Please ensure Javascript is enabled for purposes of website accessibility

How Intelsat Shares Gained 13.2% in February

By Anders Bylund - Mar 10, 2020 at 12:10PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The road to this generous gain was far from smooth, and the stock is still down by nearly 90% over the last 52 weeks.

What happened

Shares of Intelsat (INTE.Q) rose 13.2% in February 2020, according to data from S&P Global Market Intelligence. The communications satellite operator rode quite a roller coaster last month, jumping and falling by turns.

So what

Intelsat's February gains started when the Federal Communications Commission (FCC) published details on the upcoming auction of C-band radio spectrum licenses. The company could pocket as much as $4.85 billion under this plan in return for selling some of its C-band licenses. That 4% jump was followed by a sharper drop as analyst firm Raymond James argued that Intelsat's stock was "fairly valued" and that the spectrum auction windfall looks smaller than expected.

On Feb. 18, noted investment firm Appaloosa Management took a 7% stake in Intelsat and sent a letter to the company discussing the firm's "dissatisfaction" with the C-band auction. Shares surged 18% higher in a single day as investors smelled a richer payout.

A solid fourth-quarter report continued the positive trend, and management took that opportunity to confirm that the auction terms are under negotiation. Intelsat is looking for better terms and a larger payout. Investors embraced that idea, driving share prices 8% higher that day.

The last big move of the month came on Feb. 28. Intelsat's stock fell 12% as the FCC voted to limit the C-band auction's payout to satellite companies. In other words, the company appears to be stuck with that $4.85 billion maximum after all.

A satellite floats high above the earth.

Image source: Getty Images.

Now what

It's unclear where Intelsat will go from here. The company sure could use a larger auction haul in order to pay down its massive debt load of more than $14 billion. Legal action against the FCC, official complaints, and various lobbying efforts might be on the table, but Intelsat can't be sure any of these alternatives will pay off.

Intelsat's stock has now fallen 87% lower in 52 weeks as the C-band drama unfolded. You can find this stock in Wall Street's bargain bin, trading at a mere 15 times free cash flow, or 0.2 times trailing sales. The big day-to-day swings in Intelsat's share prices are typical for volatile small-cap companies, and the huge debt load hanging over the company's head isn't exactly a calming factor either. You should expect this stock to stay unpredictable at least until the C-band auction has been completed.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Intelsat S.A. Stock Quote
Intelsat S.A.
INTE.Q

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
319%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.