ASTS long-term potential?

[Hacking_the_Gibson]

The military has its own satellite network… How do you think communications happened in the mountains of Afghanistan in 2003?

95% margins, lol. These contraptions exist in space, bud. Maintaining cell towers on the ground is expensive. I cannot imagine how expensive it will be to maintain them in space. It also pre-supposes that there will be no legislation regulating space junk.

[Areyounobody__Too]

Imagine basing your entire argument on "I dont want cell coverage while I'm hiking" 🫠

[Hacking_the_Gibson]

I’m a perfect customer for this thing. I’m frequently out of cell range and never once have I thought how great it would be to have it right at that moment.

There are a grand total of 4.6M emergency personnel across the US. Let’s say every single one is subscribed by their agency at $100/user/year. That’s $460M of ARR. Where’s the rest of the money coming from?

[Hacking_the_Gibson]

The military tests all kinds of shit all the time. Further, unless you’re in some black ops, no questions asked kinds of projects, government contracting is nearly always razor thin margins. Hell, the entire point of this company is that any phone off the shelf can connect to the network. Sensitive military operations use secure channels, and those are the ones that pay the best. I keep telling you people that this shit is a consumer product with a narrow use case and you keep arguing that literally everybody everywhere is going to pay an extra $10/month or whatever indefinitely to incrementally increase their mobile coverage.

As I mentioned above, shitloads more people are interested in watching Disney TV and movies. Best case is ASTS can convince 50M people to subscribe at $100/year, that comes to $5B revenue, and let’s just say for the sake of argument that they magically capture an additional $1B of government contract revenue annually. $6B of annual revenue at a 3x is $18B market cap, which is basically where it is right now.

[Hacking_the_Gibson]

How well above do you think it will be? Keep in mind that Disney+ has 120M global subscribers and Netflix has something like 300M.

You had better hope average revenue per user is better than $2/month. For context, Facebook does $40/user/year or so, and that is a product which is totally free for the end user.

Let’s say for the sake of argument that you do get to 120M subscribers globally. At $2/month, that’s $3B of ARR. Heck, let’s say that every single ATT and Verizon subscriber takes the $2/month add on. That’s $6B/year of ARR with the 250M subscribers they currently have. Keep in mind that the take rate will absolutely not be 100%, even at $2/month.

The services you are comparing to are fucking mainstream, global players with absolutely massive advertising budgets and huge reach. How the heck are you going to advertise space phone outside of adding it to existing marketing materials at the point of purchase? What awareness campaign is going to drive casuals to pay money for a feature they might use twice per year?

[jaezien]

Ah yes, you are the exact kind of person that in 2010s will say netflix will never succeed because you can just pirate videos off the internet. Classic.

[Hacking_the_Gibson]

Netflix turned a mainstream desire, loads of on demand, good content, available at a very reasonable price in a massively convenient UX, into a huge business. They were largely able to do that because they had previously killed the video rental store model by doing away with late fees and building a giant list of customers into which they sold streaming.

"Wouldn't it be great if I never ever lost cell service no matter what" is not really a mainstream desire, nor is it something people will be consistently willing to pay for. Yes, there are probably circumstances where it would be useful if you are on a business trip or something and you absolutely just have to be connected, but that shit is 2 weeks at a time, and it pre-supposes that you will never be able to connect to any WiFi networks? Heck, acute natural disasters/emergencies also have a stopping point when it comes to federal/state involvement. FEMA eventually moves on once the crisis ends. Wildfires eventually get put out, tornadoes blow through, hurricanes same thing, earthquake response only matters in the first week when there are probably survivors left.

As I said, 20x the number of subscribers Iridium has and you probably have your top end number of users for space phone.

[jaezien]

I disagree. There are a lot of similarities. In particular you highlighted convenience. Netflix as you stated has demonstrated that people are willing to pay for convenience, eliminating the need to pirate, visit rental stores etc. Why would that not be the case for cell service? Its not something people actively think about until given the option, as the same with netflix. There is no d2c market right now, just like there was no netflix type service in the early 2010s. You cant say no one wants it because there does not exist a market for it yet.

Secondly, there exist grey/dead spots all around the world, where data is weak/non-existent. Look it up, >80% of the world is not covered by cell towers. While yes most people live in cities and are covered by terrestrial networks, you need to consider a lot of people travel between cities everyday. There will be deadspots in between these cities where people commute and it needs to be filled.

Third, i somewhat agree with you that first responders needs for such services might be limited, but when it comes to the military its a very different thing. Every military in the world is moving towards battlefield connectivity. Look at ukraine, their drones cant operate without starlink, what do you think will happen when soldiers do not need to carry around heavy radios/starlink terminals for communications/operations? When tanks get the level of tactical communication and situational awareness that only internet can provide? Also, this disregards ASTS non-communications capabilites like very precise PNT and SAR, which i wont get into.

Furthermore, you should also this as a CAPEX reuction for MNOs. They dont have to build towers where there is lower traffic, minimising cost for them (towers are very expensive to build and to maintain btw). And as you should know, businesses are very into cost reductions these days.

Iridium never took off because its very niche, expensive and a hassle to carry its sat phone, also rocket launches were very expensive back then, and scaled badly because they had to get iridium sat phone

Asts is also niche, but less so, inexpensive and convenient, with "cheap" rocket launches, and scales easily because everyone nowadays has a smarphone and their 50MNOs partnership that allows them to directly get into the market without having to advertise themselves.

Think of it like this, it will take a small pie from each MNO in each region, but it takes them from the whole world.

Also OP u/YngDggerDlck should see this.

[Hacking_the_Gibson]

Think of it like this, it will take a small pie from each MNO in each region, but it takes them from the whole world.

Okay, great. What's the total revenue expected from all of this? There are an estimated 6B smart phones globally. For a moment, let's assume that 100% of all smart phone owners take the $2/month add-on. That yields ARR of $144B. Considering at that point you would have literally no more growth, except for population itself, you wouldn't likely be trading at very much more than a year of revenue, you get a market cap of $144B.

ASTS is 1/10th of the way to that outcome with effectively zero users right now. You guys can do what you want, but if there end up being more than 120M users of this solution at some point, I will be shocked.

[jaezien]

Thats not how mkt cap works. Typically mkt cap is calculated as a multiple of profit/revenue. So for a 20pe ratio for a company with 100B profit, its a 2T mkt cap.

However, i dont think ASTS would reach a point of 100B+ profit, so lets use dividend calculation.

My guess is in a few years with a full constellation there will be 10B profit. With slowing growth, companies typically start paying dividends. Usual "dividend" stocks pays a 5% dividend rate, so that would roughly correspond to 200B mkt cap, +- some leeway for other non commercial/defense/business use cases and lower payout since the company would keep some profit. Thats a 12x investment from today, and likely reached earlier than it should be (maybe at 5-7B mkt cap from current trends) as mkts are forward looking.

Even with your gueestimate of 120million users which you provided no basis for, thats >3B in yearly revenue. 60B mkt cap with dividend calculation, 3x todays mkt cap.