BIG IDEAS INVESTING – YOUR CRYPTO, YOUR PROFIT.

Space Communications

In this week’s Big Ideas Investing - Your Crypto, Your Profit, we take the time to reintroduce a key disruptor business in the space communications ambit.

We touched on this disruptor business in the communications space called Astra (NASDAQ: ASTR) a few episodes ago and we are here to explain a little more so that you get a better idea of what this entails. After all, you want to put your crypto/money into something that makes business sense!

What Astra does is it fires rockets into Low-Earth-Orbit (LEO). These rockets specialise in breakthrough communications in the following areas:

1. Global broadband connectivity. This will be a “reliable, low latency connectivity that could leapfrog wireless” connectivity to the next level. Imagine having internet connection not from your local telco but from a satellite in Low earth orbit made possible by Astra. This is a gamechanger.
2. Internet of Things (IoT) / Machine to Machine (M2M) – According to Wikipedia, this is the a “direct communication between devices using any communications channel, including wired and wireless”. (https://en.wikipedia.org/wiki/Machine_to_machine) The possibilities here are endless when the space communications is made available. Think industrial and military uses as machines talk to one another and tasks are being done simultaneously every where on earth because of this. Here, I can imagine an entire farming system being coordinated where trucks are picking up the ingredients for farming on one side of the globe through a coordinated IoT /M2M supply chain and delivered seamlessly to the other without a single disruption. And when the crops are ready, harvesting is carried out and redistributed without a need for humans to be immersed in any part of the process.

Think military – a coordinated defence strategy against enemies deploying the navy, Air Force, army, and even drones in real time, taking objectives and engaging in skirmishes with coordinated precision!

With this, they are able to monitor things and even prepare people for extreme weather events – typhoons, tsunamis, hurricanes, changes in climate, you name it.

Who is on this team?

What is more powerful is this – on its team are from NASA (its CEO), Elon Musk’s SpaceX program (its Chief Engineer and VP Manufacturing are both from this program), Amazon (its CFO), etc.

They have also achieved commercial launch 3 years ahead of Elon Musk’s SpaceX and 9 years ahead of Virgin Orbit (yes, that one by Richard Branson, in case you were wondering).

How about customers?

That is a great question. With no customers, you can talk all you want and have no business to be carried out, right?

Well, here are the figures. Over 10 customers at the moment (BIG NAMES, by the way) and with over 50 launches in the backlog.

NASA, which is also one of its customers, has this to say about it:

“First and foremost, I find that Astra clearly provided the strongest overall proposal and technical solution demonstrating they are capable of meeting the Mission One requirements with a significant strength assigned for maturity of the launch vehicle proposed.” Scott Syring, SOURCE SELECTION AUTHORITY, NASA

How is it valued against key competitors?

Let’s use the charts to say something about this. This is the projected 2025 comparison across companies like LUMINAR (Ticker name: LAZR) which does autonomous transportation, which is akin to the self driving software the Tesla produces. See how it compares with Tesla here – (https://www.forbes.com/sites/greatspeculations/2021/05/26/will-luminar-stock-benefit-as-tesla-tests-lidar/?sh=5ac8673d488c)

QuantumScape does battery technology which is touted to beat out every other competitor out there at the moment. It has yet to recognise a single revenue but because the technology is so advanced, people are already wiling to put their dollar to support its production from the R&D stage right at the upstart.

AST Space Mobile (Ticker name: ASTS) is in the same space and has also recently IPOed in February 2021. ASTS is focused on building the world’s first space-based cellular broadband network. This is a proprietary tech that beams the signals of cellular data from satellite to smartphone without having to go through any ground towards. In short, your telcos are in trouble. (https://www.nasdaq.com/articles/ast-spacemobile-could-change-the-world.-why-asts-stock-could-reach-%24500.-2021-04-23)

Relative to ASTS, ASTR is currently overvalued. However, when you compare to what the market is voting in stock pricing, giving anywhere from 48 to 60x TEV/EBITDA to existing companies, some of which are existing disruptors in their own right, both ASTS and ASTR and VERY VERY UNDERVALUED.

CONCLUSION

I think the most logical step next is to dip your toes in because all they are already on track to taking the world by storm. You can either go for ASTS or ASTR but because ASTR has more utility other than just beaming cellular signals, it makes perfect sense that ASTR has a higher valuation relative to ASTS.

Again, this is not investment advice. So do your own due diligence by delving deeper into what we discussed, find out more about these companies before buying in (or staying out for that matter).

Yours,

Chief Editor

BBA Market Perspectives

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