Echostar is one of the world's leading satellite and broadband Internet service providers. Analysts expect at least 20% CAGR growth of the satellite internet services industry through 2030. Can Echostar still provide exposure to this forward-looking market sector despite a weaker growth period?
- The company owns all of the shares in Hughes Network Systems, which recently signed a contract with OneWeb, one of the primary communications system providers to the U.S. Department of Defense. The growing participation of the Space Force in the U.S. military could increase demand for Echostar's services and be one of the catalysts behind the growth of private 'new space' companies that are increasingly involved in civilian and military space projects;
- Americans remain 'concerned' about the development of China's Chang-e space program and are running the Artemis program whose goal is to send astronauts to the Moon. This time, the U.S. plans to stay on the Moon for a longer period of time and thoroughly investigate the possibilities of its exploration from the resource and strategic side, with could have positive impact private space manufacturers and other companies from this sector;
- This autumn, the company plans to launch the Jupiter-3 satellite, which has been postponed since 2017, allowing it to scale its services and meet the expectations of long-term shareholders. To date, Echostar has been unable to get the facility into orbit on time due to problems caused by COVID and complications in the supply chains of Maxar Technologies, which supplies and constructs the product. The postponement launch date has caused uncertainty and pushed the stock price lower. The company currently has 10 smaller satellites in orbit and provides Internet to nearly 1.5 million private and public users in the Americas (HughesNet);
- At first satellite internet services will be provided to very large contractors with large budgets (government agencies, NASA etc.), wealthier individuals and communities in countries without a developed terrestrial internet infrastructure. It is also estimated that the cost of installing satellite Internet will significantly decrease over time;
- As more objects are installed in space, the need for satellite Internet connectivity will increase;
- Hamid Akhavan, former chairman of the board at Deutsche Telekom and CEO of T-Mobile, assumed the CEO position at Echostar on March 31, 2022. Akhavan also gained experience as a director at Siemens and has been involved in the space industry for years. He began his career as a telemetry engineer at NASA (Jet Propulsion Laboratories) and Bell Research (now Textron), where he worked on AIN (Advanced Intelligent Network) technology. The change could mean a breath of fresh air for the company's business model;
- The company's primary competition is Elon Musk-owned SpaceX, which has incomparably more capital and capabilities than Echostar. Analysts expect, however, that the market for satellite services is large enough to allow several players to operate in it simultaneously;
- The company has definitely not been one of the 'fashionable stocks' lately due to problems with financing, unstable revenues, constantly postponed date of launch of the Jupiter-3 satellite, and specific industry. The company's situation may not improve significantly until the successful launch of the aforementioned satellite which is strategic to its future.
Echostar (SATS.US), D1 interval. The company's stock has been moving south since 2017 and has not yet recovered from the losses caused by the outbreak of the coronavirus pandemic. However, one can see that buyers become more active around the $20.00 level and manage to halt declines. At the same time, the line of least resistance runs downwards, so as long as the stock does not leave the downward channel the main sentiment remains bearish. Source: xStation5
