What happened

Shares of Intelsat (NYSE:I) have taken investors on a roller-coaster ride today.

Last night, reports began to filter out about Intelsat hiring lawyers from Kirkland & Ellis LLP to begin preparing for a bankruptcy filing. According to Bloomberg, "a person close to the company" said that unless the FCC decides to be more generous and allow Intelsat to keep more of the proceeds of the upcoming auction of its "C-band" spectrum for others to use for 5G internet, then Intelsat won't have the cash to service its debt load -- and will go bankrupt.

Intelsat stock plummeted 13.4% in early trading today as investors digested that news.

That story changed abruptly as the morning wore on, however, with shares suddenly reversing course and soaring over 60%!

Satellite beaming transmission to Earth

Image source: Getty Images.

So what

What happened? Bloomberg reported that unnamed sources are saying that the FCC and Intelsat have reached a deal to compensate the company for its spectrum, and will reveal those exact terms later today. Investors are apparently optimistic that the terms of the agreement will be in Intelsat's favor.   

Now what

Intelsat shares are swinging violently with each change in this developing story; as of 12:14 p.m. EST, the stock is up 25.8%. Where it ultimately lands is anybody's guess. But if I had to guess, my guess would be this:

Intelsat has paid for this spectrum. If Congress and the FCC want it back, and want to resell it for a lot more money, then they will have to compensate Intelsat fairly. Otherwise, it will be time to call the lawyers and head to court. Because no one wants that, I think the government will ultimately be forced to pay up -- and Intelsat stock will rise.