Amazon's Jeff Bezos Turns Heads With Connection to Burgeoning Space Firm
I'm planning to buy this space-based name after the BlueOrigin owner suggested some interest.
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Market action is volatile on Wednesday morning following a much weaker-than-expected ADP Jobs report. This report typically doesn't generate much market response, but the poor numbers drove a negative reaction prior to the open. The pullback was fully recovered, but a weaker-than-expected ISM Services number is also adding some concern.
The good news is that interest rates are lower on the weaker economic news as it increases hopes of a Fed interest rate cut, but can stocks continue to trend higher if economic data continues to weaken?
Overall, market breadth is still running positive, but the Magnificent Seven MAGS group has turned negative as Nvidia NVDA reversed lower.
Back in March, I highlighted AST Spacemobile (ASTS) as an interesting play on a space-based cellular broadband system that doesn't require special equipment. It has partnered with AT&T T, Verizon VZ and others and is busy launching satellites and gaining the necessary licenses to fully implement its services.
An interesting development in the last couple of days is that a picture was posted on Instagram of Jeff Bezos, who owns space company BlueOrigin, meeting with people who hold major investments in and are connected with ASTS. ASTS is currently a major customer of BlueOrigin for satellite launches.
Analysts at Scotiabank are speculating whether Jeff Bezos could become an investor in ASTS. Bezos is one of the world's top investors in space projects, and ASTS is clearly a leading space play. ASTS owns specialized RF technology, which is protected by thousands of patents that represent a significant barrier to entry for newcomers, including Project Kuiper
Project Kuiper is an Amazon effort to provide global broadband internet access via a constellation of over 3,200 low Earth orbit satellites. It aims to deliver high-speed, low-latency internet to underserved and unserved communities, competing with services like SpaceX's Starlink.
Amazon AMZN intends to invest $13 billion to $16 billion in the Kuiper constellation of 3,236 satellites. That compares to the current market capitalization of ASTS at only $8.3 billion. Scotiabank's revenue projection for ASTS is actually larger than that for Kuiper at $30 billion by 2033 versus the $25 billion estimated for Kuiper.
A potential tie-up between Bezos-owned entities and ASTS makes sense, and there is some positive action in ASTS, which reflects increased speculation.
I have a position in ASTS and will be adding to it as the chart develops.
At the time of publication, DePorre was long NVDA, VZ and ASTS.
