When I first wrote about ASTS 4 years ago, it was the first DD on the stock to appear on this subreddit. I told you to dismantle your grandparents porch to sell the top of lumber and buy the stock. I was kinda right but also terribly wrong as you can see in my gain post here. Now I am older, wiser, richer, and with a hotter wife and better DD. So settle in and learn something. Or don’t, it’s whatever. When you last ignored me there was one key point in the ASTS Investment Thesis:
1) ASTS Wholesale Model gives them access to billions of customers and thereby revenue.
- All Satellite companies (save for SpaceX’s Starlink) have failed because they cannot effectively monetize their service. Technology isn’t a problem, it’s the go-to-market strategy which fails. ASTS has solved this with its wholesale model working with existing telecoms under the FCCs rules for Supplemental Coverage from Space.
- Iridium was one of the most incredible engineering accomplishments in history, everyone who used it loved it. It was the only way calls could be made in NYC on 9/11, the only way to call out of New Orleans in Hurricane Katrina, it’s the first thing every person at the top of Everest reaches for, the list goes on.
- The problem is that Iridium couldn’t sell the service. It was expensive (for the specialized headset and by the minute in its use), people didn’t know it existed (Iridium were engineers not marketers), a market didn’t exist (maritime and remote villages and niche minute by minute sales does not a market make).
- ASTS solves this with its super wholesale model where AT&T, Verizon, Rakuten, Vodaphone, and others do all the marketing, all the sales, all the billing, and upsell their existing customer base for a service they want anyway (more on this later).
- ASTS does not need to find customers. Their agreements with the above give them instant access to 3B paying handsets overnight.
- ASTS does not need to sell the world a new device. Every cell phone just works.
That is the entire story that valued ASTS to its core investors since it started trading as a SPAC. While every single ASTS long term investor lost the love of their wives as the stock cratered to 1.98, the story changed. Five additional pillars have been layered on top of the above original thesis which makes me (and you if you are capable of reading) more bullish. They are as follows:
2) Military Applications Non-Communications Use
- The large array and patented technology have more uses than just communications with cell phones.
- They can be used as an alternative to GPS, for Missile Tracking, for PNT, and more.
- Any piece of military equipment that can accept a small wireless chip can use ASTS.
- The future of war is remote drone operations. They need connection. ASTS does that too.
- ASTS was awarded (through a prime contractor) a United States Space Development Agency (SDA) contract worth $43 million
- This is for 6 satellites for one year and paid out linearly.
- Fairwinds advertisement for the service shows ASTS communicating with existing Military Satellites.
- This award will likely be expanded as more satellites come into service.
- Hybrid Acquisition for proliferated Low-earth Orbit (HALO) program
- ASTS was awarded a starter contract as their own prime.
- The program can cover launch and parts costs on top of service payments.
- End game of this is ASTS use for missile tracking in the “Golden Dome” the Trump administration wants to build out.
3) European Monopoly / Satco Joint Venture with Vodaphone
- ASTS and Vodaphone created a joint venture for all of Europe where they will sell the service to other European Telcos. They will also be offering the service to the European Governmen