The current market price of Dish Network stock (NASDAQ: DISH) is around $6.60 per share. It is 86% lower than its high of $46.50 on May 7, 2021, before the inflation shock. Dish Network’s stock price sank to about $17.90 at the end of June 2022, before the Fed started increasing interest rates and is still 64% below that level. Conversely, the S&P 500 gained roughly 10% during the corresponding period. Dish Network’s stock price has suffered in recent months due to a cyber attack on its IT systems and a decline in its core satellite TV operations. However, as its wireless business comes into play with the 5G wireless rollout and the company’s sizable spectrum holdings, its revenues may stabilize.
To reach its pre-inflation shock level, Dish stock needs to rise over 600% from its current value. However, it may not happen any time soon, and Dish’s valuation may be estimated at around $14 per share, almost 2 times its current market price. Recent financial uncertainty has made investors concerned about a potential recession.
We have analyzed Dish Network’s upside potential post-inflation shock and compared it with its performance during the 2008 recession. Here’s the timeline of events during the inflation shock:
- 2020-Early 2021: The increase in the money supply to cushion the impact of lockdowns led to high demand for goods, but producers were unable to meet this demand.
- Early 2021: Shipping snarls and worker shortages from the coronavirus pandemic continued to hurt the supply chain.
- April 2021: Inflation rates cross 4% and increased rapidly.
- Early 2022: Energy and food prices spike due to the Russian invasion of Ukraine. Fed begins its rate hike process.
- June 2022: Inflation rates peaked at 9%, the highest level in 40 years. The S&P 500 index declined more than 20% from peak levels.
- July – September 2022: Fed hikes interest rates aggressively – resulting in an initial recovery in the S&P 500 followed by another sharp decline.
- Since October 2022: Fed continues the rate hike process, and improving market sentiments help S&P500 recoup some of its losses.
During the 2007/2008 financial crisis, Dish’s stock declined from almost $38 in September 2007 (pre-crisis peak) to $11 in March 2009 (as the markets bottomed out), indicating that its stock lost almost 71% of its pre-crisis value. However, it recovered to levels of around $21 in early 2010, reflecting an 84% increase between March 2009 and January 2010. During the same period, the S&P 500 Index saw a decline of 51%, falling from levels of 1,540 in September 2007 to 757 in March 2009. It then rallied 48% between March 2009 and January 2010 to reach levels of 1,124.
Dish revenues increased from $12.8 billion in 2019 to $17.9 billion in 2021, mainly due to the acquisition of Boost Mobile, Ting Mobile, and Republic Wireless. However, revenue declined in 2022, resulting from the continued loss of subscribers in Dish’s pay-TV operations and the shutdown of T-Mobile’s CDMA Network, which had MVNO customers. Dish’s net income rose from $1.76 billion in 2020 to about $2.30 billion in 2022.
With the Fed’s efforts to stabilize inflation rates and boost market sentiment, Dish Network’s stock has the potential for strong gains once concerns about a potential recession are eliminated. For investors seeking portfolios with high-performance returns in periods of sharp market declines, the reinforced value portfolio is a good investment opportunity.
| Returns | May 2023 MTD [1] | 2023 YTD [1] | 2017-23 Total [2] |
| DISH Return | -12% | -53% | -89% |
| S&P 500 Return | -1% | 8% | 85% |
| Trefis Multi-Strategy Portfolio | 0% | 9% | 243% |
[1] Month-to-date and year-to-date as of 5/24/2023
[2] Cumulative total returns since the end of 2016
Investors can check out Trefis’s Market Beating Portfolios and Trefis’s Price Estimates.
The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
