This Stock Is a Way to Own SpaceX Shares Before Its IPO. But Investors Should Heed These 5 Big Risks.

2026 could be a blockbuster year for initial public offerings, with several artificial intelligence companies looking to raise capital on public markets. Spending on AI computing is set to soar this year, as evidenced by the massive capital spending plans from all the cloud giants.

After its merger with xAI, SpaceX is apparently joining the fray. The satellite and space travel giant has just hired two law firms to work on the upcoming IPO.

Want to buy SpaceX shares but don’t want to wait for the IPO? There’s a way to gain exposure to SpaceX right now: satellite telecom EchoStar (SATS +0.58%), which sold a large block of wireless spectrum to SpaceX in exchange for SpaceX shares last summer.

The company’s SpaceX stake makes up the majority of EchoStar’s current value, making EchoStar stock a “proxy” for SpaceX. Still, there are also several risks investors need to be aware of before diving in.

1. EchoStar doesn’t have the shares yet

It should be noted that although EchoStar’s 357% gain in 2025 reflected not only the benefits of its spectrum sales to SpaceX but also an all-cash $22 billion sale to AT&T (T +1.21%), those transactions have not yet closed.

Now, these spectrum sales were “forcefully encouraged” by the Federal Communications Commission. In May of 2025, the FCC informed EchoStar that it was putting its licenses under review. The complaint was that EchoStar hadn’t been utilizing the massive amount of spectrum it had purchased, even though EchoStar insisted that it was in the process of building out a 5G wireless network with it.

Given that the FCC basically forced EchoStar into the sales to others, it seems highly unlikely that the spectrum sales would be blocked. Yet until EchoStar actually has possession of the shares and cash, that’s always a possibility.

2. Decommissioning costs

While it’s true that EchoStar is likely to receive a massive influx of cash, the company will also bear decommissioning costs over time.

This is because when EchoStar was building out its 5G network, it had agreed to long-term leases for towers and other equipment that it no longer needs. Instead, EchoStar’s Boost Mobile wireless business will lease spectrum from AT&T.

On the recent conference call with analysts, EchoStar noted that these decommissioning costs could run between $5 billion and $7 billion, and will be paid over time.

These amounts are estimates, mind you, and they could turn out to be higher or lower. Nevertheless, these costs, even if paid over time, will eat into the $12 billion or so in net cash EchoStar is set to have when the two deals close.

3. Three core businesses could be zeros

The majority of EchoStar’s value today comes from its SpaceX stake and cash. Still, the company runs some fairly large legacy businesses, including the DISH and SLING TV satellite cable brands, the Boost Mobile Wireless brand, and the Hughes satellite broadband business.

All of these businesses appear to be declining or struggling. While the Boost Wireless business is growing year over year, it also saw a quarter-over-quarter decline in subscribers in the fourth quarter, along with higher churn and lower revenue per customer. And keep in mind, this is EchoStar’s only business that’s “growing.”

Meanwhile, the satellite cable business, increasingly a relic in the age of streaming, is also on the decline, posting year-over-year declines in subscribers and ARPU. And the Hughes satellite broadband business has been in consistent decline, seemingly set to be replaced by SpaceX and others.

All of these three businesses could ultimately zeroes. While both DISH and Hughes are profitable on an adjusted OIBDA basis (operating income before depreciation and amortization), investors probably shouldn’t ascribe much, or any, value to these declining “rumps.”

Image source: Getty Images.

4. Not sure what the strategy for cash is going forward

If the prospects for the remaining legacy businesses are unclear, and SpaceX is going to do its own thing, what exactly might EchoStar control going forward?

Last Fall, EchoStar formed EchoStar Capital to invest its influx of cash on behalf of shareholders. But the strategy seemed very general, opening itself to either controlling or non-controlling investments, both inside and outside the telecom business.

As recently as the last earnings call, it didn’t appear management had thought out a specific strategy for the cash. Executive Hamid Akhavan elaborated:

Look, EchoStar Capital, as I mentioned, we are looking at every possibility for utilization of the liquidity and cash when it arrives. … Obviously, we’re looking at the long horizon for creating value, all of this in the context of taxation and how the net return to shareholders may be. We’re obviously looking at our opportunities every single day. And judging that against what other options may be available. So it’s a long answer to a short question, but honestly, that is the case; it would be foolish to do anything other than that.

So investors don’t really know how this excess cash will be deployed. As of now, one has to trust that EchoStar executives can create accretive value, but they don’t appear to have a plan.

5. EchoStar didn’t look at SpaceX’s financials before investing!

Another somewhat startling revelation is that EchoStar’s Chairman, Charlie Ergen, admitted that EchoStar didn’t even have access to SpaceX’s financials before agreeing to take stock. When asked about SpaceX’s valuation and EchoStar’s stake, Ergen said:

They’ve been the best company I’ve ever worked with in 45 years. So they’re just responsive. They’re creative. They move at a pace that most companies don’t. So I don’t think any amount of valuation is probably crazy there. Obviously, we’re not privy to their numbers. So we invested on faith, and we invest in people, and we felt that they’re the best people we could invest in.

It’s somewhat shocking, given that SpaceX will now account for much of EchoStar’s value, that Ergen didn’t even look at SpaceX’s financials before taking over $11 billion in SpaceX stock as part of the spectrum deals.

On the other hand, maybe Ergen is on to something. In its annual report, EchoStar noted that it acquired SpaceX at $212 per share, without giving a specific market cap. Today, just seven months later, the price of SpaceX stock is being traded on the secondary market at just over $600 per share, according to Forge Global, which tracks secondary transactions of private companies.