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Satellite Firm AST Is Going Public in Blank-Check Deal

By Crystal Tse December 15, 2020, 7:00 PM PST

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AST & Science, which is developing a space-based cellular broadband network, is going public through a merger with a blank-check company, according to people with knowledge of the matter.

AST is merging with New Providence Acquisition Corp., a special purpose acquisition company, or SPAC, said the people, who asked not to be identified because the information is private. The combined company will be valued at $1.4 billion including debt. The deal is expected to close soon as the first quarter of 2021.

AST, also known as AST SpaceMobile, and New Providence have raised $230 million from a private placement to finance the transaction, the people said. The placement was led by AST’s strategic partners, including Vodafone Group Plc, Japanese online retailer Rakuten Inc., American Tower Corp. and UBS Group AG’s hedge fund arm UBS O’Connor, said the people.

A representative for AST declined to comment. A spokesperson for New Providence couldn’t be reached for comment.

AST, based in Midland, Texas, plans to provide broadband service from space to mobile phones, according to its website. It’s partnering with Vodafone to launch its commercial mobile communications service in 2023, providing for a 4G network, the people said.

New Providence raised $230 million in an initial public offering last year.Have a confidential tip for our reporters?
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Goldman says the SPAC boom will continue and found a way to spot ones that may outperform

The historic SPAC boom in 2020 is more than just a fad, “We expect a high level of SPAC activity will continue into 2021,” David Kostin, Goldman’s head of chief U.S. equity strategy, said in a note. “Increased retail trading activity has also boosted interest in early-stage SPAC targets. SPACs have low opportunity cost for investors when policy rates are near zero.”

HYLN coming back to life any time soon?

GP

DMYD Big Friend Of Mine Wrote

Genius Sports currently has contracts with the NCAA, PGA, NASCAR, FIBA, EPL, Bundesliga, and NBA, among other leagues, to be their sole or primary data provider.

 

  • locked in for multiyear contracts.
  • 220 customers including DraftKings, FanDuel, William Hill, MGM, PointsBet, and Caesars.
  • Important to note: Genius takes 5% of revenues of events they cover from ALL sportsbooks.
  • mature market position and strong financials
  • 30% CAGR over the last several years, with
  • revenue growing 250% from 2016 to 2020 ($42M to $145M).
  • 60% of revenue is recurring due to multi year contracts, and
  • the top 10 customers only account for 30% of revenue, thus lowering flight risk of any particular customer.
  • already EBITDA positive with 10% margins this year, and
  • anticipates $68M in adjusted EBITDA (adjusted to ignore stock based compensation, a non-cash expense) with 29% margins in two years.
  • successfully resigned their contract with the NBA,
  • signed a contract with the NCAA to create a new software: NCAA Livestats

I also think the NCAA presents the biggest upside catalyst for Genius: March Madness. March Madness was cancelled due to the pandemic last year, but betters placed $4.8B in bets on the tournament in 2019. Who has a monopoly on NCAA data? Genius. Who gets a 5% revenue share from ALL sports books for NCAA events? Genius. With the number of states with legalized betting doubling from 2018 to 2020, we could see upwards of $10B spent on March Madness this year.

Along with March Madness, secular tailwinds for sports betting suggest high upside for Genius moving forward. 46 out of 50 states have either passed or presented legislation to legalize sports betting. As states such as NY, CA, TX, and FL legalize betting, revenues streams will swell. Data will become increasingly important in this industry as live updates are constantly moving betting lines for books. With multi-year contracts with half of the US’s professional leagues, Genius serves as an index for the entire industry.

Additionally, with Pfizer’s vaccine approval, there is little to no risk of massive sports cancellations in the future. Genius still grew revenue during Covid’s massive disruption. I imagine that the revenue numbers for 2021 will be fantastic.

Now let’s focus on the stock movement and valuation. Genius is valued as $1.4B, or 7.4x 2021 revlps.enues. For a company with high CAGR and an industry with massive tailwinds, this seems like a fair, or cheap valuation. Note that Genius is trading at a steep discount to lower margin businesses such as sportsbooks Golden Nugget, DraftKings, and Penn. While investors have been chasing the next hot EV IPO, Genius has slowly climbed from $10 to $13. Last summer, a rumored FEAC-SportRadar merger led to FEAC pumping to $15+. SportRadar was worth $2.8B in 2018, presenting 60% upside from Genius’ current price to reach its competitor’s 2018 valuation! DMYD and Genius announced their merger in late October during a market downturn, thus letting it go overlooked. I think this is a sleeper reverse merger that will have a

massive influx of news in Q1, as its merger aligns with the climax of college basketball and the beginning of March Madness. A single Benzinga article pumped the stock by almost 20% last week. Imagine the upside when the broader market realizes they can invest in the data behind the sports betting industry.

Personally, I am long $166k in DMYD stock, and have no intention of selling anytime soon. Always do your own DD, but I hope this post he

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