EchoStar and the Curious Case of Orbital Finance

by

The year 2026 promises a glut of initial public offerings, a vulgar display of optimism considering the general state of affairs. OpenAI and Anthropic are poised to join the fray, alongside the ever-ambitious SpaceX. One might almost suspect a collective delusion. But then, the financial world has always operated on a foundation of hopeful folly.

SpaceX, of late, has been much in the news. Mr. Musk, a figure of undeniable energy and questionable judgment, recently announced a merger between his space venture and xAI, his artificial intelligence project. The intention, it appears, is to establish data centres in the heavens. One pictures celestial servers humming away, processing the mundane anxieties of terrestrial users. The sheer extravagance of it all is rather breathtaking.

The combined entity is valued, according to the usual optimistic estimates, at $1.25 trillion. SpaceX itself accounts for the lion’s share, a cool trillion dollars, with xAI contributing a mere quarter of that sum. A forthcoming IPO, naturally, aims for an even more impressive $1.5 trillion valuation. The markets, it seems, are perpetually eager to believe in miracles, or at least in exceptionally well-marketed illusions.

Investors, understandably, are keen to participate in this latest episode of speculative mania. But one need not wait for the inevitable frenzy of the IPO. A more discreet, and perhaps more sensible, route to exposure exists.

A Satellite’s Shadow: The Curious Case of EchoStar

While various exchange-traded funds dabble in SpaceX, offering a fractional taste of the future, the truly committed speculator might consider EchoStar. A company, until recently, of decidedly provincial origins. One might have described it as a purveyor of dwindling entertainments – satellite television, a quaint relic of a pre-streaming age – and a struggling mobile operation. A picture of terminal decline, in short.

However, EchoStar possessed a secret weapon: a substantial portfolio of wireless spectrum. Acquired over years, and seemingly forgotten, these frequencies proved surprisingly valuable. A sale, reportedly encouraged by the previous administration, transformed the company’s fortunes with startling rapidity.

Investors, it seems, had either underestimated the value of this spectrum or simply failed to notice it altogether. The result has been a quadrupling of the share price, a phenomenon that would be almost comical if it weren’t happening with such serious financial consequences. In August, EchoStar secured a deal with AT&T for $22.65 billion. This was followed by an even more audacious transaction with SpaceX itself, involving $19 billion in spectrum, a significant portion of which was settled in SpaceX stock. Another $2.6 billion followed, again in shares. A truly remarkable sequence of events.

EchoStar has now disposed of most of its spectrum, retaining enough to license its existing businesses. Analysts, naturally, are eager to ascribe a value to these remaining frequencies, suggesting that aggressive bidding may be forthcoming. One suspects that the usual suspects will be lining up to participate in this latest round of financial gamesmanship.

Loading widget...

Calculating the Celestial Stake

As these transactions conclude, EchoStar will boast $24.1 billion in cash, offset by $13.4 billion in debt. Furthermore, SpaceX is expected to provide an additional $2 billion in interest coverage. One might therefore conclude that EchoStar possesses a net cash position of roughly $12.7 billion. And, of course, there remains the lingering question of the value of the remaining spectrum.

EchoStar also acquired $11.1 billion in SpaceX stock, the precise valuation of which remains somewhat elusive. The financial media, in recent months, has offered a range of estimates, from $400 billion to $800 billion. In July, the Wall Street Journal reported on a potential employee stock sale at the lower end of that spectrum. However, in December, the same publication suggested that SpaceX was seeking funding at a significantly higher valuation.

EchoStar’s transactions occurred between these dates. Let us, for the sake of argument, assume that the company acquired 2% of SpaceX at a valuation of $550 billion. Adding in the 20% dilution resulting from the xAI merger, EchoStar would effectively own 1.6% of the combined entity. Applying this to SpaceX’s recent $1.25 trillion valuation yields a stake worth approximately $20 billion.

EchoStar’s current market capitalization stands at around $32 billion – almost exactly equal to that $20 billion, plus the company’s net cash position. A curious coincidence, wouldn’t you agree?

A Discounted Glimpse of the Future

If these estimates are remotely accurate, SpaceX accounts for roughly 62.5% of EchoStar’s value. Investors are also acquiring $12.7 billion in cash, along with the remnants of EchoStar’s satellite, broadband, and mobile businesses – valued, for all intents and purposes, at nothing. A rather generous assessment, perhaps.

EchoStar’s leadership has recently established EchoStar Capital, a vehicle for investing the company’s net cash in technology, media, and telecommunications businesses. Whether these investments will prove fruitful remains to be seen. However, acquiring EchoStar stock today offers exposure to SpaceX, and potentially a discount on the sum of its parts – provided, of course, that SpaceX lives up to its lofty valuation. A considerable gamble, naturally, but then, the financial world has always thrived on improbable hopes.

Read More

2026-02-23 16:41