EchoStar Stock Is the Best Way to Play a SpaceX IPO

An Ariane-5 rocket blasts off in 2012 carrying an EchoStar communications satellite. An EchoStar-SpaceX deal for wireless spectrum in September has sent EchoStar shares to the moon. (CNES/AFP via Getty Images)

Key Points

• EchoStar’s stock was up 11.2% on Wednesday after a report of a potential 2026 IPO for SpaceX, in which EchoStar holds $11.1 billion in stock.
• EchoStar’s stock performance is linked to SpaceX’s valuation due to a deal where EchoStar sold spectrum licenses for SpaceX stock.
• Analysts have increased EchoStar’s average target price by $43 to $93 since September, driven by SpaceX’s rising valuation.

Elon Musk’s rocket company SpaceX is the most valuable aerospace & defense company on this planet. It’s growing fast, but privately held, putting it out of reach for most investors.

There is a publicly traded stock that has become inextricably tied to SpaceX’s valuation—satellite communications company EchoStar .

Shares of EchoStar jumped $10 in late trading on Tuesday, closing at $93.54, up 6%, after Bloomberg reported that Elon Musk’s space technology company SpaceX might be headed for a 2026 initial public offering. SpaceX didn’t respond to a request for comment.

Shares rose another 11.2% to $103.98, while the S&P 500 and Dow Jones Industrial Average rose 0.7% and 1.1%, respectively.

EchoStar stock tracks SpaceX’s valuation because, in September, EchoStar announced a deal to sell its AWS-4 and H-block spectrum licenses to SpaceX. Spectrum—the frequencies over which wireless calls travel—is a finite resource that every mobile company needs.

As part of the deal, EchoStar got $8.5 billion in SpaceX stock. At the time of the deal, SpaceX was valued at about $400 billion. EchoStar got another $2.6 billion in SpaceX stock by selling more spectrum in November.

EchoStar stock traded from the high $60 mark to the high $70 level following the SpaceX deal. It has kept rising. EchoStar started Tuesday at around $88 a share.

Coming into Monday trading, EchoStar stock was up 20% for the month of December. SpaceX was responsible for that jump, too. On Friday, SpaceX was reported to be seeking an $800 billion valuation. Musk seemed to play down the possibility, saying in part on X that SpaceX is already cash-flow positive, meaning it doesn’t have a pressing need to raise cash by selling stock.

Still, the possibility of a new private market valuation or IPO is causing Wall Street to re-evaluate EchoStar’s outlook. On Tuesday, New Street Research analyst David Barden took his price target for EchoStar stock to $125 from $100, citing the SpaceX private-market valuation report as well as changes in spectrum deployments that could make commercially available spectrum, which EchoStar possesses, more valuable.

A $25 price target bump adds about $9 billion in market value, based on EchoStar’s roughly 353 million fully diluted shares outstanding.

Other analysts besides Barden have become more positive, too. Since the SpaceX deal in September, the average analyst target price for EchoStar stock has moved up about $43, from $50 to $93. Through Tuesday trading, however, EchoStar stock is up only $32 over the same span.

There are $11 missing. Now, there is no reason that Wall Street price targets and stock prices need to line up exactly on any given day. Still, it’s one way to understand recent trading in EchoStar stock.

Another way to look at what’s happened is to consider changes in the total value of EchoStar, including debt. After the SpaceX deal, the market valued EchoStar at about $40 billion, excluding the value of its newly acquired SpaceX stock. Coming into Wednesday trading, EchoStar’s value ex-SpaceX, at an $800 billion valuation, is closer to $31 billion.

The decline feels a little odd, but the situation is unique.

Write to Al Root at allen.root@dowjones.com