$ASTS Spacemobile a Worthwhile Moonshot?

 

My favorite stocks are those that have potential to be 100x if one gets in early, and AST Spacemobile (ASTS) has potential to be one of these stocks. The company is planning to launch satellites that can communicate with existing cell phones to get 4G LTE/5G service anywhere in the world, including at sea and on an airplane. Current land cell towers have very limited coverage. If you live in a major city, you won’t notice this, but actually most of the world is not covered. ASTS is the only company that is working on a real solution to this $1 trillion dollar problem. Note that this is different from Elon Musk’s Starlink’s goals, which is to provide WiFi internet service to people’s homes via a satellite dish receiver. So this company has no competition.

For a long time, it was thought to be impossible to use satellites to directly communicate with cell phones, but ASTS has a lot of big name talent who have been working on this technology for a long time. JPL scientists initially said it was impossible when asked about the idea, but after being shown ASTS’s idea, they exclaimed “It will work!” So, in April 2019 ASTS launched Bluewalker 1 (BW 1) which showed that their satellites can communicate with cell phones! It only took them a month to manufacturer the test model.

From ASTS website on describing their goals:

“In the middle of the city or on a remote mountaintop, at a crowded event or becoming one with nature, billions of mobile phone users are forever moving in and out of connectivity. With SpaceMobile filling all the coverage gaps — anywhere traditional wireless networks don't exist or become overwhelmed — mobile subscribers can be assured of connectivity no matter what.”

“For the first time ever, mobile subscribers will be able to automatically roam from land networks to a space network​. In the most remote location, on rural farmland or in the midst of a crisis or natural disaster, people will remain connected at broadband speeds – without having to invest in expensive, specialized hardware.”

“For the over 1 billion people who are still unconnected today because they remain out of reach by traditional wireless networks, SpaceMobile will finally welcome them into the digital economy ... not to mention open them up to all sorts of opportunities for education, social networking, healthcare and more.”

 

Current state of company:

They are now working on Bluewalker 3 (BW 3) which will have a huge 693 sq ft antenna and show what the technology will really do. SpaceX will launch this in March 2022 from Cape Canaveral, Florida. If it works, ASTS is going to the moon! If it doesn’t work, they will be set back for 6-12 months, depending on what went wrong, but ultimately it is still a very promising technology. Don’t wait for BW3 to work to buy the stock though, by then it will be really crowded. The market is very irrational and after a huge run up, the stock can actually sell off on groundbreaking good news.

They expect to launch 20 satellites by 2023 and cover 49 countries. They will be 700km above Earth, and therefore need a total of 66 satellites for coverage of the whole planet, as demonstrated by Iridium. ASTS plans for a total of 168 satellites just for redundancy and better service.

 

Future market:

The addressable market is $1 trillion dollars. Margins are expected to be over 90%. The plan is to eliminate the connectivity gaps faced by today's five billion mobile subscribers moving in and out of coverage zones, and bring cellular broadband to the half of the world's population who remain unconnected. In fact cell phone carriers have already signed on with ASTS as customers are expected to demand better phone coverage. The integration is supposed to be seamless and users won’t know whether they are using tower connection or satellite. The military also wants this technology. Right now it’s a company with a market cap of only $1.9 billion, representing at least a 200x upside. At $10 per share at the time of this writing, I expect it to go to $2000 per share if the technology works. The downside is the stock goes to zero, but the potential reward is investing a small amount of money to become a millionaire (or become a billionaire if you are already a millionaire).

Risks:

It’s too risky a stock for most people as it can go to zero if the technology fails. I don’t see it this way as the science is fundamentally sound and BW1 already demonstrated this. Not completely though, since they had to build a special receiver BW2 on the ground to communicate with the satellite, rather than have an actual 10 minute conversation on an existing cell phone. Hence, only BW3 could demonstrate the true proof of concept convincingly and de-risk this stock.

ASTS Tour, Texas

How smoothly would the technology work with 10,000 users at once? Would the latency be low enough to have smooth voice conversations? I’m sure text messaging should work as it has already been demonstrated. Though ASTS claims that a direct line of sight to the cell phone is not neccesary, how well would it really work within a building? What happens if 6G comes out? Would they need to replace all their existing satellites?

I’ve attempted to get more information on the technology so I could evaluate it, even though it’s not my field, I like to do my own research. When it comes to SAVA and its Alzheimer’s drug, the research data is publicly available and I can analyze it for myself, realizing it’s a home run:

Unfortunately for ASTS, a large part of the investment risk is that the company’s development is done entirely behind closed doors and outsiders don’t have access to any of the technological information. Everything is just top secret, much of it they don’t even include in patents to keep their technological edge. ASTS is not investor friendly and will not respond to your request for their data.

Like a biotech stock, I would watch out for any insider selling, which would indicate a problem that is not known publically.

Chart Action:

Chart shows this stock has stayed at $10 since inception. At some point in the past it rallied to $25 in February 2021 due to being hyped up by online articles, but as there was still no timeline for the BW3 launch, the investors quickly lost patience and dumped the stock. It went down to $7 and that’s when I picked up some stocks. Now, BW3 launch details have been announced, with none other than SpaceX, a reputable satellite launch company in the United States. From here till launch in March 2022, I expect the hype over this stock to continue and we should see some action from speculators. Launch is only 7 months away. I have no idea when people will start bidding up the price but for sure well before before the actual launch. Expect lots of volatility. Consider locking in a position at today’s prices.

Are more people going to live off grid if this technology works?

I certainly would!

Article Links

The U.S. government may help fund ASTS ambitions:

https://www.lightreading.com/iot/policymakers-oblige-5g-satellite-aspirants/d/d-id/765585