What happened
Shares of ex-SPAC Israeli satellite communications-equipment maker SatixFy Communications (SATX +0.00%) exploded higher on Monday morning, rising 9.5% through 11:35 a.m. ET after announcing a deal to supply its chipsets to Indian wireless telecom start-up Astrome.
NYSEMKT: SATX
Key Data Points
So what
Astrome's business aims to provide 5G "gigabit speed wireless solutions" to telcos and other providers through "a multi-gigabit wireless X-haul radio," according to a press release, and will use SatixFy's PRIME 1 beamformer chip to power its 5G GigaMesh product.
Although originally developed for use in satellite antennas, SatixFy says its PRIME 1 beamformer can also be used to distribute 5G capability from one output point to multiple receivers, giving the company a way to enter what it calls a $15.5 billion market for 5G backhaul equipment. And as SatixFy points out, this is a completely new revenue stream for the company, marking its first entry into the terrestrial 5G market.
It's this novelty of the business for SatixFy -- and its size -- that are presumably sending its shares rocketing higher this morning.
Now what
And yet, it's not entirely clear whether the move in share price is justified. For one thing, neither SatixFy nor Astrome said anything about the size of the order that Astrome will be placing for its chips, or indicated whether this is an experimental transaction or a longer-term supply deal.
For another, Astrome itself is something of an unknown -- not a major player yet -- and indeed describes itself as a "start-up." This suggests that even if Astrome wanted to buy a lot of chips from SatixFy, it may not have the financial heft to do so -- or a market big enough to make use of very many chips.
Long story short, lacking more data on precisely how big of a deal this is for SatixFy (in dollars and cents -- and revenue and profit), I cannot really say that today's share price move is justified. Unprofitable, burning cash, and with more debt than cash on its balance sheet, SatixFy stock remains a risky bet.
