Why EchoStar Rocketed 56.2% in June

S of EchoStar Corporation (SATS 6. 68%) rocketed 56. 2% higher in June, according to data from S&P Global Market Intelligence

EchoStar has been embroiled in a controversy with the Federal Communications Commission in the new administration, which has led to missed interest payments and the threat of bankruptcy

However, it appears President Trump intervened on EchoStar's behalf in June, extending the deadline for both parties to agree to a deal

EchoStar's distressed stock explodes Coming into the month, EchoStar's stock had fallen to distressed levels

That was to be expected; its core satellite TV is declining, and its efforts to build a 5G mobile network that could rival the other major telecoms was going too slow for the government's liking

That led to a standoff with FCC Chair Brendan Carr, who had threatened to seize EchoStar's spectrum to sell to other companies

Amid the FCC review, EchoStar skipped interest payments on its debt, not knowing whether it would be able to continue building its mobile network

In mid-June, President Trump intervened, calling for a meeting between EchoStar CEO Charlie Ergen and Carr, and apparently telling the parties to come to some of amicable deal

That being said, EchoStar decided to skip its $114 million interest payment due on July 1, starting another 30-day grace period before the company is nically in default

Image source: Getty Images

EchoStar avoids bankruptcy, for now Given its depressed stock price, it's no surprise to see a big gain when bankruptcy was avoided, and with President Trump seemingly having the company's back

That being said, the company isn't out of the woods

As such, it's bably best for investors to stay on the sidelines, especially since the stock has surged to a much higher valuation

Billy Duberstein and/or his clients have no position in any of the stocks mentioned

The Motley Fool has no position in any of the stocks mentioned

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