Why EchoStar (SATS) Stock Is Up Today

What Happened?

Shares of satellite communications company EchoStar (NASDAQGS:SATS) jumped 13.6% in the morning session after the stock extended its positive momentum as the company announced a $23 billion deal to sell some of its wireless spectrum licenses to AT&T. 

The all-cash transaction provides AT&T with valuable mid- and low-band spectrum to enhance its 5G and broadband services across the U.S. For EchoStar, the owner of Dish Network and Sling TV, this deal provides a significant financial boost, clearing up uncertainty that had weighed on the company. The proceeds will allow EchoStar to pay down a large portion of its debt and help resolve an FCC investigation that had raised concerns about its financial stability. 

In response to the news, TD Cowen significantly raised its price target on the stock to $67 from $28, citing the company's improved financial position and the newly unlocked value of its remaining spectrum assets.

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What Is The Market Telling Us

EchoStar’s shares are extremely volatile and have had 36 moves greater than 5% over the last year. But moves this big are rare even for EchoStar and indicate this news significantly impacted the market’s perception of the business.

The previous big move we wrote about was 1 day ago when the stock gained 78.2% on the news that the company announced a definitive agreement to sell certain spectrum licenses to AT&T for approximately $23 billion. The all-cash transaction involves 50 MHz of EchoStar's nationwide 3.45 GHz and 600 MHz spectrum licenses. This move provides a significant capital injection for the company, which plans to use the proceeds to retire debt and fund its operations and growth. The deal is also part of EchoStar's ongoing efforts to resolve inquiries from the Federal Communications Commission (FCC). In addition to the sale, the two companies amended their network services agreement, establishing a hybrid mobile network operator (MNO) relationship. This arrangement allows EchoStar’s Boost Mobile wireless service to continue operating on AT&T’s network, solidifying their strategic partnership.

EchoStar is up 153% since the beginning of the year, and at $57.59 per share, has set a new 52-week high. Investors who bought $1,000 worth of EchoStar’s shares 5 years ago would now be looking at an investment worth $1,945.

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