Satellite TV, wireless, and broadband provider DISH Network Corporation NASDAQ: DISH
stock has been punished in December trading down (-13%) year-to-date (YTD) versus the 14% YTD performance of the benchmark S&P 500 index NYSEARCA: SPY
. Shares were punished when the Company priced a $2 billion convertible note offering on Dec. 16, 2020, with a 30% premium conversion price of $40.96 per share. The Company pursues a grand plan to become the nation’s fourth-largest wireless carrier with the acquisition of Boost Mobile and 5G rollout. With COVID-19 vaccine distribution
underway, the race towards a return to normalcy is being hit hard with rising Covid-19 cases with many geographies surpassing previous pandemic
peak levels. Prudent investors looking for an asset-rich tax-loss play trading at a discount heading into 2021 can monitor DISH shares for opportunistic pullback levels to consider taking some exposure.
Q3 FY 2020 Earnings Release
On Nov. 6, 2020, DISH released its fiscal third-quarter 2020 results for the quarter ending September 2020. The Company reported an earnings-per-share (EPS) profit of $0.86 excluding non-recurring items versus consensus analyst estimates of $0.53, a $0.33 beat. Revenues rose 42.9% year-over-year (YoY) to $4.53 billion beating analyst estimates of $4.21 billion. The numbers included the acquisition of Boost Mobile. Net Pay-TV subscribers for the quarter rose by 116,000 compared to a rise of 148,000 YoY. Total Pay-TV subscribers were 11.42 million including 8.96 million DISH TV subs and 2.46 SLING TV subs. The Company ended the quarter with $2.8 billion in cash and marketable securities. For a third straight year, DISH was recognized as number one in the J.D. Power customer satisfaction survey.
Conference Call Takeaways
DISH CEO, Erik Carlson, expounded on the Company strategy of entering into the retail wireless business with the acquisition of Boost Mobile on July 1, 2020 and Ting on Aug. 1, 2020. The acquisition was made possible as a concession for the T-Mobile US NASDAQ: TMUS and Sprint Corporation NYSE: S merger resulting in gaining 9 million wireless customers. The Company will operate as a mobile virtual network operator (MVNO) until completing the buildout of its 5G network. Retail wireless had a net (-212,000) customer drop in the quarter. The Company gained additional vendors in the quarter including Nokia NYSE: NOK, Intel NASDAQ: INTC, Hansen Technologies, DigitalRoute, Blue Planet, MATRIXX and VMware NYSE: VMW. DISH continues to make progress as the nation’s first cloud-native OpenRAN compliant 5G network investing $50 million operating expense and capital expenditures in Q3 with the same expected for Q4. DISH TV had a gross gain of 292,000 new activations but ended with a net subscriber loss of (-87,000) customers for the quarter primarily due to COVID-19 effects stemming from the reluctance to direct mail offers and allowing technicians to enter residences. Sling TV gained 203,000 subscribers for the quarter primarily from the return of sports programming.
DISH 5G Buildout
DISH is still on track and committed to a minimum of 15,000 cell sites by June 2023 as part of their nationwide 5G rollout plan with the FCC. As part of the T-Mobile/Sprint merger concessions, they will decommission 20,000 sites which DISH has the opportunity to reuse. The Company plans to have coverage in small markets in Q1 2021, but it won’t be until Q3 2023 when DISH Wireless will have “a major market up and running”, as per DISH Chairman, Charlie Ergen. He pointed out something unique to the DISH Wireless network, “It’s going to be a lot more flexible, because it’s cloud-native, because it’s an O-RAN, OpenRAN system, because it’s 21st century architecture versus 30 years ago architecture… can do things other networks can’t do.” The Company owns nearly $20 billion of spectrum at attractive frequencies. Prudent investors looking for exposure can look for opportunistic pullback levels.
DISH Opportunistic Pullback Levels
Using the rifle charts on the monthly and weekly time frames provides a broader view of the playing field for DISH shares. The monthly rifle chart has got flat with the 5-period moving average (MA) and 15-period MA at $31.39 and $31.64, respectively. The monthly stochastic is also flat contemplating a stochastic cross up versus a mini inverse pup. The $36.48 Fibonacci (fib) level has been a resilient resistance level. The weekly rifle chart stalled the uptrend as the weekly stochastic completed a full oscillation that is peaking at the 80-band. The weekly market structure low (MSL) buy triggered above $22.50 and weekly 15-period MA support at the $30.67 fib is trying to hold. The daily formed an opposing market structure high (MSH) sell trigger before $35.35. The weekly stochastic cross down can present opportunistic pullback levels at the $30.67 fib, $29.50 sticky 5’s, $27.97 fib, $25.39 fib and the $22.50 MSL trigger. The upside trajectories range from the $34.40 fib up towards the $46.92 fib level. The market is still pricing DISH as a Pay-TV play rather than a wireless carrier and streaming provider with its Sling live TV product, which is a cord-the-cord play.
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