Sometimes, the stock market just doesn't make much sense.
One day after Intelsat (NYSE:I) stock jumped 16% higher on little more than a memo from HR, the stock is giving back its gains again and tumbling 10.3% (as of noon EDT) -- despite Intelsat actually having some positive news to report.
This morning, Intelsat announced that the Ministry of Transport and Communications of Myanmar (that's the country formerly known as Burma, sandwiched between India to the west, Thailand to the east, and China just up north) "has broadened its relationship with Intelsat to accelerate the deployment of the country's wireless communications infrastructure in Myanmar."
"The MOTC," explains Intelsat "will utilize services on Intelsat 39, a Ku-and-C-band satellite which is scheduled to replace Intelsat 902... under the new multi-year, multi-transponder agreement."
Financial terms were not disclosed, but it seems reasonable to assume that expanded usage of Intelsat's services will lead to greater revenue (and profits) for Intelsat. Probably not a big increase, as the entire Asia-Pacific region accounts for barely 9% of Intelsat's global revenue, according to data from S&P Global Market Intelligence -- but at least some.
That's why investors' decision to sell off Intelsat's stock in the wake of the news seems to make little sense.
I won't say "in response to the news," because to be honest at this point I don't think investors are paying much attention to the news at all. Instead, I believe investors are treating Intelsat like some kind of cosmic yo-yo momentum stock -- piling in when the stock appears to be going up, and piling right back out at the first sign of a descent.
Good or bad news, it has little effect on Intelsat stock. For the foreseeable future, I expect things to resemble the recent past -- and for Intelsat to be treated as a momentum stock, no more and no less.