Here’s the intro to the spiel that I’m getting asked about this week, it’s from Luke Lango in an ad for his Early Stage Investor service over at Investorplace ($1,999/yr, no refunds), he’s talking up a critically important phone call that will be placed in a few weeks…

“This single phone call that will not only instantaneously change the world as we know it… forever…

“But will turn the page in history… starting the next chapter of mankind…

“A global opportunity… more important than the creation of the printing press, Edison’s lightbulb, and the personal computer… and more significant to mankind than the lunar landing.”

So what’s the story? It has to do with a satellite, obviously, but he says the excitement starts with a “highly redacted” filing with the SEC:

“Beginning with this 4-page document, signed and filed with the U.S. Securities and Exchange Commission, just days ago…

“A highly redacted document, now known as “Exhibit 10.1.”

“A ‘hush-hush’ multimillion-dollar contract between two companies…

“One a massive $125 billion private enterprise… owned by the world’s richest man…

“That’s right, Elon Musk, and the company you know as SpaceX…

“And the other…

“A tiny, $12.4-million-a-year firm… quietly tucked away… in the sandy Permian Basin of west Texas…

“An early-stage firm…

“Not only flying well below the radar of the mainstream media and the financial press…

“But now on the verge of making history… sparking one of the largest and fastest wealth-building opportunities in modern human history…”

And that, frankly, makes it an easy and instant solution — that file he talks up is clearly the launch agreement between SpaceX and a little company called AST SpaceMobile (ASTS), a multi-launch agreement for three satellite launches, including two that are actually agreed upon and one future reservation.

The dates were redacted, as were the times for the launches, but certainly ASTS doesn’t want it to be secret, they even issued a press release upon the signing of the agreement.

What caught my eye was what they didn’t highlight in the press release, the fact that the multi-launch agreement covers just three launches between now and the end of 2024: the first satellite launch (their first real test satellite, BlueWalker 3, which has a launch window next month); the first commercial satellite launch (their first BlueBird satellite, whose schedule hasn’t been publicly announced yet and whose design is presumably not finalized yet); and a second BlueBird launch reservation. That doesn’t necessarily mean that they can only launch three satellites in the next two and a half years, they could always make other agreements with SpaceX or other launch companies, but it’s a pretty light commitment so far for a company that is still widely talked about as maybe launching commercial service next year.

But yes, this is a pitch from Lango that when AST SpaceMobile gets its first test satellite launched, and makes the connection between that satellite and a regular mobile phone on the ground, proving that its technology works, that will be the moment that the earth stands still.

He lays it on pretty thick…

“… if you’re one of the millions of Americans who have recently lost over $3 trillion in retirement money… and now looking for a chance to get it back…

“This small company could be your golden ticket…

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“While the potentially life-changing event I’m going to share with you today… could in fact be the biggest secret on Wall Street right now…

“It’s simply not for the faint of heart… and far from risk free…”

We’ll include his warning, to be fair:

“What I’m revealing to you today… is one of the most ambitious and potentially impactful space missions in human history… potentially more important than the moon landing in 1969…

“And unlike anything attempted before.

“So under no circumstance should you invest more than a dime you’re not willing to lose.”

I definitely agree with that last sentence.

So what’s the promise of AST SpaceMobile? Here’s a little more from Lango:

“If this historical, first-of-its-kind mission, is in fact successful…

“It will directly, and dramatically, impact the lives of well over 3.7 billion people…

“Including one in four Americans… potentially just days from now…

“While forever changing the very fabric of our society…”

And he says that institutions are buying in, too:

“Wall Street’s biggest players, and those who understand the massive opportunity at hand… are already moving in for the score of a lifetime.

“With legendary investors like…

“BlackRock… the world’s largest money manager…

“The ultra-secretive, hedge fund titan – Citadel Advisors…

“Point 72, the massive hedge fund founded by billionaire investor and owner of the New York Mets…

“And D. E. Shaw… widely regarded as one of the industry’s most profitable and successful hedge funds…

“Have built significant positions in this tiny firm…”

OK, yep, those folks all have positions in ASTS. Some from before the SPAC merger, some more recently.

So what’s the big moment he’s been talking up for the past week?

“… at any moment, perhaps just hours from now…

“One of the most important details of this highly redacted document will finally be revealed…

“And that’s… the specific launch date of this breakthrough mission, planned to take place just days from now…

“And once that official launch date is finally revealed to the general public… you’ll be glad you acted today.

“Because the excitement this single announcement alone will generate…

“Could easily result in this stock doubling or tripling in value, if not more… virtually overnight.”

He runs through a ton of hype about ASTS, most of it backed up by the company’s SPAC presentation and other recent commentary — much of the appeal is that they have partnered with large telecom and service companies, with memorandums of understanding to at least test the deployment of what are sort of like satellite “cell towers,” including American Tower, Vodafone and AT&T, all of whom are publicly backing the technology and say they’re excited about the potential that SpaceMobile has to fill in the gaps in cell coverage.

And then he gets to the numbers…

“Is now predicting their revenue to explode… soaring over 132,000%… hitting over $16.4 BILLION in sales by 2030…

“With a staggering 99% profit margin.

“This tiny firm almost no one has heard of… could become a Wall Street behemoth… with over $16 billion in cash hitting the bottom line – each and every year!

“That’s over $300 in cold hard cash per share… on shares that are right now… trading for less than $10.”

So what’s the story? Well, it’s not under $10 at the moment, this is a very news-driven story stock, and they just delivered their first test satellite to the launch pad on Florida and are expecting to provide an investor update on August 15, so the stock has popped much higher during the recent enthusiasm. That first launch window is “early to mid September,” so it should be a busy month or so. And, of course, having Luke Lango pitch the story as the biggest news in history has helped to bring more attention as well.

I’ve been skeptical of the AST SpaceMobile story over the past few years, but that’s partly because I am hard-wired to resist the “this will change the world” story. It is impressive that they’ve been able to get to this point in their testing, and that their telecom partners are so convinced and so willing to lend their names to the cause, but it’s still a very early speculation. The one test they’ve run from space so far did reportedly work, but they did it on the cheap a few years ago, sort of a backwards test — they effectively sent a cell phone into space (BlueWalker 1, their first launch in 2019, was a tiny cubesat), and connected it with a prototype of their satellite on the ground. So it’s not entirely unproven, they’ve apparently sent a cell signal from space to earth and back, but there is a lot that could change or be learned with this first actual test satellite launch.

American Tower (AMT) is an investor in ASTS, and has an agreement to provide a lot of the ground-based services that the system will require around the world, and I’m an AMT shareholder, so I guess I’m somewhat exposed in that way — if SpaceMobile’s technology ends up working, it’s going to require a lot of ground connections and direct interlinks to data centers, but I’ve never actually bought the shares.

The stock is going through a surge of excitement right now, and that may lead up to the launch, but then a lot will depend on how long it takes them to test that first satellite, whether the launch is successful, what the test results look like from Blue Walker 3 (and how much gets publicized, since the company is still very coy about how the technology works — perhaps there will be a splashy video about a connection to a phone, as Lango imagines, maybe they won’t say anything for a few months), and when they plan to launch their first commercial satellite to begin building the initial constellation of 20 satellites.

It could easily take a couple years to launch the first 20 satellites, I think they are very unlikely to have full global coverage by 2027 as initially planned, and it could cost far more than they initially imagined, so the wave of speculators who are excited about the stock today could easily crest and crash many more times again, as it has a couple times in the past year, before ASTS becomes a viable business. If I were speculating on this as a breakthrough idea, I’d probably buy a small stake in the shares, mentally commit myself to losing 100% of my investment if the first launches don’t go well, and ignore it for three years — the ups and downs of satellite launches and testing will probably be excruciating to wait for, the stock will probably move up and down a lot, and they could easily have to raise money much sooner than they expect.

What else can we share about this company? I’ve looked into it a couple times over the past two years, here’s where I see things now:

AST SpaceMobile, which used to be called AST & Science, is planning what they call the SpaceMobile network, which they believe can provide satellite-based cellular broadband directly to cell phone users who are out of reach of a cell tower, and to do so without requiring mobile phones to have a special chip or antenna — so everyone who has a phone today could be a potential customer (indirect, though, their real customers are the mobile telecom companies). Their initial SPAC presentation from late 2020 is here.

They have an indirect connection to 1.8 billion people, through early partnerships with telecom companies around the world, so the potential addressable market is large, though we’re a long way from clarity on the economics of the service (it does make sense that it should be high margin, particularly if partners handle the selling and billing, but all we have are memorandums of understanding at the moment, and projections from the company, not really contracts for coverage of a certain number of customers).

The goal, when they announced their SPAC deal to go public in late 2020, was to launch their initial service with an equatorial constellation of satellites to provide coverage to some areas within the next few years, with the first wave of commercial service from 20 satellites covering a band that includes parts of Africa, Latin America and Southeast Asia, where the largest numbers of “unconnected” people are, and to go almost global over the following four years with a total of at least 168 satellites rolling out to increase the coverage area and then improve the connection speed (they originally projected full global coverage and 373 million subscribers by 2027, paying an average of something like $2 a month, which would be an overwhelming $9 billion in revenue… but there are a lot of assumptions in there).

Today, they’re not being as specific in their investor presentations (the most recent one is from June of this year)… but I suspect that they won’t have anywhere near 20 satellites launched in 2023, since their first commercial launch (after next week’s test) is unlikely to happen before next year, and their first launch memorandum with SpaceX for the next 20 months includes just those three total launches at this point, but maybe they’ll surprise me. The goal was to use cash flow from the first commercial launch (those initial 20 satellites) to fund future launches, and they need to get the money spigot flowing a little bit before we have some idea of what that cash flow might look like.

They have spent heavily on this first test satellite, a total of about $86 million including the launch costs, and they estimated early on that their first constellation of 20 satellites would cost $510 million… so it’s quite possible the cash will run out well before they launch commercial service, particularly if that takes a couple years (as of the end of June, they were down to about $200 million). If everything is going well, and investors are excited about progress, raising more money will be easy… if they’re stuck in a pattern of delays, or the test raises problems that take time to solve, it will be tougher.

The plan sounds very ambitious to me, but I guess ambition and lofty goals are important for tech companies who are trying to create new markets, even if they sound maybe a bit implausible (see: Musk, Elon) — they initially said they were going to launch their first real test satellite in the second half of 2021, so that has been pushed out by one year. That’s BlueWaker 3, which is the launch planned for next month, and that’s close to being a prototype for their planned commercial BlueBird satellite (it’s half the size, and they’ve been authorized to test it on some wavelengths, but I don’t know what the FCC or NASA think right now, or what they will say about the full-size and full-power BlueBirds).

I guess the key to those satellites (and the reason they were large enough to worry NASA when the plan was first announced) is that they are very large and powerful, they basically unfold into huge flat surfaces that are antennas on one side and solar collectors on the other. The company has responded to NASA’s concerns in the past about traffic jams at their orbit, which is higher than the Starlink orbit and higher than stuff like the International Space Station, but kind of in a sweet spot (around 700km up) where lots of other critical media and weather satellites can be found… but I don’t know what the outcome of this will be when more ambitious launch plans begin.

They are also building out their manufacturing capacity and say they believe they will be able to build six satellites a month by the end of 2022 — so if that goes to schedule, it’s not likely to be the actual construction of satellites that slows them down. The commercial launch would apparently require 20 satellites or so, so at six satellites a month I guess they could have enough satellites built to get to 20 by next Spring if they jump right to it and have a final design and start building in January, but those satellites would all have to be launched, too, and those launch plans don’t seem to be in place yet. Once the first 20 satellites are up, the goal is to launch roughly 50 a year after that for four or five years.

How does this technology work? Something about having lots of small and aim-able radios in a massive panel, with a lot of power, all working together, though I do find their “how it works cannot be disclosed” language a little frustrating (not that I would necessarily understand, even if they told me). This is from their FAQs last year, they have a higher number of patents now and I don’t think they’re still including this language:

“With over 750 patent claims, the technology is highly proprietary, and exactly how it works cannot be disclosed. We can say that our engineers have designed an entirely new form factor and deployment method that we anticipate will significantly reduce the time and costs associated with manufacturing, launching and operating satellites.

“Leveraging proven technologies, ultra-powerful SpaceMobile satellites will provide 2G/3G/4G LTE/5G and NB-IoT connectivity to standard mobile phones and IoT devices.

“Our team also has worked – and continues to work – closely with mobile network operators and regulators to ensure compatibility with today’s wireless networks.”

They are intending to launch as a wholesale service that’s really sold by the telecoms — theirs would be an add-on “opt in” service kind of similar to how some providers handle international roaming now, selling “day passes” that can be facilitated by the big telecom companies, starting with partners Vodafone and AT&T but also including at least a half dozen other large mobile providers around the world… which is how they get to the point where they project 1.8 billion potential customers, those are essentially all the people covered by their telecom partners (there are a lot of remote use cases in areas where it’s not feasible to build towers right now, but we should get the idea of billions of customers out of our minds — most people will never use a service like this if it costs more than cell service, because most people live in urban areas where terrestrial coverage is pretty good and improves steadily).

They expect the US and Europe to be their richest hunting ground for subscribers, not surprisingly, that’s where a lot of the money is, but they did say early on that their average revenue per user for the global network should be $2.15 per month by 2027. It probably remains to be seen whether it’s going to be mostly a “connect the disenfranchised poor near the equator” story, or mostly a “get cell coverage in Yellowstone and Alaska” story, it might be a global phenomenon in expanding coverage to millions or it might be an expensive tool to keep rich people connected when at sea or in their remote mountain lodge. Not unlike Starlink or OneWeb in some ways, I guess.

I get a little frisson of skepticism when reading all this, but, well, I got that same feeling when Elon Musk promised fully autonomous driving by 2017, too… and although Tesla hasn’t gotten to that point, five years later, he probably will get there eventually, and the company has benefitted from the unreachable goal. I guess it’s fair to say that overpromising and having a “shoot for the moon” mentality is part of getting there. If people who calculated the odds were in charge of a lot of these projects, they would never go anywhere.

The way they modeled it out with their early service projections, the growth would be pretty startling — $181 million in revenue in 2023, jumping to a billion in 2025 and $2.6 billion in 2025… and almost $10 billion in 2027. The SPAC transaction was supposed to fully fund the launch of their first 20 satellites, and they think their 50/50 revenue share deals will mean that their revenue comes in with very high margins, particularly as future satellite costs come down, so they were pitching this deal as providing $130 million in EBITDA in 2023 and $2.5 billion in 2025 (“D” is a big number in those income statements, we should note, which is why that number jumps positive so fast — depreciation for satellites is huge, and at that orbit they probably have to be replaced every ten years or so).

They’re not likely to get anywhere near those numbers by those years, which shouldn’t surprise anyone — as we’ve grown to understand over the past couple years, five-year projections from SPAC mergers are about as reliable as investor presentations from junior mining companies or timelines from Elon Musk. They are paeans to optimism and ambition, designed to drive enthusiasm and get money raised, not to be taken as specific or serious.

This is, at the very least, a perfect story-driven stock for individual speculators. There will be lots of news items as their strategy is implemented, from the actual planned launch next month to any real-world testing results they release to reports from their partners through the rest of 2022 to, perhaps, the launch of their first commercial satellite (perhaps sometime next year), or the first details of their 50/50 revenue share contracts being finalized and revenue generated. There are a lot of potential news “catalysts,” including, on the negative side, launch delays or equity raises. Because of the huge ambition of providing global service through most of the world’s big telecom companies, the addressable market is massive… which makes it pretty easy to draw direct lines to a very binary outcome, a possible 10X or more return in the next few years, if things go well in terms of proving out both their technology and their business model… and a possible 80-90% loss in six months if this first test satellite launch fails, or the satellite fails to validate the technology. Add in the fact that speculation in general is picking up again this week, and this has a connection to space and a strong following of retail investors who love the story, and buckle in for a rollercoaster.