EchoStar Corp (NASDAQ: SATS) opened a whopping 45% up on Monday following reports that President Trump has stepped in to resolve a conflict between the satellite communication company and the FCC.
According to Bloomberg, the US President has urged EchoStar to consider a deal with the regulator that could potentially end the feud over its wireless spectrum licenses.
Despite today’s surge, EchoStar is down over 20% versus its year-to-date high in late February.
Why have EchoStar and FCC been in a conflict?
In May, FCC announced an investigation to determine whether EchoStar is in breach of regulatory obligations pertaining to its wireless and satellite spectrum licenses.
Reports last week even suggested that Brendan Carr, the agency’s Chairman, has told EchoStar that it must unload some of its spectrum licenses, or risk losing them, due to concerns of “spectrum warehousing.”
Investors had been concerned about SATS shares over the past month since EchoStar, at the time, said FCC’s scrutiny was disabling it to proceed with the planned rollout of a 5G network.
In fact, the aforementioned regulatory actions could even lead to bankruptcy in the second half of 2025, its management warned in early June.
Following today’s rally, EchoStar stock is at least going for a higher price than at the start of 2025.
President Trump’s view on EchoStar stock
President Donald Trump has intervened to resolve the conflict between EchoStar and the FCC, largely to protect what he described as “vital American spectrum assets”.
He appears interested in helping SATS avoid bankruptcy, also because the Englewood-based firm is seen as strategically important for the US 5G ambitions.
According to the US President, who’s known for his nationalist stance on tech infrastructure, the company’s insolvency could prove disturbing for the business community and is, therefore, a threat to the nation’s leadership in next-gen wireless networks.
Despite ongoing challenges, Wall Street sees upside in EchoStar stock to $27.33 on average, which translates to another 11% upside from current levels.
SATS’ revenue declined 3.0% in its fiscal Q1
Simply put, President Trump is attempting to broker a compromise that would allow EchoStar to restructure without losing critical spectrum since SATS spectrum assets are seen as valuable for national security as well as commercial competitiveness.
Trump described this effort as protecting “America’s digital future” from what he characterised as bureaucratic overreach.
The news arrives shortly after EchoStar reported its financials for the first quarter. The satellite communications company added more than 150,000 subscribers and improved churn by 7.2% on a year-over-year basis in Q1.
Still, SATS revenue came in down some 3% on a year-on-year basis in its latest reported quarter. Note that EchoStar stock does not currently pay a dividend to attract income investors.
The post Why did President Trump step in to help EchoStar stock? appeared first on Invezz