Interesting Stocks

[jiesen]

yeah, that's the deal for additional shares they get next year. they also own shares from previous spectrum sales that will become available to sell next month.

[BlueWolf]

Yes, they can only sell bits of SPCX before 2027, as most of it's locked up until after Musk gets to sell his next year, otherwise yes it should have traded in lockstep with SPCX (that was my original bet, that when SPCX hit 200, so would ECHO, and I'd have been out with a 60% gain at least). Unfortunately due to the lockup of the shares, ECHO (and I) need to wait until later after all the shares become available to trade.

The deal has received regulatory approval but I don’t believe it will close until the second half of 2027. Technically, that would mean that ECHO doesn’t actually hold the shares yet.

[jiesen]

So that kind of works both ways, too. As it didn't spike dramatically when the IPO launched, it's not sinking so much either, as the SPCX shares really only become relevant later, when the actual price they can get for them will be clearer. The market is probably discounting ECHO's holdings by at least 50% now, in case SPCX continues to drop from $120 down to $60 or something like that next year.

[jiesen]

Yes, they can only sell bits of SPCX before 2027, as most of it's locked up until after Musk gets to sell his next year, otherwise yes it should have traded in lockstep with SPCX (that was my original bet, that when SPCX hit 200, so would ECHO, and I'd have been out with a 60% gain at least). Unfortunately due to the lockup of the shares, ECHO (and I) need to wait until later after all the shares become available to trade.

[BlueWolf]

Something puzzles me. If your thesis about ECHO’s value being almost completely tied to the value of SPCX, then why isn’t ECHO plunging at the same rate as SPCX? It’s kind of odd since the value of the SPCX shares they hold is greater than their entire market cap. Is this because the SPCX deal is not yet finalized (it won’t be until 2027 from what I’ve read)?

[jiesen]

No, not at all. The shares of SPCX that ECHO owns is worth more than the market cap of the company, so after you account for that value, you are getting the entire Echostar business for free (if it's worth anything, then that's a bonus). Could be that SPCX isn't worth much either, but that's the risk you take buying either of these.

But to the first point, when I bought ECHO it was prior to the SPCX IPO, when I wasn't assured a $135 entry. Assuming it opens at 150 and continues to go up from there, ECHO would have been a good way to get in at a good price before the IPO launched. Now that the SPCX shares are cheap, that turns out to not be the better deal, but you only know that in hindsight. Yes, I could sell ECHO now and buy cheap SPCX shares, but I still think ECHO is the better deal of the two, and don't want to switch lanes midstream...

[BlueWolf]

I see your connection now, but why not just buy SPCX stock directly instead buying shares of a proxy that was basically a failed business before obtaining the SPCX shares during the sale of part of its wireless spectrum? Aren’t you basically diluting the value of the SPCX shares with the rest of ECHO?

[jiesen]

I had the idea that when SPCX IPO'd that ECHO would get a big bounce on the IPO along with SPCX, but that didn't happen.... So I'm waiting for the eventual realization of value in the SPCX business to get my money from this ECHO trade.

[jiesen]

If you truly believe in a stock for the long term, you have to be ready to live with some draw down. Not sure I see the connection between SPCX and ECHO, though. SPCX’s business is centered in three areas: Starlink, launch services, and xAI. You could make a case that ECHO is somewhat competitive with Starlink in the broadband arena, although I think they serve different markets, but that’s it. What makes these two stocks so tightly linked in your mind?

The fact that ECHO is holding (a locked up) chunk of SPCX stock, equal to more than its market cap. They sold spectrum to SPCX last year for about 260M shares of SPCX, which they can sell next year. That's a 3% share of a $2T company (assuming SPCX goes back up next year).

[BlueWolf]

Nope, I am holding ECHO instead, which I'll hold for a year or two, when I expect I'll see a double or triple from here. Pretty much locked in on that play, and not adding risk with SPCX on top of it. Only having some buyer's remorse now, seeing that IPO go from over 200 to under 130 now, taking ECHO right on down with it.

If you truly believe in a stock for the long term, you have to be ready to live with some draw down. Not sure I see the connection between SPCX and ECHO, though. SPCX’s business is centered in three areas: Starlink, launch services, and xAI. You could make a case that ECHO is somewhat competitive with Starlink in the broadband arena, although I think they serve different markets, but that’s it. What makes these two stocks so tightly linked in your mind?

[jiesen]

Nope, I am holding ECHO instead, which I'll hold for a year or two, when I expect I'll see a double or triple from here. Pretty much locked in on that play, and not adding risk with SPCX on top of it. Only having some buyer's remorse now, seeing that IPO go from over 200 to under 130 now, taking ECHO right on down with it.

[BlueWolf]

Now SPCX had gone from 195 to 125 in one month... it's got some real momentum now, in the down direction! Where will this bottom, anyone have a crystal ball to give a target on that?

Nobody has any crystal balls here. You seem pretty infatuated with this stock so the only real question is, are you buying here?

[jiesen]

Now SPCX had gone from 195 to 125 in one month... it's got some real momentum now, in the down direction! Where will this bottom, anyone have a crystal ball to give a target on that?

[jiesen]

And now SPCX is below the 135 IPO price, so pretty much everyone holding shares they bought at the IPO or later is under water. I think we're going to see a lot of selling in SPCX right about now.... might be a good time to pick some up when the bottom hits, if you like timing bottoms! SKHY is going down right along with it, too...

[jiesen]

Did anyone pick up any SKHYV today?

Nope, but that one (now SKHY) would have been a good one to pick up yesterday at 152.... it's over 188 right now!

Also, if you missed the SPCX IPO you can get as many shares as you want now for 138, only $3 more than the IPO price...