Kevin Mak

$ASTS

ASTS has rallied ~50% from $17 to $26 in 6 trading sessions. The question is, is this move sustainable or have we come to far too fast?

This graph contrasts the volume of this latest move with the one in August. They are drastically different. Where last time, there was a retail/momentum frenzy (tourists and gamblers) coming to bet on an exciting launch of a SpaceX rocket carrying block 1 (which actually makes no sense at all to be a vol event). This time, the move is much "quieter", and the volume is likely coming in to get ahead of an expected announcement by commercial partners about the product launch (i.e. VZ and ATT saying "beta test is working, and we'll be live end of 2025/early 2025").

Getting ahead of that announcement makes more sense since its close-to the last step before revenues start to show up, and represents the last major technical derisking hurdle (which Vodafone has realistically already spoiled, but markets are kinda dumb that way).

This move is far "healthier" than the last one, so I think it's less likely (I'd say 40% chance instead of 80% chance in August) that we retrace significantly. Also note this price action occurred despite the convertible debt holders (likely) hedging significant quantities of stock on the way up (exerting selling pressure), and they'll now be buying on the way down if the stock falls (providing some price support).

Despite my bullishness, the stock at $26 has a very different risk/reward profile than the stock at $17, which means I've trimmed it in my fund from 8% to a bit less than 5%.

Post ATT/VZ announcements (which are probably coming in the next 0 to 30 days), I think the narrative changes to purely be "what does monetization look like", and the market will no longer be asking "will it work? how will they finance it? when will it be online?". I think the company becomes far more "investable" by a much larger pool with this narrative change. I'm very optimistic.

(Maybe this is a frontrun and then VZ/ATT become a "sell the news" event, but my spidey sense says that's unlikely to be a significant driver).

My comment about the price action on 8/15/24:
https://x.com/KevinLMak/status/1824282875765879066
The problem with retail momentum:
https://x.com/KevinLMak/status/1824286383743070512
Short straddle trade ahead of the launch and reasoning:
https://x.com/KevinLMak/status/1833944539406762144
My incredibly insightful analysis😜 that marked the lows of the stock price:
https://x.com/KevinLMak/status/1885028189618991140

Someone asked about taxes and deleted it. Here’s my answer:

A) I’m not a tax lawyer. Everyone’s situation is different. A lot of people invest out of tax sheltered/deferred vehicles.
B) I’m Canadian. I generally don’t mind paying taxes.
C) I don’t like the idea of holding an overvalued security “to avoid taxes”.
D) I loathe the idea of holding irresponsibly large (ergo risky) weights of stocks “to avoid taxes”.
E) Most people also have losses to offset gains, at least to a certain extent.
F) I think most people use taxes as a convenient excuse to gamble. “But I couldn’t sell cuz of taxes and then it went down but that’s not my fault.” It’s a mental freeroll. 

Investing is an incredibly hard game. Adding constraints (that your opponent doesn’t have) makes it even harder. I want to win in the easiest way possible, optimize the winnings after.