Interesting Stocks

[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]

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.

[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.

[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]

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.