Hey regards, 3 days ago a very regarded member made this post https://www.reddit.com/r/wallstreetbets/comments/1etva8u/asts_due_diligence_and_inevitable_dilution/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button
There was lots of incorrect facts and figures so I decided to make something that resembles DD and has correct facts and figures.
Lets begin
What is ASTS?
ASTS is set to commercialize the first satellite-based mobile broadband system that provides global 5G broadband to unmodified handsets. Backed by an elegant go-to-market strategy with leading mobile operators, the Company is poised to generate significant cash flow in tandem with its global deployment and enjoy attractive economics due to a multi-tenant economic model – TheKookReport
How much money are they going to make?
Using the transhumanica valuation calculator: I have this number: 8.52b which is fairly conservative. Todays fair stock price according to the calculator is $168
Consider this, 42% of the global population has no cell service and 90% of the world is not covered by cell service. Yes we do know that people live in cities and they'll have cell service but thats not everyone and "not everyone" is a lot of people. Numbers sourced by ASTS investors presentation.
Isn't this just another pump and dump?
Probably, I'm terrible at pump and dumps because I've been in love with this stock since 2021 when I was a wee teenager in college dumping his student loan into it and I still haven't sold (ish).
I can't attach more images so I'll have to explain what I'm going to show you.
So ASTS was a SPAC… I know I know, Ehwww Brother Ehwwww. Okay now that's out of the way lets get serious.
It went public at 10 per share, now you would think that the SP would increase everytime they reduced their risk but nope.
ASTS: Launches BW3 (test satellite)
Market: Haha fuck you
ASTS: Proves the tech works
Market: Lol okay here is some mone… SIKE get dumped
ASTS: FCC approval
Market: whatever losers.
During this time the SP kept depressing and ASTS kept failing to attract decent financing options which forced ASTS to do public offerings – a negative feedback loop.
What changed?
Great question – thanks for asking!
ASTS got pre-payments (the best form of funding) and they sold convertible bonds to their customers (the MNOs) then they did another public offering and boom the SP went to the gutter.
But something crazy happened soon after…
Verizon joined ASTS which was a shocker that not a single ASTS investor expected, as far as we were all concerned, AT&T had an exclusive contract for the USA and we always imagined it as being impossible but alas it happened. Then something even more incredible happened! At the 2024 Q1 ER the company mentioned that there would be no more public offerings this year. NO MORE DILUTION (just kidding, RSU's, ATM facility, warrants etc are all dilutive but in a good way) and the stock ripped.
So is $20 or $30 a fair price?
That is something that you must decide for yourself.
If you look at the chart and see that it was cheap then you may think that these are very expensive prices.
If you were a long-term investor for a long time then you may think that hmmm:
If it went public at $10 thats our baseline
They proved that the tech works so it SHOULD have gone to $20
They are now months away from initial revenue so maybe it should be $40
The issue is that all of our estimates and predictions dont tell us how much money each satellite will make and what the real revenue of the company is. If we knew that, we would run a simple DCF and have our fair valuation.
BUT STARLINK
Cry about it regard.
Starlink isn't winning because they're missing the magic.
what is the magic???
The magic is spectrum and the almighty MNO's are the providers of spectrum.
As it stands, with Verizon being the best example, MNO's are choosing to go with ASTS instead of starlink but why?
- ASTS has a better solution, developed specifically to provide cell service including broadband to everyday cellphones whereas starlink is using Swarms IoT tech and trying to do the same with that.
- Starlink is a threat to MNOs. Starlink is a competitor to MNOs with their satellite broadband service. Sure they aren't a direct competitor but it doesn't hurt to go against the competition.
ASTS sells to MNOs, not retail, they use the MNO spectrum and do a revenue share. To put it quite simply, spectrum is gold and ASTS is being given it, not starlink because they are aligned with the MNOs.
WHAT ABOUT SABOTAGE RISK!!! WHAT IF ELON BLOWS UP THE ROCKET!!!
Okay so tin foil hat time, lets say he does. 1 failure over 200 launches is not super surprising, we had that happen a few months ago. 2 failures in a 3 month period is extremely worrying. That would jeopardize the launch business and encourage government agencies to support blue origin, rocket lab and the other launchers. This is BAD for SpaceX, this is BAD for starlink.
The tech ASTS has is also being tested by the DoD, this would be very very bad to have destroyed by a very suspect rocket failure.
Sabotage would put so many eyes from all over the place on SpaceX and if it is sabotage, people would know that what ASTS has is very special.
Rocket lab can do it too
Okay shut the hell up you dumb idiots, I get it… You're jealous but NO!
Did you not read the part about "magic" the fucking spectrum you knob. This tech doesn't work without that and as it stands, ASTS has the most of it and Starlink, the bigger competitor is struggling so much to get any of it and that's before any of their interference woes.
Yea yea rockets are the keys to space whatever but you guys aren't the only ones with it.
SHOULD I BUY IT???
I've been broke irl for 2 years now (snowboarding is expensive) so I haven't been able to buy but honestly if I had the excess funds, I would. Yea $30 is way more expensive than $2 but this is where it should have been for a long time.
Think of it this way. By the end of this year the company will finally have revenue so we might see initial numbers in the April ER (not sure how beta testing will affect the timeline).
From there it's really just about CAGR and revenue. We're probably going to get Ex-Im funding (favourable debt) to help fund the rest of the constellation so in maybe 2-3 years we'll have a full global constellation and billions in revenue. Yes billions so just add your favourite PE/EBIDTA multiplier and boom you have a very rough market cap in the tens of billions if not more. Also remember that the market is forward looking…
Conclusion
I've missed a lot of details to really water it down for you guys so you get whats happening and why the FUD is just FUD.
Positions:
4 shares
1 Sep 20 25C
5 Nov 15 35C
27 Feb 21 35C
Dont be like me and sell your 51 Jan 22.5Cs for shares on the runup and miss out on the 2x leverage they've been providing. Fucking idiotic risk management move. I could have bought a house if I didn't make that stupid mistake.
Ask me any decent questions and I'll happily answer, I'll see you guys all the lambo dealership or Wendies, one of the two.
[EDIT] If you want to make your own valuation then make a copy of this spreadsheet and fill in the numbers yourself.
https://docs.google.com/spreadsheets/d/1Cr0dE0IZB57OJMy12KRG4IdlnZBFvxDnRQ2vvfd321o/edit?gid=120887393#gid=120887393 – made by NomadBets on twitter
Its better than the transhumanica valuation model
ASTS Due Diligence but without the lies
byu/WeissMISFIT inwallstreetbets
Posted by WeissMISFIT
20 Comments
Saying it’s where it SHOULD have been is bologna. Buying now is CHASING. The value is in the spectrum which they don’t own any? Sending and building satellites is expensive.
Globalstar GSAT is a stock with spectrum.
Editors Note: When OPs start calling everything lies and FUD you should realize you’re in an ape-tier event and be skeptical of everything you’re hearing. Yes, even this message.
to me, this is a clear-cut buy for massive long-term gain.
Position: 4 shares ?
Hum I hope it can be used in China
Respectfully
A company’s projections for 2030 aren’t even close to reality
They have no infrastructure or funding to hit those targets
It’s easy to model on what they want to happen
In real life supply and demand, logistics deals, unforeseen road blocks and speed bumps come up
The path to those numbers are extremely long and require more funding and everything going correctly along with deals that are can’t even begin to be thought of because they don’t have the network or reliability of service in place to make them happen
It’s a dump at this number
Just my opinion
Having said that wish I would of bought at 2
Sure as hell will not buy above $10
No mention of our good old friend Mr. Dilution? I’d sell before ASTS does if I had been lucky enough to buy in before the squeeze. They need some capital to get those all those proposed satellites into space. Risky, is all I’m saying, when a company with essentially no income is sitting on an $8B market cap.
”Don’t believe the lies” while immediately presenting us with some numbers pulled out of their ass 
90% of the Earth isn’t covered by cell phone service. This man wants to bring cell service to the oceans and Antarctica in the name of profitability 
I’m long . Bought in 2021
But 2 major concerns remain
Funding
Technical milestones
Regulatory license ie FCC
These are big ifs and nothing to sneeze at. I think it’s over bought today at 30. 20 is more reasonable
After Sept if launches are successful, I’d raise target price however.
Drink glass of a cold water when you woke up from dreaming.
For the long term keep in mind this company has no revenue and is burning piles of cash so when someone says “potential future stock price 600!” Ask yourself where are they gonna get all the money they need to get to profitability? The answer is by selling more shares and dilution of existing holders so even if you believe the 600 a share thesis there may be 600x as many shares issued by the time you get there leaving you at $1 a share.
Positions: 4 shares
what the fuck man
634 ?! ***
Please put 100k into long term calls.
Quick sense check.
Largest telecom operators in world:
T-Mobile: 229bn
China mobile: 208bn
Verizon: 170bn
Comcast: 153bn.
ASTS expected to be worth 183bn in 2030. So 5 years to become the 4th most valuable Telco operator based on today’s valuations, from 0 revenue and 283m of cash and a handful of satellites.
Sense check… Passed.
4 shares
love the broke student life
Maybe…but they’re one mistake away from shutting the bed
You are sayung 8.31B ebitda out of 8.52B? 97.6% profit margin? You are true regard. Hats off
When did you first start trading 2020 , 2019 ?
Why SpaceX is not their next launch provider? Who is it going to be? SoyuZ? tian Long?