Motley Fool: Why Intelsat's Stock Soared 531% Higher in 2018


What happened

Shares of Intelsat (NYSE:I) gained 531% in 2018, according to data from S&P Global Market Intelligence. The Luxembourg-based provider of satellite communications services has been fighting off its debtholders by selling more stock while waiting for approval of its crucial next-generation 5G networks.

So what

Last year’s gains were more of a turnaround effort than an organic win. Intelsat is hoping to launch an innovative combination of satellite- and tower-based communications networks in the near future, but regulatory approvals have been few and far between. Meanwhile, the company is reporting negative earnings and cash flows. So when Intelsat started announcing a steady stream of new customer contracts in the spring of 2018, stock prices skyrocketed on every positive tidbit of news.

A satellite orbiting over city lights on an otherwise dark earth.

Image source: Getty Images.

Now what

Make no mistake: Intelsat needs to launch its 5G networks in order to stay in business. Otherwise, creditors are sure to rip the debt-laden company apart in their efforts to extract some value from their debt agreements. That’s the deal when an unprofitable company with promising but unproven future prospects comes with a $3.2 billion market cap but $14 billion in net debt.




I’m quite content to watch this volatile ticker from the sidelines until those much-needed regulatory approvals actually show up.

Anders Bylund 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.

Let’s block ads! (Why?)


Source: fool.com

Source






*Information contained on this page is provided by public rss feeds. Manager Mint Media makes no warranties or representations in connection therewith.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.