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Website“Yellow Card” Reverses EPS Surprise, Casts Doubt on Growth Prospects
Satellite communications provider ViaSat (NASDAQ: VSAT) shares plunged over 13% intraday on July 7, retreating to $37.72. Just a month earlier, the stock had rebounded hundreds of percent from its one-year low, driven by an EPS surprise and momentum from defense and government contracts. In a single day, it wiped out about $596 million in market capitalization. Investors cited both profit-taking on the recent rally and emerging signs of slowing revenue growth alongside ongoing losses in the latest quarter as reasons for the sell-off.
Earnings Miss Debate Spreads on Social Media: ‘Growth Story Slows’
On social platforms and retail investor forums, debate over ViaSat’s calendar-year Q3 results grew heated. Revenue of about $11.4 billion fell short of expectations, with year-over-year growth lingering in the low single digits—prompting critics to argue that “it’s too slow for a satellite-boom play.” Some argued investors should focus on the robust defense and government pipeline—citing up to a $4 billion U.S. Space Force contract—rather than quarterly misses. However, with capex and launch costs climbing, skepticism intensified over when the company will generate meaningful free cash flow.
Retracing Last Year’s Red-Hot 2025 Rally: Valuation Gap With Investment Banks Adds Pressure
Through the second half of 2025, ViaSat outperformed major indexes, fueled by narrowing losses, expanding communications-service bookings, and rising defense and advanced-tech order backlog following its November earnings release. Several global investment banks lifted price targets above $50 and upgraded from Neutral to Overweight. Yet at current levels, some research desks still peg fair value in the mid-$20s—implying over 30% downside—keeping valuation debates alive. After leaping from a small-cap to a mid-cap market cap in short order, the stock now appears in a “cool-down” phase.
ViaSat-3 and Defense Orders on the Test Bench: Timing of Cash Generation Is Key
Ultimately, market focus centers on when ViaSat’s massive satellite investments and defense/government network projects will translate into visible free cash flow. The ViaSat-3 satellite program, connectivity solutions for the U.S. Navy and commercial shipping, and the long-term U.S. Space Force contract form the pillars of its growth narrative. Yet today’s double-digit tumble signals investors won’t justify lofty valuations on future potential alone. Without clear signs of revenue growth recovery, loss reduction and a peak in capex in the coming quarters, ViaSat risks remaining a volatile stock rather than resuming its upward trajectory.
