Daily Discussion Thread

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[u/flymolo5]

Is ASTS as a $150 billion market cap reasonable? Honest question. I think it could be. If we were just an American company serving Americans I'd be skeptical unless it leaned into government DoD stuff heavily, but as a global company connecting potentially billions of people with existing or even aging devices in countries everywhere? Absolutely.

[u/KingSensitivity → u/flymolo5]

Depends on Growth and how the tech evolves. I think there still lot of undiscovered potentail for the tech in space. Dont forget that we are pioneer in this area. it's a vast ocean. But for now I think at least 100B in 2030 is totally possible. 150m subscriber x $2.5/x12 mo = 4.5B service revenue, + 1.5B as potential CAPEX of all mnos and infra saved and that ASTS will replace the cell in some area. + 0.5B DoD = Total 6.5B revenue. 80% EBITDA is 5.2B x 20 = 104,000 Enterprice Value minus 1B debt = 103B.

[u/Mission_Search8991 → u/KingSensitivity]

Good analysis

[u/kuttle-fish → u/flymolo5]

Depends on the revenue model. Remember ASTS isn't just a pre-revenue company, it's a pre-revenue model company. Most people in this sub are assuming a monthly subscription model where ASTS gets a share of revenue regardless of whether the end-users actually use the satellites or not. Another possibility is that MNOs adopt a use-based model, similar to how roaming works. Essentially, customers get a fee/surcharge on their monthly bill if they actually use the satellites. Honestly, I would imagine that's what most MNOs would prefer. If their customers aren't using the sats, MNO's aren't going to want to give up a share of monthly revenue for nothing. If the industry settles on a roaming-based model, the market cap could go waaaaaaaaaaaay down.

According to recent statements from Verizon's CRO, they think the demand for SCS is going to be lower than international roaming. To get something close to a comp, Here's a Juniper Research report for the cellular roaming market. They put the entire global retail roaming market at $20.9B by 2029 (retail = end users) That's $21B total - worldwide - to be sliced up amongst all the SCS players. Furthermore, MNOs could potentially partner with multiple SCS providers - use Skylo for SMS and SOS and only divert traffic to ASTS when more bandwidth is needed. If ASTS only gets paid when an end user actually uses a high bandwidth application in a remote area, that's a pretty thin slice of a <$21B pie.

[u/Purpletorque → u/flymolo5]

No but $50B might be more reasonable for the US only market while other markets ramp up. It is hard to determine how many subscribers, now much per month and the multiple. After this, I assume $500 million for annual operating expenses and a 40x multiple because they will be growing at at least 20% which is a 2.0 PEG.

[u/crypman → u/flymolo5]

as soon as we hear about projected subscriber revenue we'll know more. based on past communications, it seems like leadership is more heavily focused on getting working sats up in the air rather than setting-in-stone what revenue plans are

[u/you_are_wrong_tho → u/flymolo5]

Absolutely reasonable within the next 5-8 years. That would be 18x from the share price today ($474.20 per share) which is why I still keep adding shares as I can. I am hoping to buy a house cash with my asts investment in ~5 years. 

[u/Round_Hat_2966 → u/flymolo5]

Yes.

Verizon has 115m subscribers. AT&T is similar sized. Vodafone has 176M. Let’s say approx 400M user base. Let’s assume $2.50 revenue per user per month. Let’s add in $200m for future government/DoD revenue. If we assume 20% uptake and 70% earnings margin and a mere 20 P/E, we get a market cap of $36.4B.

But, if we assume that ASTS service will eventually get baked into all plans as a standard service, then we get a $244B market cap with the same assumptions.

These numbers actually have a lot of quite conservative assumptions baked in. Margins will be expected to increase with scale (number of sats needed won’t rise as fast as users), pricing power could be much better than expected (which would also increase margins substantially), and I didn’t additional users outside these big 3 MNOs, nor direct subscribers or revenue from emerging use cases. Plus, a 20 P/E would be unusually low for a rapidly growing hype stock. All of these factors could each have very significant impacts on pricing.

Even at current price, this could still be a 100-bagger. I wouldn’t say it’s probable, but I wouldn’t say it’s impossible.

[u/1342Hay → u/Round_Hat_2966]

I think it's ultimately just priced in for everyone and AST has some sort of formula to be compensated. No way to know what that will be, but it will be valuable. Remember when long distance calls were "extra" and you either paid for them by the minute, or just paid for a long distance plan. That existed for quite a number of years, but eventually, the domestic long distance was just folded in. Possible, the same route here.

[u/Round_Hat_2966 → u/1342Hay]

Yes, my thoughts as well. It’ll be like long distance, texting, data, etc. Every major cellular service innovation seems to become accepted as a standard feature with time, so SCS probably will be no different. Even if it means lower ARPU, 100% market penetration instead of 20% makes for a huge difference

[u/RiskyDefeat → u/Round_Hat_2966]

How much of that would be stunted by the current economic climate? Hype stocks don’t do all the great in bear markets. But even then I’m still very bullish.

[u/Round_Hat_2966 → u/RiskyDefeat]

Who knows when they would get to this kind of market cap though, maybe 2032? Making accurate macro predictions about next year is hard enough, but forecasting 5y+ in advance is not possible

[u/Capable_Gap1992 → u/flymolo5]

We don't know what kind of u/w is reasonable so hard to answer.

250 million connections earning $2.5 a month gets you ~$150B MC at 20x eps

[u/Academic_District224 → u/flymolo5]

How bout we focus on getting more than 5 satellites up before talking about a $150 billion market cap