Inflation Report Stabilizes Markets – Iridium Under Pressure

The recent figures of the Personal Consumption Expenditures (PCE) Price Index have spurred the stock market in the afternoon session. The index, considered an important indicator of inflation development, matched Wall Street expectations with a rise of 0.2% from the previous month and 2.9% year-over-year. This alignment provides relief to investors and reinforces the assessment that inflation remains under control without hindering economic growth. The market is reacting positively to the prospect that the U.S. Federal Reserve will likely continue its initiated course of interest rate cuts, making cheaper capital available and potentially further stimulating economic growth. However, it is regularly observed in the stock market that excessive price fluctuations offer interesting buying opportunities for high-quality stocks. In the field of satellite communications, Iridium stocks caught the attention of investors. The company recorded a total of 18 share movements of more than 5% over the past year. Today's price reaction indicates that the market considers the inflation declaration significant, without fundamentally questioning Iridium's business foundation. A notable price drop of 3.3% occurred 14 days ago, based on Raymond James' downgrade from 'Strong Buy' to 'Outperform' and a significant reduction of the price target from 39 to 26 US dollars. This move was a response to the strategic offensive of competitor SpaceX Starlink, which is strengthening its position in the direct-to-device market by acquiring frequency rights. This development increases competition in the satellite communications sector and pressures Iridium's stock, which has already fallen around 29% this week. The analysts' action reflects growing uncertainty about Iridium's market position in an increasingly competitive environment. Since the beginning of the year, Iridium has lost 40.1% of its value, and with a current price of 17.68 US dollars per share, the stock is trading 47.3% below its 52-week high of 33.57 US dollars from October 2022. Investors who invested 1,000 US dollars in Iridium five years ago would be looking at a portfolio of 702.10 US dollars today.