Read on Twitter
Thread: $ASTS SpaceMobile price has been in a free-fall since the SPAC merger was completed on 7 April. Although this severe of a decline was unexpected, there is a precedent for this price action. Will history repeat itself?
I’ve previously written a thread about how I believe that $ASTS is an extraordinary asymmetric investment opportunity that only comes along a few times each decade.
If you’re not familiar with $ASTS or you would like to read that thread for background, the link is here: https://twitter.com/asymmetric_bets/status/1379227305659179008?s=20
Despite the potential that this company has to completely disrupt the wireless industry, the price action post-merger has been unexpectedly disappointing, going from $11.81 at merger-close to a low of $7.12 earlier this week. This is down from a high of $25.37 in February.
So what’s been happening? The brief answer is that PIPE investors have been shorting the stock in order to box their position and mitigate their risk. @spacanpanman has written a great explanation on this process and what’s been happening here: https://twitter.com/spacanpanman/status/1380622211481018368?s=20
If we want to get a sense of what the most recent price action means in the longer term for $ASTS, we can compare it to other stocks that have completed a SPAC merger.
Of those companies, the most highly-correlated would be another space-related stock that many of us are very familiar with: Virgin Galactic $SPCE.
$SPCE completed their SPAC merger and began trading on 28 October 2019. The stock closed at $11.75 that day, and immediately began a steep decline in price. About a month later, the stock found a bottom around $7.
After staying around the bottom of $7 for about a week, the price began rapidly growing. By early February, $SPCE was trading over $20.
$SPCE has been highly volatile, as you would expect from a pre-revenue company in the space industry, but it is interesting to note that the price has been in a macro uptrend since hitting the lows in December 2019. Its ATH is $62.80.
So how does that compare to $ASTS SpaceMobile? SpaceMobile closed on its first day of post-merger trading at a very similar price of $11.81 and also immediately began a price decline. It nearly reached $7 earlier this week.
I don’t know if this is the bottom for $ASTS, but I finished accumulating into my full portfolio position over the last two days.
For a company that just closed a $460MM financing deal and has zero debt, I find it unlikely that the market cap will go significantly lower. https://twitter.com/thekookreport/status/1382377149189877760?s=20
As @vince_imnida points out in his great Reddit post (link in tweet below), the next catalyst will be positive coverage from analysts and institutional investment. https://twitter.com/Vince_imnida/status/1383139613355638786?s=20
The patents and technology are world-changing, the addressable market is massive, the US government is providing billions in 5G funding, the strategic partners are some of the biggest in the industry, and $ASTS SpaceMobile is years ahead of their competitors.
The biggest takeaway from looking at the $SPCE post-merger price action is this: in a highly volatile growth stock, the ~40% post-merger decline is a fairly unremarkable blip on the chart a year and a half later.
Can the same be said for $ASTS SpaceMobile two years from now? I don’t know, but I like the odds.
Thanks for reading.
Thanks for reading.
