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Viasat shares crash

July 14, 2023

Viasat, which only a few weeks ago was celebrating the acquisition of London-based Inmarsat, is suffering a massive crisis of shareholder confidence following news of its problems with its new ViaSat-3 Americas (VS-3A) satellite. Its shares opened on July 13th at $42.98 and closed on the day at $30.74, a net fall of 28.48 per cent but the fall during the working day was as much as 36 per cent.

The problems with the satellite (a crucial antenna has failed to deploy) caused Delta Air Lines to say the problem hasn’t lead to any meaningful impact on Wi-Fi on US domestic flights, but could potentially delay the availability of international free Wi-Fi.

“If anything, it may cause a delayed rollout on some international markets, but it’s too early to tell,” said Ed Bastian, Delta’s CEO on an earnings call with analysts.

“This issue could be a major blow to the timing of the Viasat growth story, as [its older] ViaSat-2 (VS-2) has been capacity constrained in the Americas for many quarters, and the company has been counting on VS-3A to expand capacity in the Americas and resume fixed broadband subscriber growth,” Raymond James analyst Ric Prentiss wrote in his note to clients.

William Blair analyst Louie DiPalma, in his report, said: “This stock selloff is largely driven by emotion as there are a number of mitigating factors that soften the blow,” adding that Viasat still has global coverage following its Inmarsat acquisition, can use a second satellite to cover North America and will likely receive a hefty insurance claim from the issue.

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