Why EchoStar Stock Surged Higher Today
Key Points
A growing SpaceX valuation is enriching EchoStar.
EchoStar took an interest in SpaceX from spectrum license sales first announced in September.
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Shares of satellite communications company EchoStar (NASDAQ: SATS) have been rocketing higher this month. The stock continued its ascent today.
After surging as much as 7.4%, EchoStar stock remained higher by 6.8% as of 12:05 p.m. ET. That has helped it soar by over 36% in December alone.
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A SpaceX IPO
Investors are pouring into EchoStar stock as reports surfaced of plans for an initial public offering (IPO) of privately held SpaceX. That's because EchoStar has announced two spectrum licensing sales to SpaceX since September that included payments in SpaceX equity.
EchoStar first announced it would sell the spectrum licenses for its AWS-4 and H-block satellite networks to SpaceX for $17 billion. That included $8.5 billion in SpaceX stock priced at the private company's valuation at the time. Last month, the companies added EchoStar's AWS-3 spectrum in another deal, valued at approximately $2.6 billion in SpaceX stock.
Now reports have surfaced that SpaceX may go public at a valuation of $800 billion next year. SpaceX founder Elon Musk subsequently called those reports "not accurate" in a social media post.
Regardless, investors who believe SpaceX may eventually go public have decided to capitalize on this potential development by owning EchoStar shares.
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Howard Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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