Gilat Tessa another 30% – global markets

Stock

Gilat (US)
+ 28.65%

closure:0

opening:10.87

Tall:13.99

low:10.71

cycle:–

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Rises more than 30% with the opening of Wall Street Trading Week. The stock has almost doubled in value since the beginning of the year and the market value of the Israeli satellite company reaches $ 700 million. The rise in the value of the company raises some eyebrows of veteran investors. What led to the tremendous rise in the stock and caused it to detach from its economic value?

Let’s start with the positive angle. Gilat is a good company. Its technology for satellite communications networks provides it with multimillion-dollar contracts around the world. Using the company’s satellite technology thickens the cellular transmission of local operators. Hey, even investment bank Morgan Stanley at some point became interested in the company.

In addition, the company manages to increase its profits without increasing revenue. The company managed to rise to $ 2.28 per share in 2019, compared to 1.27 in 2018 and 0.42 in 2017 (when in those years earnings fell by 10%). The company’s profits brought it the opportunity to distribute dividends twice this year. The total dividend to be distributed to shareholders amounts to approximately $ 55 million (dividend yield of almost 10%).

Recently, there has also been speculation that as a satellite company, it will be included in an ETF that will include companies that are engaged in space science. We recently reported this ETF from ARK Investment House. Entering a large ETF will increase the use of company shares. As expected, upon learning of the possibility of including Gilat’s share in the certificate, the stock soared.

Before you rush to buy the stock, you should remember that there was a company that already wanted to buy the stock until recently and gave up. But really gave up. In fact she insisted on withdrawing her takeover bid.

Comtech offered to buy Gilat for about $ 10.25 per share, with 70% paid in cash and 30% in Comtec shares. Gilat’s share was then traded at $ 8 (today it is 50% more expensive). The deal was reported in January. But she delayed. It is not known exactly what made Comtech regret the acquisition of Gilat, it could be that it is two weak quarterly reports of the company following the corona, perhaps difficulties of Comtech itself.

One way or another it is quite clear that CamTech knows more about the company than the average investor after performing proper checks and it has chosen not to carry out the deal. She actually went to court to have it overturned. Today the company is already worth 20% more.

I really kept the good for the end. Opponents of the company point to a joint effort of investment influencers among the young investors who are pumping the company on YouTube. We went to check for ourselves and were surprised by the result. We found a few different videos that glorify the stock. Here is the first, here is the second, third and fourth. They all came up in less than a week.

Those who claim that Gilat’s share value is detached from the company’s economic value claim that the source of the increase is due to the increase in its mention of YouTube. We will not tell you what they say about those who recommend buying the stock on YouTube.