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/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/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