What happened

Intelsat (NYSE:I) stock dropped nearly 15% in early trading Thursday before recovering to about an 8.9% loss as of 1 p.m. EST.

The reason: Shareholders controlling as much as 8.4% of Intelsat stock are dumping their shares.

Satellite transmitting to Earth

"Hey, Houston! Did you hear? Somebody's selling Intelsat stock -- a lot of it!" Image source: Getty Images.

So what

Intelsat stock peaked at more than $34 a share last month, capping a yearlong rise that's seen the value of this satellite communications operator increase more than eightfold. But no sooner had Intelsat hit that peak than it got caught up in a wave of selling, and lost 30% of its value in a matter of weeks.

The stock has recovered a bit since then, but that doesn't mean that all of Intelsat's shareholders are willing to sit through a repeat of what happened last month, should Mr. Market hiccup once again. Today, the company announced that "certain of the company's shareholders" are looking to cash out at least 10 million shares -- and potentially as many as 11.5 million if they can find buyers for them.

Now what

When companies sell shares of their own stock, that's not necessarily a bad thing. They may sell stock for any number of reasons, not least a desire to raise cash to pay down debt -- and Intelsat still carries $14.5 billion in debt.

Problem is, this is not a case of a company selling its own shares to raise cash. These are Intelsat shareholders who've made big money betting on the company, and who now fear losing those profits should Intelsat stock slide again. So they are deciding to cash out, take their money, and run.

Smaller shareholders who've booked smaller paper profits on this stock can be forgiven for wondering: If the smart money is cashing out, maybe I should consider selling Intelsat stock, too.

Rich 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.