Could SpaceX Go Public Through a Merger With EchoStar (SATS)?

Instead of going public the usual way through an IPO, space firm SpaceX (PC:SPXEX) could merge with EchoStar (SATS), a company that offers wireless phone and satellite TV services, among others. According to Barron’s, it’s an unusual idea, but the two companies already have business ties. More specifically, SpaceX bought wireless spectrum from EchoStar in 2023 in two separate deals worth $20 billion. About $11 billion of that was paid in SpaceX stock, thereby giving EchoStar over 2% ownership in SpaceX. That ownership has made EchoStar one of the best public ways to invest in SpaceX.

Interestingly, a merger could speed up the process of going public compared to a regular IPO. It would also allow SpaceX to tell investors more about its future plans, which is important because its high valuation depends on long-term growth. In addition, experts say that a merger like this could be done tax-free and work like a reverse acquisition, where SpaceX would take over EchoStar but still use the SpaceX name.

It is also worth noting that EchoStar’s chairman, Charlie Ergen, has worked with SpaceX for years and called it the “best vendor” in space. Meanwhile, EchoStar would bring a strong balance sheet, with $24 billion in cash and $13 billion in debt, plus valuable assets such as Boost Mobile, Sling TV, and spectrum, which could help SpaceX expand Starlink. The deal would also avoid costly IPO fees and give SpaceX a stable valuation. Nevertheless, it’s important to mention that no such plans have been announced.

Is SATS Stock a Good Buy?

Turning to Wall Street, analysts have a Strong Buy consensus rating on SATS stock based on three Buys, one Hold, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average SATS price target of $107 per share implies that it is trading near fair value.

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