Iridium Communications Q1 FY12/24

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Technicals vs. Fundamentals - Choose Your Own Ending

Iridium Communications ($IRDM) reported its Q1 last week. The company is in the max-cashflow period of the satellite fleet operating cycle. It ate money for a few years when it was paying to have satellites built and then paying to have them launched and put on orbit. It then became somewhat cash generative whilst revenue ramped up on the new fleet. And now the company has more money than it knows what to do with, hence the dividend and buyback program and the recent acquisition of Satelles. Soon enough the business will be back to intensive capex as a new set of assets have to be built, launched and operated - but not yet.

The chart says that Iridium stock is probably at a good risk/reward position in which to buy. The name put in a deep correction from its April 2023 high of $68 to its April 2024 low of $25. That drop was almost-but-not-quite a 78.6 Fibonacci retracement of the whole move up from the 2017 lows to the 2023 highs. That’s a 2022 META or CRM type dump. And the stock looks to have found support. I have a nag that the A=C condition isn’t satisfied (but that would be at around $7/share, which seems unlikely), but aside from that, now looks like a good place to buy. Probably in small steps so that when the initial selloff comes, you have capital available to allocate to buy the next higher-low.

But the fundamentals don’t agree with the chart.