$SATS - An Asymmetric Trade Going Into SpaceX's IPO

SATS is a $32B market cap holding company with $35B in SpaceX equity, $20B in cash arriving in the coming weeks, and 25% of the float short.

SATS is currently:

·       \~260 million post-split SpaceX shares representing \~2% of SPCX. At $135 IPO price that's $35 billion gross.

·       Poised to receive $20.25B cash payment from AT&T arriving in the coming weeks. Its $24.56B total debt mostly gets wiped out when that cash arrives.

·       Set to have a clean balance sheet and essentially act as a holding company, sitting on a publicly traded SpaceX stake worth more than the entire current market cap.

·       Represented on the S&P500 as of March 23, 2026, creating a floor to its price via passive buying.

The market cap of the stock today is \~$32B. Again, the SpaceX stake alone is worth $35B.

WHY IS IT SO CHEAP / VOLATILE:

1. The debt looks unattractive. EchoStar skipped a $183M interest payment June 1. However, management said that they're holding cash while they wait for the AT&T $20B to close. It's a treasury management decision not a bankruptcy filing. The grace period expires July 1. AT&T is set to close before then.

1. The options market is running the stock. 25.64% short interest. 7.68 days to cover. Call/put ratio 4.8:1. Market makers are delta hedging constantly which creates 4-6% swings on little to no news. The volatility you're seeing is mechanical, not fundamental.

1. Nobody knows what to do with it taxonomically. DCF analysts say it's worth $20 (I believe they're ignoring the SpaceX stake entirely). SOTP analysts say $155-161 (TD Cowen, New Street Research). The spread between bull and bear price targets is $141.

THE SETUP GOING INTO THE IPO:

SpaceX starts trading June 12 at $135. Books closed 2x oversubscribed at $150B of demand. Multiple $10B+ institutional orders. 30% retail allocation. Fixed price IPO.

SATS is currently pricing SpaceX at approximately $155-165 based on NAV math. Private grey market was trading SPCX at $145-160 pre-IPO. If SPCX opens at $155+, the implied SATS NAV is $120-135. If it opens at $175+, squeeze conditions are perfect.

THE SHORT SQUEEZE MATH

25.64% of float short. 7.68 days to cover. S&P 500 inclusion March 2026 means passive funds are buying every single day. Darsana Capital, Carl Icahn, and DLD Asset Management (with a $2.5B position) are all long.

Jackson Peak Capital recently wrote in their Q1 investor letter that their SATS position hurt returns due to "trading activity around the underlying" but they're still holding into the IPO because the NAV discount is too large to ignore. When smart money gets punched in the face and stays in the trade, pay attention.

The squeeze doesn't need retail. It just needs shorts to start covering when the AT&T close removes the last bear catalyst. 7.68 days to cover means if even 20% of shorts decide to exit simultaneously the move is violent.

HIDDEN, ADDED VALUE:

After AT&T closes and SpaceX is public, SATS still has remaining spectrum licenses. Morningstar has a fair value model suggesting Verizon and T-Mobile will eventually need to buy this spectrum. The market is assigning approximately $0 to this optionality right now. It's a free call option on future spectrum auctions sitting on top of the SpaceX stake.

RISKS:

·       AT&T close delayed by tower company litigation or FCC order finality challenge → grace period triggers formal default → SMCI scenario. This is the only thing that kills the trade and probability is \~20%.

·       SpaceX opens at $135 and fades toward Morningstar's $780B fair value bear case → SATS re-rates to $87-100 → Jan calls worthless.

·       Hedge fund may mechanically trim, which may create a ceiling at $125-130.

·       There may be a "sell the news" proxy selloff. Yahoo dropped 2.7% when Alibaba popped 38% on IPO day. BUT - Yahoo had a dying core business and was selling shares at the IPO. SATS is selling nothing IPO day because its shares are locked up.