Intelsat SA (NYSE:I) has taken a significant hit, ever since it reported disappointing Q3 financial results. The broader stock market turning bearish also appears to have fuelled a sell-off of the stock. The announcement of a massive stock sale also appears to have spooked investors. The stock is already down by about 30% after a meteoric rise to 52-week highs of 37 a share.
Intelsat Price Analysis
Intelsat has been on an impressive run since the start of the year has rallied by more than 600%. The rally has come on huge turnover of traded shares on investor confidence skyrocketing. The stock has however come under pressure in recent weeks the uptrend having lost some momentum. After skyrocketing to record highs of $37.70 a share, the stock has come down tumbling to the $24.87 a share level. The pullback faces immediate support at the $21 a share level. A breach of the critical support level could leave the stock susceptible to further declines, down to the $15 a share level seen as the next substantial support level. Intelsat stock needs to rally and stabilize above the $30 a share level to avert the possibility of further slides. Above the critical resistance level, bulls could come in and push the stock back to its 52-week highs.
Sell-off Catalysts
In October, Intelsat fell 10% as the broader U.S stock market came under pressure, amidst surging trade tension between the U.S and China. The broader stock market posted the biggest dip since the financial crises of 2009. In addition, the stock also came under pressure on the satellite communications company reporting somehow disappointing Q3 financial results. The satellite communication company reported a net loss of $0.46 a share in Q3, wider than a net loss $0.34 that analysts expected. The net loss was almost double a net loss of $0.26 a share reported a year ago. Revenues also took a hit, dropping to $536.92 million compared to revenues of $538.76 million reporter year ago. However, they beat consensus estimates by 2.38%. While the wider than expected net loss did spook investors plans to carry out a secondary offering of common shares is the latest headwind. The company has already announced plans to sell 10 million shares of common shares as well as an additional 1.5 million share at $25.75 a share. The offering consists entirely of common shares owned by selling shareholders.
Operational Efficiency
Amidst the earnings miss as well as secondary offering, Intelsat continues to fire on all cylinders when it comes to operational efficiency. The company is fresh from signing a multiyear agreement with Vodacom Mozambique for the expansion of mobile connectivity as well as providing support for growing data demand. Under the terms of the deal, the satellite communication company is to upgrade the carrier’s network using its Intelsat Epic satellite platform. The platform should improve the network’s capabilities as well as deliver better connectivity experience in a cost-effective manner. In addition, TV Peru has signed, a new expanded contract as it seeks to enhance its Digital Terrestrial Television. Pursuant to the deal, the TV broadcaster has renewed its C- and Ku band services on Intelsat 14.
What Next For Intelsat
Intelsat has taken a significant hit ever since it skyrocketed to 52-weeks highs of $37 a share. The pullback, however, appears to be a minor correction on investors taking profits. The broader stock market turning bullish could see the stock continuing its uptrend in continuation of the long-term uptrend. The steep pullback essentially presents an opportunity for investors who missed the initial upswing to get involved in the stock and take advantage of another blockbuster run on the upside.