EchoStar (SATS) this week has seen buyers in July $29 and $30 calls for size trades amounting to over $2M call premium. SATS had 1500 December $35 calls sell to open for $4.55 in October that also remain in open interest. SATS has seen shares more than double since late 2023 and trading at the highest level since 2021.

SATS provides networking technologies and services worldwide in four segments: Pay-TV, Retail Wireless, 5G Network Deployment, Broadband and Satellite Services. Dish, Sling and Boost Mobile are familiar brands.

The monthly chart shows the long downtrend starting to inflect positive and shares cleared a major volume shelf and VPOC this month. SATS also cleared AVWAP off the 2017 highs.

SATS has a $7.65B market cap and trades 33X EBITDA and 2.3X EV/Sales with short interest rising to 5.5% of the float from 4% in early December. SATS growth has been challenged and positioning is likely more event-driven.

SATS has $6B cash and the DirecTV merger was called off. The bull case here is for the sale of some or all of its spectrum holdings. Management and controlling shareholder Charles Ergen has instead continued to pursue a strategy to build a business around its spectrum, despite the substantial FCF burn. SATS is essentially a call option itself, a spectrum sale could realize a share price over $50 and likely why we are seeing July calls position for upside.

UBS recently noted that efforts to scale the wireless business and secular pressures facing Pay TV are likely to keep free cash flow losses elevated in 2025 but recent financing transactions provide EchoStar with the runway to pursue its business model while a shortage of new spectrum from the government and new regulatory oversight bring the potential monetization and valuation of EchoStar’s wireless holdings back into focus. MSCO says the odds remain long that EchoStar can scale Boost into a profitable, scaled wireless carrier in the US.  A successful Boost has the potential to be very disruptive to a US wireless industry.