Editor's note: This article has been corrected to note that EchoStar's deals to gain SpaceX stock are still awaiting regulatory approval.
2026 could be a massive year for initial public offerings, with AI leaders OpenAI and Anthropic considering public market debuts, along with Elon Musk's SpaceX.
SpaceX has been in the news a lot recently. A Feb. 2 blog post from Musk announced a private markets merger between SpaceX and xAI, Musk's AI company, along with Musk's description of his intention to launch AI data centers in space.
The merger was reportedly made at a valuation of $1.25 trillion, with SpaceX valued at $1 trillion and xAI valued at $250 billion. Meanwhile, news reports claim the company is aiming for a $1.5 trillion valuation for its upcoming IPO.
Investors may be excited to jump on the SpaceX-xAI train once shares hit the market. But as it turns out, you don't have to wait for the IPO to buy into this game-changing company.
Image source: Getty Images.
Want SpaceX today? Buy EchoStar
While some diversified exchange-traded funds currently have exposure to SpaceX, the publicly traded stock EchoStar (SATS 4.20%) is the best way to concentrate a bet on SpaceX's success.
One year ago, EchoStar was a mid-cap telecom company that appeared to be in trouble. The company owned the Dish TV and Sling TV satellite cable companies, which are in a declining business, along with the Boost Mobile wireless company, which is growing, but unprofitable and relatively tiny. EchoStar also offers satellite broadband under its Hughes brand, but that, too, appears to be a small and declining business.
However, things changed rapidly for EchoStar when it decided -- possibly under pressure from the Trump administration -- to sell the valuable wireless spectrum assets it had accumulated over many years.
Investors either weren't expecting EchoStar to sell these assets or didn't realize their value, because these sales completely transformed the company, and the stock has subsequently more than quadrupled. In August, EchoStar agreed to sell AT&T (T +0.85%) $22.65 billion worth of spectrum, and followed that up with a $19 billion sale of spectrum to SpaceX, of which $8.5 billion of the sale would come in the form of SpaceX stock. EchoStar followed that up with another smaller $2.6 billion spectrum sale to SpaceX, for which it received the entire $2.6 billion in SpaceX stock.
These sales are subject to regulatory approval, but I expect that to be granted.
Although EchoStar has agreements to sell most of its spectrum, which it plans to license for its current satellite and wireless businesses, EchoStar still has a bit more spectrum to sell. While it's difficult to ascribe an exact value to that spectrum, some analysts believe bidders will be "aggressive" in paying up for these scarce assets.
NASDAQ: SATS
Key Data Points
How much of EchoStar's value is tied to SpaceX?
When these transactions close -- if approval is granted -- EchoStar will have $24.1 billion in cash against $13.4 billion in debt, with another $2 billion in interest coverage coming from SpaceX as part of its $19 billion deal. So, one might say that EchoStar has basically $12.7 billion in net cash. On top of that, EchoStar also has additional spectrum of unknown value.
Then, of course, EchoStar will acquire $11.1 billion in SpaceX stock at some unknown valuation, assuming everything is approved. But investors can still make an educated guess as to what those shares are worth today.
Just before and just after these transactions, the financial media reported SpaceX's valuation at $400 billion in July and then $800 billion late last year. In July, The Wall Street Journal reported on a potential SpaceX employee stock sale at a valuation of around $400 billion. But in early December, the WSJ also reported SpaceX's CFO had told investors the company was looking to raise money in a funding round valued at $800 billion.
EchoStar's two SpaceX-related announcements occurred between these dates, so, for the sake of argument, let's say EchoStar acquired 2% of SpaceX at a $550 billion valuation. Add in the 20% dilution from the xAI merger, and EchoStar would own about 1.6% of the combined company, excluding any further dilution from subsequent funding rounds. 1.6% of SpaceX's recent $1.25 trillion valuation would make EchoStar's potential stake worth $20 billion.
EchoStar's market cap is about $32 billion today -- almost exactly equal to that $20 billion plus EchoStar's net cash.
Most of EchoStar appears to be SpaceX, and it could be at a discounted price
Assuming these estimates are in the ballpark of correct -- and that regulatory approvals are granted to allow the spectrum sales -- it appears that SpaceX accounts for roughly 62.5% of EchoStar's value at current prices. Meanwhile, EchoStar investors would also be getting $12.7 billion in cash, along with some additional spectrum and the satellite TV, broadband, and mobile wireless businesses, valued essentially at nothing.
In the third quarter, EchoStar's leadership formed EchoStar Capital, which will invest EchoStar's net cash into technology, media, and telecom businesses that may or may not be related to its core telecom businesses.
Assuming EchoStar's managers can create value from all that cash, not only would buying EchoStar stock today give one expected exposure to SpaceX, but EchoStar investors may also be getting a big discount on the sum of EchoStar's parts -- that is, provided SpaceX lives up to its lofty trillion-plus valuation in the future.
