Straight Path Communications Inc (NYSEMKT:STRP) shares were up over 20%, after there was some speculation of a bidding war. There was some speculation that Verizon Communications (NYSE: VZ) could potentially make a bid for STRP, in counter to AT&T Inc’s (NYSE:T) $1.25B for Straight Path and its wireless spectrum. Let’s get into this news.

Bidding War Speculation

Last Monday, AT&T agreed to pay $95.63 per share for STRP, over a 150% to the stock’s closing price on April 7, 2017. However, Straight Path Communications announced that a rival suitor could potentially top the $1.25B acquisition offer made by AT&T. In an SEC Form 8K Filing, Straight Path stated that a third party was evaluating a potential offer that could top AT&T’s bid. Now, the company did not disclose the identity of the suitor, but the rival suitor indicated to the company that it’s exploring an offer that could potentially AT&T’s bid. A Reuters article noted that Verizon Communications is considering to make a buyout offer for STRP, potentially topping T’s bid, according to parties familiar with the matter.

However, Verizon declined to comment and state whether it was making a bid for STRP. Moreover, Straight Path declined to comment.

This speculation also caused some stocks to rise in sympathy, most notable Globalstar, Inc. (NYSEMKT: GSAT), which was up nearly 10% on the day. Globalstar, a stock satellite company, also owns wireless spectrum, which has been one of the hot topics among telecom companies. With the FCC quiet period end, there could be more M&A talks in the space, and the markets seem to have priced this in with GSAT.

Straight Path Communications Statistics and Ratios

STRP traded in a range between $103.00 and $112.49 today, marking a new 52-week high. STRP traded between $15.06 and $112.49, over the past 52 weeks. The stock closed at its 52-week high, and it’s over 600% above its 52-week low. STRP is over 200% above its 200 day SMA, after this catalyst. Additionally, the stock is over 150% above its 50-day simple moving average.

Take a look at STRP’s performance on the daily chart:


The company has a book value per share of -0.962, and therefore it is trading at a negative price-to-book ratio, while the industry average is 2.0. STRP has a price-to-revenue ratio of over 1,900, while the industry average is 1.6. Moreover, it has a P/S of 1722.029. Straight Path Communications Inc. has  6.7M shares floating, 11.7M shares outstanding, and a short ratio of 20.90%.

Final Thoughts

Shares of Straight Path Communications have been up significantly, returning over 160%, over the past week due to speculations of another suitor potentially topping AT&T’s bid. Now, we’ll need to see something concrete come out, or Verizon comment on whether it’s actually considering a bid for STRP or not. For now, we’ll have to wait and see.

Author: Jason Bond

Jason taught himself to trade while working as a full-time gym teacher; his trading profits grew eventually allowed him to free himself of over $250,000 in student loans!

Now a multimillionaire and a highly skilled trader and trading coach, Over 30,000 people credit Jason with teaching them how to trade and find profitable trades. Jason specializes in both swing trades and in selling options using spread trades, which balance the risk of selling options. Jason is Co-Founder of and the Foundation which donates trading profits to charity. So far the foundation donated over $600,000 to charity.

Learn More

Leave your comment

Related Articles: