Bloomberg reported this morning that the case calendar for the AMC / DISH suit contains a "possible settlement" on Monday, October 22nd. Only news I could find that could explain today's market action... A couple of thoughts came to mind when trying to understand the stock's behavior:
1. The $2.4B suit and other related miscellany have been an overhang, and when the overhang is taken away, the stock finds its true level. Fine. But DISH is now trading at 14.8x forward earnings and 6.4x forward EBITDA. As a reference point, DTV is trading at 10.3x and 5.7x forward earnings and EBITDA, respectively. The implication is that DISH is superior operation? I thought it was the other way around.
2. This third pop since last Thursday is a short squeeze, as all the 'special situations' traders betting against DISH in the AMC suit are getting out of Dodge. Short interest at the end of September wasn't outrageous, but.... This would explain the aberrant multiples ascribed to DISH equity right now.
My kingdom for access to a flow desk for getting to the bottom of this. But as the old poker saying goes, if you look around the table and don't know who the sucker is, it must be you. Ergo, I'm on the sidelines.
I considered the spectrum value.. a few days ago I mentioned in a post here that Morgan Stanley's bullish case is an extra $9 per share on top of their $35 target. I conceded then that spectrum value could also be driving the stock's recent meteoric rise, as institutional guys with access to the FCC front run public disclosure. Really high trading volumes since last week support such a thesis.
This was one reason for my considering jumping into a long bet, but unclear to me is the timing of the spectrum's monetization. The FCC gives a green light for terrestrial use, and then what? DISH, via a partnering agreement or solo, will then try to go head-to-head with T, VZ, and S? Complete black hole for CapEx... Or DISH then sells all or some of the spectrum? If you know a likely buyer that has strategic rationale for buying, please share. Thanks.
The $2.5B will include $1B in intrest and damages, and DISH will lose. Just check the news, it will be very ugly for DISH, and it couldn't happen to a better man than Charlie "Ego" Ergan. Investors better enjoy where this is at right now, because when the judgement is final this will drop like a rock. Enjoy!