EchoStar Investors Didn't Sign Up For A SpaceX-xAI Merger

• EchoStar acquired its SpaceX stake when the space company was valued around $400 billion; the SpaceX-xAI combined entity targets a $1.25 trillion valuation
• TD Cowen analysts maintained a buy rating but noted investors 'did not sign up' for exposure to the crowded and uncertain large language model market, where xAI faces established competitors like OpenAI and Alphabet
• Despite recent sell-off, EchoStar stock is up 70% since receiving its first SpaceX equity and surged 374% in 2025, with analysts previously upgrading on prospects for additional strategic deals

EchoStar Investors React Negatively to SpaceX-xAI Merger

Key Developments

Elon Musk confirmed on February 2 that SpaceX will merge with his AI startup xAI, with plans for a SpaceX IPO potentially later this year. The combined entity targets a valuation of $1.25 trillion, significantly higher than SpaceX's previous estimated valuation of $400 billion.

Companies and Stakes

EchoStar, which operates DISH Network and Boost Mobile, holds a 2-3% stake in SpaceX acquired for $2-3 billion. Under the proposed merger valuation, this stake could theoretically be worth up to $37.5 billion, though various factors including potential dilution could affect this figure.

Market Reaction

EchoStar stock has declined approximately 12% over the five days following merger speculation, representing significant investor concern. However, the stock remains up 70% since receiving its first SpaceX shares and had surged 374% in 2025 overall.

Analyst Perspectives

TD Cowen analysts expressed concern that EchoStar investors did not sign up for AI venture exposure. They noted natural synergies existed between EchoStar's satellite business and SpaceX's Starlink operations, but minimal connection to large language model ventures. Analysts cited the uncertain competitive landscape for AI, with xAI facing established players like OpenAI, Alphabet, and Anthropic, plus unclear profitability paths for AI ventures.

Despite near-term concerns, some analysts maintain positive ratings. TD Cowen kept its buy rating, while Morgan Stanley upgraded to overweight in December, citing opportunities for tax-efficient spectrum sales.

Bottom Line

EchoStar represents the most significant public market proxy for SpaceX exposure, but the xAI merger introduces unexpected risk that satellite-focused investors didn't anticipate.