What Happened?
Shares of satellite communications provider jumped 7.3% in the morning session after the stock's positive momentum continued as the company was added to the S&P 600 index, a list of small-cap companies. This change came as part of an index rebalancing where Iridium was moved from the S&P 400 Communication Services index. The move to the S&P 600 was significant because investment funds that track this index were then required to buy shares of Iridium to properly mirror the index's holdings. This mandatory buying from institutional funds created increased demand for the stock, which in turn pushed its price higher.
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What Is The Market Telling Us
Iridium’s shares are very volatile and have had 22 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 5 months ago when the stock dropped 20% on the news that the company cut its full-year revenue growth forecast and reported mixed second-quarter financial results.
The company lowered its total service revenue growth expectation for 2025 to a range of 3% to 5%, a significant reduction from its prior forecast of 5% to 7%. For the second quarter, Iridium's earnings of 20 cents per share fell short of analyst estimates. While revenue of $216.9 million edged past consensus, net income dropped to $22 million compared to $32.3 million in the same period last year. The company explained this drop was mainly because the prior year's results included a one-time gain from an acquisition that did not repeat in 2025.
Iridium is down 38.6% since the beginning of the year, and at $18.16 per share, it is trading 44.4% below its 52-week high of $32.66 from February 2025. Investors who bought $1,000 worth of Iridium’s shares 5 years ago would now be looking at an investment worth $477.87.
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