Viasat — A Potential Undervalued Space Play

Viasat ($VSAT): Deep Dive into a Distressed, Misunderstood, and Potentially Lucrative Turnaround

Welcome to what might be the longest, most comprehensive blog post you’ll read on Viasat. Buckle in, because we’re diving deep into every facet of the company’s situation—from the brutal 70% YTD drop to satellite assets, from short interest and forced selling to the possible game-changer of Ligado’s missed spectrum payments. This is not financial advice, but rather a detailed overview of why some contrarian and distressed-asset investors see an asymmetric risk-reward in Viasat. Always do your own research and invest responsibly.

Table of Contents

1. Overview & Rationale
   1.1 Position & Thesis
   1.2 Why Now?
2. Distressed Valuation
   2.1 Below Liquidation Value
   2.2 EV/EBITDA Discount
   2.3 High Revenue vs. Tiny Market Cap
   2.4 Manageable Debt & Refinancing
   2.5 Core NAV Exceeds Market Cap
3. Turnaround Catalysts
   3.1 Defense & Government Pivot
   3.2 CapEx Peaking → FCF Growth
   3.3 Short-Interest ~23%
   3.4 Market Recognition
   3.5 Insider / Political Support
4. Key Risks & Mitigations
   4.1 Consumer Broadband Competition
   4.2 Debt Load
   4.3 Execution on Defense Growth
   4.4 Short-Squeeze Risk to the Upside
5. Technicals & Potential Price Targets
   5.1 Oversold Territory
   5.2 Range Targets
   5.3 Fibonacci/Resistance Levels
6. Investment Thesis Summary
   6.1 Extreme Distress = Deep Value
   6.2 Pivot to Defense
   6.3 Cash Flow Inflection
   6.4 Short-Squeeze Potential
   6.5 Mispriced by Forced Selling
   6.6 Bottom Line
7. Detailed Valuation & Recovery Scenarios
   7.1 Baseline DCF & EV/EBITDA
   7.2 Ligado Networks Bankruptcy & Legal Action
   7.3 Debt Recovery Scenarios ($500M, $1B, $2B)
   7.4 Intangible “Moat” Value
8. Broader Macro Context: Why S/MID Securities Are Beaten Down
   8.1 Liquidity Drains & ETF Selling
   8.2 Passive Outflows & Momentum Selling
   8.3 Viasat in the Crosshairs
9. Putting It All Together: A High-Conviction Contrarian Bet
   9.1 Core Takeaways
   9.2 A Turnaround, Not a Growth Stock
   9.3 The Risk-Reward Equation
10. Final Thoughts & Disclaimer

1. Overview & Rationale

1.1 Position & Thesis

• Position Size: ~$585,000 in Viasat (current tranche), initiated in the mid-$8 range as a short-term lot.
• YTD Performance: The stock is down nearly 70% in the current year, which typically implies massive investor pessimism or forced selling.
• Core Thesis: The market seems to be pricing Viasat as though it’s on the verge of bankruptcy. However, their tangible assets (satellites, orbital slots, and spectrum) and intangible assets (defense IP, strong government relationships) suggest that the actual insolvency risk is much lower than the share price indicates.

1.2 Why Now?

1. Market Risk-Off Environment: Small- and mid-cap securities have seen broad outflows, punishing many companies indiscriminately.
2. Short Interest (~23%): Heavy shorting exacerbates downward pressure and can create forced selling—especially if margin calls or large institutions exit.
3. Pension/ETF Liquidations: These large pools of capital have recently de-risked, selling off mid-cap names like Viasat for reasons unrelated to the underlying fundamentals.
4. Upcoming Catalyst: Viasat’s pivot to defense and the winding down of satellite CapEx might soon start improving cash flows, changing the narrative.

2. Distressed Valuation

2.1 Below Liquidation Value

• Market Cap vs. Assets: Viasat’s market cap (around $1B) is below what they could likely fetch in a “fire sale” of their satellites, orbital real estate, and spectrum rights.
• Tangible & Intangible Assets: Beyond physical satellites, the intangible or “moat” assets include FAA or NASA-approved technologies, defense IP, and advanced network integration expertise.

2.2 EV/EBITDA Discount

• Viasat currently trades around ~4× EV/EBITDA. Most aerospace and defense peers trade in the 6–8× range, or even higher. This discrepancy suggests a severe “distress” discount.

2.3 High Revenue vs. Tiny Market Cap

• $4.5B+ Annual Revenue: For a company generating billions of dollars in revenue, a $1B market cap implies the market is pricing a near-certain collapse—contrary to evidence of new contracts and normalizing CapEx.

2.4 Manageable Debt & Refinancing

• Debt From Inmarsat Acquisition: Large, yes, but maturities have been refinanced.
• Reduced Insolvency Risk: Government contracts typically carry multi-year, stable cash flow. This provides an ongoing revenue cushion that mitigates default risk.

2.5 Core NAV Exceeds Market Cap

• Net Asset Value (NAV): Once you add intangible assets (orbital slots, spectrum rights, defense contracts), the real NAV dwarfs the current equity valuation.
• Conservative Assumption: Even if we discount intangible values heavily, Viasat’s equity should logically trade above $1B in market cap.

3. Turnaround Catalysts

3.1 Defense & Government Pivot

• NASA, DoD, GSA Contracts: Viasat has recently secured significant contracts—such as an IDIQ (Indefinite Delivery, Indefinite Quantity) up to $568 million, and a portion of a $4.82 billion NASA deal.
• High-Margin Revenue: Defense projects usually come with better margins and multi-year commitments, reducing the volatility that plagues consumer broadband segments.

3.2 CapEx Peaking → FCF Growth

• Satellite Buildout: A major cause of the company’s heavy spending is nearing completion.
• Free Cash Flow Inflection: As CapEx normalizes, more cash can go toward debt reduction and other high-value investments. This shift in the free cash flow profile could be a major catalyst.

3.3 Short-Interest ~23%

• Near-Term Downside Pressure: High short interest can grind the price lower.
• Potential Short Squeeze: Any positive surprise—earnings beat, new contract, or debt paydown—could force short sellers to cover, accelerating an upward move.

3.4 Market Recognition

• Re-Rating Toward Defense Multiples: Once Wall Street starts viewing Viasat primarily as a defense/GovCom play, the EV/EBITDA multiple should gravitate away from distressed territory and toward industry norms (6–8×).

3.5 Insider / Political Support

• High-Profile Endorsement: Political figures like Debbie Wasserman Schultz have shown involvement or buying interest, signaling confidence in Viasat’s pivot.
• Long-Term Government Partnerships: Large agencies (DoD, NASA, GSA) don’t award contracts to companies they believe are financially unstable.

4. Key Risks & Mitigations

4.1 Consumer Broadband Competition

• Risk: Starlink’s low-latency, high-speed network could erode Viasat’s consumer market share.
• Mitigation: Viasat is transitioning away from generic consumer broadband to specialized segments like aviation, maritime, and secure government communications—where Starlink’s blanket approach is less competitive.

4.2 Debt Load

• Risk: The Inmarsat acquisition created a large debt burden.
• Mitigation: Refinanced maturities reduce near-term liquidity issues. The pivot to stable, high-margin defense cash flow helps service debt.

4.3 Execution on Defense Growth

• Risk: If contract awards are delayed or the integration of Inmarsat is bumpy, defense revenue might lag.
• Mitigation: Multiple multi-year contracts are already signed. DoD and NASA have completed their due diligence, suggesting they trust Viasat’s capabilities.

4.4 Short Squeeze Risk to the Upside

• Risk (to Shorts): With ~23% short interest, any positive news cycle might spark violent upward moves.
• Mitigation (for Longs): The same mechanism that has been driving the stock down can propel it up rapidly on the right catalyst.

5. Technicals & Potential Price Targets

5.1 Oversold Territory

• Multi-Year Lows: Viasat has cratered to levels typically seen during major capitulation events.
• Technical Bottom Formation: Extended selling can lead to oversold conditions that set the stage for a significant bounce.

5.2 Range Targets

• Short-Term: A move to $11–$14 is feasible if sentiment shifts modestly.
• Medium-Term: $17–$18 is a notable resistance pivot. A break above that area could signal a stronger turnaround, possibly up to the mid-$20s if defense traction accelerates.

5.3 Fibonacci / Resistance Levels

• Fibonacci Retracements: Monitoring these technical bands from the YTD highs to the recent lows helps identify potential levels for partial profit-taking or adding to positions.
• Capitulation Metrics: Volume spikes on large down days followed by quick reversals often indicate capitulation, where forced and panic sellers have largely exited.

6. Investment Thesis Summary

6.1 Extreme Distress = Deep Value

Viasat is priced for near-bankruptcy, yet multiple fundamentals (refinanced debt, intangible asset value) dispute that narrative.

6.2 Pivot to Defense

NASA/DoD contracts transform Viasat from a struggling consumer-satellite business to a credible defense/GovCom provider.

6.3 Cash Flow Inflection

Massive satellite CapEx is nearly done, opening the door for free cash flow to repay debt and boost equity value.

6.4 Short-Squeeze Potential

With ~23% of the float short, any material improvement in fundamentals or a positive news cycle could trigger a rapid price rebound.

6.5 Mispriced by Forced Selling

Major institutional outflows (pension funds, ETF rebalancing) hammered the stock, creating a contrarian opportunity uncorrelated to underlying fundamentals.

6.6 Bottom Line

A -70% YTD drop has overshot to the downside, presenting a potential asymmetric risk-reward. It’s essentially priced like a dying company, but the evidence suggests otherwise. For distressed-asset investors, Viasat is a prime candidate for re-rating once the market acknowledges its transformation.

7. Detailed Valuation & Recovery Scenarios

7.1 Baseline DCF & EV/EBITDA

Let’s look at the base case for FY25:

• Forward EBITDA: $1.56B
• Conservative EV/EBITDA Multiple: 4× → $6.24B EV
• Current Net Debt: ~$5.6B
• Equity Value: $6.24B – $5.6B = $640M
• Per Share: $640M / 128M shares ≈ $11.25

This baseline is already above the current share price in the mid-single digits, which implies an easy path to double-digit territory if Viasat can stabilize.

7.2 Ligado Networks Bankruptcy & Legal Action

• Ligado (also spelled Legato) Missed Payment: $395M was due on January 1, 2023, and was not paid.
• Quarterly Obligations: $15M payments scheduled through 2107, with inflation adjustments potentially pushing the total into the $20B+ range.
• Legal Action: Inmarsat, now owned by Viasat, is seeking to recover these unpaid amounts. Even a partial settlement or significant court-awarded sum could reduce net debt meaningfully.

7.3 Debt Recovery Scenarios

Here’s how different debt-recovery amounts from Ligado could affect the stock:

1. $500M Recovery
   • Adjusted Net Debt: $5.1B
   • Equity Value: $6.24B – $5.1B = $1.14B
   • Per Share: ~$14.90
2. $1B Recovery
   • Adjusted Net Debt: $4.6B
   • Equity Value: $6.24B – $4.6B = $1.64B
   • Per Share: ~$19.70
3. $2B Recovery
   • Adjusted Net Debt: $3.6B
   • Equity Value: $6.24B – $3.6B = $2.64B
   • Per Share: ~$27.20

7.4 Intangible “Moat” Value

If we add ~$1.5B of intangible value—covering patents, proprietary technology, backlog, and strategic assets—the per-share outcomes could move even higher:

• Base Case: $11.25 → ~$23 with intangibles
• $500M Recovery: ~$14.90 → ~$26.40
• $1B Recovery: ~$19.70 → ~$31.20
• $2B Recovery: ~$27.20 → ~$38.70

Clearly, any meaningful debt recovery from Ligado could drastically change Viasat’s risk profile and catalyze a re-rating.

8. Broader Macro Context: Why S/MID Securities Are Beaten Down

8.1 Liquidity Drains & ETF Selling

• Risk-Off Environment: In uncertain economic times, small- and mid-cap stocks often suffer first because institutions rotate into “safer” large-cap or cash positions.
• ETF & Pension Liquidations: These forced, mechanical selling pressures can severely depress share prices, especially if a stock has lower liquidity or if it’s singled out by momentum-selling algorithms.

8.2 Passive Outflows & Momentum Selling

• Algo-Driven Downward Spiral: High short interest, combined with systematic outflows, can compound the downside.
• Viasat’s Bad Timing: Broadband weakness plus a big debt load made the stock a target for short sellers.

8.3 Viasat in the Crosshairs

• Satellite & Defense Themes: In 2023–2024, satellite players have been overshadowed by Starlink buzz. Meanwhile, defense contractors mostly soared if they had strong fundamentals. Viasat, bridging both worlds, ended up misunderstood and battered.

9. Putting It All Together: A High-Conviction Contrarian Bet

9.1 Core Takeaways

• Not Going Bankrupt: The doomsday scenario is unlikely. Refinanced debt and defense contracts significantly reduce insolvency risk.
• Massive Asset Base: Satellites, orbital “real estate,” and spectrum rights alone could command more than the current market cap in liquidation.
• Shift to Higher-Margin Work: The focus on defense and specialized communications (aviation, maritime, secure gov’t channels) is already gaining traction.

9.2 A Turnaround, Not a Growth Stock

• Legacy Broadband: Starlink competition hammered Viasat’s consumer broadband perception.
• Defense Identity: The real story is a pivot to DoD, NASA, and GSA, where Viasat aims to be a leading integrator and communications partner.

9.3 The Risk-Reward Equation

• Downside: At current levels, the stock is arguably priced for disaster. Any short-term downward pressure might be limited by the real asset value.
• Upside: Even modest contract wins or partial debt recovery from Ligado could send the stock toward $15–$20. A full-blown short squeeze or big legal victory might push it to $27 or higher.

10. Final Thoughts & Disclaimer

The Macro Backdrop

• S/MID Outflows: A broad risk-off climate has hammered mid-cap names.
• ETF/Index Rebalancing: Viasat’s weighting was cut heavily in 2023–2024, but this could reverse if its fundamentals improve and if it’s reclassified or recognized as a defense contractor.

Why the Valuation Is So Low

• Bankruptcy Pricing: The market is pricing Viasat as if default is imminent, ignoring the refinancing and stable government revenues.
• Severely Discounted EV Multiple: Trading at ~4× EV/EBITDA is an outlier for the industry and signals a mismatch between perception and reality.

Bottom Line

• In a Nutshell: Viasat is a deep-value, distressed play. It’s not a perfect company—there are real challenges—but it’s priced so low that even modest operational improvements or a shift in sentiment could unlock significant upside.
• Potential Quick Catalysts: Strength in defense bookings, news on Ligado debt recovery, short-squeeze dynamics, or broader market rotation into underpriced mid-cap names.
• Final Target Range: Depending on the success of the defense pivot and legal outcomes, a short-term move to $14.90 is feasible, with $19–$27 possible under more optimistic scenarios.

Important Disclaimer

I have a position in Viasat ($VSAT). This blog post is not financial advice. It represents my personal research and opinions, which may be biased. Always do your own due diligence before making any investment decisions. Markets can be volatile; past performance does not guarantee future results. Consult with a qualified financial advisor to discuss your specific situation.

In Closing

Viasat has been battered by a brutal -70% YTD decline, hammered by forced selling, short interest, and concerns over consumer broadband competition. Yet beneath that grim exterior lies a company rich in intangible assets (orbital slots, spectrum rights, IP), pivoting aggressively into high-margin defense contracts, and bearing refinanced debt that removes immediate insolvency fears.

For contrarian, distressed-asset, or deep-value investors, this is the classic setup: a “fallen angel” priced for bankruptcy, but with enough tangible and intangible value to justify a re-rating. Throw in a ~23% short interest that could be forced to cover if any of the bullish catalysts materialize, and you have a potentially explosive risk-reward profile.

Whether Viasat actually soars to the mid-$20s or just rebounds to “fair value” at $14–$15 depends on execution, market sentiment, and possibly the wild card of Ligado’s spectrum payments. What’s certain is that the current price offers a deep discount to any rational assessment of the company’s true worth—and sometimes, that’s exactly where opportunity lives.

Thank you for reading this (admittedly) “long ” breakdown of Viasat’s investment case. Remember: all investments carry risk. None of this is financial advice. Use it as a starting point for your own research, and invest responsibly.

‍