Bargain or Bust? Is Dish Network Stock Overcooked?

Key Points

• DISH provides broadband, internet and wireless access to rural geographies where national broadband providers have less of a presence.
• Net Pay-TV subscribers fell by 552,000 in Q1 2023, leaving 9.2 million subscribers. Wireless subscribers fell by (81,000) leaving 7.91 million retail wireless subscribers.
• Its 5G network is scheduled to be operational in June 2023.
• DISH shares are hitting levels not seen since 1999.
• Insiders purchased $22.9 million in shares in the last quarter.
• DISH has $4.78 in cash per share.
• DISH Network shares trade at 5X forward earnings with a 20.2% short interest.

Satellite communications provider DISH Network Co. NASDAQ: DISH stock has been in a death spiral, hitting price levels not seen since 1999. While consumers with access to mainstream broadband and wireless providers like Comcast Co. NASDAQ: CMCSA, Verizon Communications Inc. NYSE: VZ or AT &T Inc. NYSE: T would hardly ever consider using a satellite provider as reliability is impacted by severe weather. Heavy rain, snow and other disruptive weather conditions can cause service interruptions and outages.

However, DISH is one of the rural areas' limited internet access options. This demographic has been a niche for DISH for over two decades.  

Rural Community Access

DISH serves more rural geographies where traditional cable and wired broadband are not as prevalent. It provides these underserved communities with internet, wireless, streaming and broadband access and service. Dish operates 15 geosynchronous orbiting satellites providing TV and internet services to U.S. customers. Its internet network covers 98% of the U.S. The company has been growing its 5G network per mandate to cover 70% of the U.S. by June 2023.

DISH Brands

DISH owns many brands, including streaming service Sling TV, prepaid cellphone service Boost Mobile, Dish Wireless and DISH TV. The company has been building out its 5G broadband network calling it the nation’s first Smart Network™.  DISH subscribers peaked at 14.1 million customers in 2013, which has melted down to around 7.9 million retail wireless subscribers in 2023. Shares have been a falling knife since their $81 highs in 2015, hitting a recent low of $5.94 on May 12, 2023.

5G Network Buildout

DISH was the benefactor between the T-Mobile US Inc. NASDAQ: TMUS merger with Sprint. Sprint had to make some divestitures as part of the Department of Justice approval. DISH was to spend $5 billion to acquire Sprint's prepaid customers and 800 MHz spectrum but was required to build a 5G network covering 70% of the U.S. population and 15,000 cellular sites in June 2023. The company looks to be track to hit its goals after raising $2 billion in 2022.

Swing and a Miss

On May 8, 2023, DISH released its fiscal first-quarter 2023 results for the quarter ended May 2023. The company reported a diluted earnings-per-share (EPS) profit of $0.35, missing consensus analyst estimates by ($0.04). Revenues fell (8.5%) year-over-year (YOY) to $3.96 billion, missing analyst estimates of $4.06 billion. Net Pay-TV subscribers fell by (552,000) in the quarter compared to a drop of (462,000) in the year-ago period for a total of 9.2 million subscribers comprised of 7.1 million DISH TV and 2.1 million Sling TV customers.

Wireless net subscribers fell by (81,000) compared to (343,000) in the year-ago period for a total of 7.91 retail wireless customers. The company had $2.45 billion or $4.78 in cash-per-share.

Cyberattack

DISH was hit by a ransomware attack on Feb. 23, 2023, forcing the company to take its website offline and cancel service calls. Its investigation found that certain employee records and a limited number of data records were extracted. Its customer database was not accessed. DISH Network CEO Eric Carlson commented on the February 2023 cyberattack for which the company incurred $30 million in expenses related to remediation, customer support and IT costs.

Carlson provided an update on the Q1 2023 earnings conference call, “We restored the systems affected by the cybersecurity incident; our websites, customer care functions, self-service applications and payment systems are operational and have been since March. Our customer care operations are running, and service times have normalized.”

Analyst Downgrades

On May 12, 2023, Goldman Sachs maintained its Neutral rating but lowered its price target to $6 from $13. On May 9, 2023, Credit Suisse reiterated its Outperform rating on DISH. On March 27, 2023, UBS analyst John Hodulik downgraded DISH to Neutral with a $10 price target from $27. He cited weakening subscriber trends leading to EBITDA estimate cuts between (15%) to (20%) that were accelerated from the cybersecurity incident in February 2023. DISH Network analyst ratings and price targets can be found at MarketBeat.

 

Weekly Falling Price Channel

The weekly candlestick chart on DISH illustrates a falling price channel that has been ongoing for years as shares reach lows now seen in over two decades. The last weekly market structure low (MSL) attempt at $9.45 failed to trigger in April 2023. This caused shares to collapse even further, hitting a swing low of $5.94 on May 12, 2023.

The weekly stochastic has been smothered under the 20-band since February 2023. The weekly 20-period exponential moving average (EMA) resistance is falling at $10.41. Pullback support levels are at $5.54, $4.78 cash-per-share price level, $4.57 and $3.82.