mine who's on X, he works at a hedge fund. He's one of the few bulls out there who he was actually knows. I mean, most of the bulls who work on the institutional side, whether that's a Hennessy or my friend, there was actually quite a few friends. They actually understand the story very well, right? And then when they talk to guys who were short, it tends to be more of a high level trade. They don't really understand the details, but they just make a auto, auto short assumption that, okay, these guys are competing directly against base X. And so it's an obvious short. But this guy in particular was saying that he had spoken to an investment bank desk this morning, because the desk was saying they had put out some morning chat. And I used to be part of these two where, you know, whether it's a sector or it might be event driven. You have these Bloomberg chats that are opened up. And they might send out some training recommendations. And so this particular bank said, you know, you should buy puts on AST. So why would you do that? Which by the way, like those people that did this morning, they're now underwater. But apparently, you know, one of the trades that people have on a pair trade is their long space X and their short 18T horizon. And so the thought there, of course, is that space X, at least on the mobile side, is going to gain share. And this is by the way, like this stuff happening is over the long run, right? But then hedge funds like to trade based off of short term moves and, and you know, vibe trading or the narrative, right? And so that trade, by the way, has worked out pretty well, right? Long space X and short 18T horizon. And then maybe you throw a T mobile on there. The other name that has gotten has been thrown in there as well, which is is AST, right? And so being long space X and short, the MNOs and AST, that's kind of the trade that some people have on. And, you know, part of that, part of buying puts today, I think part of the rationale is that space X is reporting earnings after the close today. And, you know, there is potentially some expectation that maybe they'll make some more grand statements about eating the MNOs lunch, right? Which is possible, right? And you might be having that on for trade. But I think it's important to separate, you know, I guess the hype from reality, it's space X has with start start like mobile. And I'm not dismissing them as a competition. And as I've said before, the fact that they're entering the market is good for AST. But you're talking about something that's going to take a pretty tremendous amount of time, right? To actually build out tower infrastructure, to go light up the 7 by 7, or although a stutately pointed out by folks who follow spectrum, it's really going to be 5 by 5, I think it's a spectrum that you can deploy because you're going to need guard bands on either side of the uplink and downlink. And so it's going to be 5 by 5, right? And you're going to have to build out towers and you're going to have to hang radios. And that's going to take a lot of time, right? And then the start link mobile, the true B2, satellites, those are going to be deployed sometime. They're hoping we'll start in 2027. And you're going to need Starship working, right? And so all this stuff is going to take time. That said, the market has already discounted the strategic, you know, the competitive impact on the M&O's. But you know, a key question is like, how far, how much can you discount? Right? Like is Starlink mobile going to be a successful product? Is it going to capture significant share? Is it going to be, have some type of impact on pricing? I mean, there's a whole bunch of questions, right? But if you, you know, and, you know, actually, if you really want it to be really smart about it, one potential trade, if you were hedge one, would be not that I'm saying people should do this. But one would be to go long AST in short, the M&O's, right? Because the M&Os are the ones who are directly getting competitive, the competitive impact or the perception of that. And then AST should be a beneficiary of that, right? Because it is the arm supplier for all the M&Os to counteract Starlink, right? So that could be, you know, if you were trying to be very clever about a trade, that might be a pair of trade you would put on. But, but I think, you know, that's, you're being too cute there. Because I think the risk in the trade and, and is anyone who's been in the head fund industry for a long time and if you've had a pair trade go wrong, there's significant basis risk here because, you know, SpaceX, Starlink Mobile today is, is a, it's a concept, right? Like there is the existing texting satellites that they sell through T-Mobile and a few other carriers globally. But the actual true Starlink Mobile service, it won't be, won't get off the ground until, I don't know, 2028 or, you know, in space time as we all know, maybe 2029. And so as a result of that, your, your long SpaceX, which is primarily a Neo Cloud reselling company, with some level of launch, of course, and Starlink fixed wireless, right? And then your short AT&T and Verizon, which are high-ealed stocks, the yielding, meaning dividend, right? They, they, they, if you're short of these stocks, you have to pay out, actually, let me see where the dividend yields are today. So if you look at AT&T, the gross yield is 4.7%. So in addition to paying a bar fee, you have to pay that out, that dividend out on a quarterly basis, where, where's, where's Verizon? Ryzen's at 6.35%. So it's not a cheap short to have on. And if the macro-broad drop changes, which are clearly, has due degree, of course, in value and income stocks, you know, trade up, then you can get completely demolished on that trade. And being long-spacess, you know, it's, space X right now has the confidence in the market. And as I've mentioned before, people are affording them, they're giving them credit for everything that they're trying to do. But when the company inevitably does have some hiccups, is that, you know, is that premium valuation going to compress, right? So one day, if Google decides, hey, we're not, we're not giving you any more money for renting out data center space, compute power, they pull that, and then you lose several billion dollars around you per month, then what do you do with that, right? What happens to the trade, which it's been working well for them thus far. But if the market dynamics change, that could, I mean, and this is kind of the risk around NeoClouds right now, which is why everyone's trying to ascertain which way the winds are blowing. But I think Alon was making kind of core weave the other day that they're basically trading in as a distressed credit, because they're a CDS, I think, blew through 1100. You know, you'd be careful what you wish for, right? Because I think on the one hand, it would be kind of nice for competitors to go out of business, and then people have to go to space X. But if credit overall is getting cut to NeoCloud companies, and they've got to build and stay ahead of their cost, you know, they've got to generate more revenue and build out the data centers so that people are actually paying them. Then if that starts collapsing, that's going to impact pretty much everyone in the sector, right? So anyway, but that's a long way of saying these guys who are long space X and short the carriers, that's a pretty dangerous trade. I don't know how crowded that trade is. It probably does feel pretty crowded, given how much the M&O has moved lower, but that can change pretty quick. But anyway, let's move on. So let's talk about today's PR. So the company, sorry for the coughing here, I still have a cold. The company put out a PR today talking about the fact that they are going to have initial intermittent coverage rolled out before year end, 2026, in 5K markets, United States, Canada, Japan, United Kingdom, and Saudi Arabia. And so here we also got an update that they have 60 gateways deployed installed or in planning. And so I think originally that number last update, I believe is like 50. So they're showing progress there as well. And then they disclose that the initial target is to deploy about 100 megahertz of spectrum in the United States. So that was a pretty important fact. So let's go back to what this means. So some people ask this morning, they're like, why did the company put out this PR? It's kind of funny because people want the company put out PR. And then when it comes out, they're like, why did they do it? Which is fair. Why is the company putting out a PR now? Some people speculate they're trying to calm down shareholders. They're trying to do whatever it is. And some people also expressed this point. But there's no shipping update. There's no launch update. So this PR, you know, I don't know for sure, but I'm going to take a few stabs at what this potentially imply. But today's PR was very important, right? Because I think, you know, when people talk about the narrative, space X has certainly had the upper hand, right? Like they're, they've talked about rolling out star league mobile. They purchase grain and they're like, hey, we're going to take on the world. And the market has given them credit for that. They're like, hey, space X, they're the genement. They're, they've assembled some level of a spectrum. And I'm going to give them credit that they're going to capture some, some percentage of a market share in global mobile, mobile revenue. Right. It's not just in the US where, where MNOS traded down. It wasn't just AT&T rising T mobile in Europe. They MNOS traded down. And also in parts of Asia as well. And so, clearly, people are focused on that. And if you look at news articles, even the Walt Pitchek interview that I shared yesterday, a cell side research notes, no one talks about the fact that these MNOS are actually working with a satellite provider that can do true broadband. That will enable them to compete with space X. Like no one talks about that, right? And, you know, to be fair, there's not much to talk about, right? Like, AST currently has satellites in place, but they haven't turned on service, right? So I think part of today was a coming out, right? The fact that the company is now committing to intermittent service. And that's, you know, you can pretty much call that data. And I don't know how broadly they will roll out service out. Maybe it will be for select customers or it may be beta users. But they will come out and say, we are launching service at the UNQ4. And so what do that look like? Well, by the end of this year, they will probably have my guess what, 20 plus satellites deployed, depending on how many launches are going up. And so you will have a reasonable level of coverage, right? It'll be intermittent. It'll be parts of the day for certain periods of time, but you will get broadband coverage. And my guess is for beta testers, they'll get an app like that for those that don't know this seems like an attorney to go. But there was a testing app that was deployed by AST available on the Apple app store. And it showed you exactly where the satellites were. And if you were able to, if you would be able to get coverage, right? And this was actually for true internal employees. And my guess is, eminent partners testing the product. My guess is they will probably release that type of application. So that users will know when the satellite will be in coverage. And so they can test it out. And this is important because now, and I don't think the release today, Tuesday was by accident. It was ahead of SpaceX earnings. But more importantly, it is ahead of a whole slew of MMO earnings announcements, right? So you've got AT&T, Verizon T-Mobile, Deutsche Telekom, Modifone, Orange Telefonica. They're all reporting in the next call it two weeks, right? And so with this PR, you put a stake in the ground and they will now be able to get a new app. And they will now have the ability to say, oh, hey, we're working with this company called the AST Space Mobile based out of Midland, Texas. If they have these.