Iridium Communications, Inc.
Thesis
Iridium represents an attractive structural short investment due to its impending financial challenges and increasing competition in the satellite communications industry. The company plans to invest $3 billion in its next generation satellite constellation, which is necessary as its current satellites are nearing the end of their life. However, with projected flat to negative EBITDA growth and high leverage, Iridium is likely to face a restructuring similar to past industry players, destroying equity value for shareholders.
Did it work?
The short thesis predicted that Iridium's $3B next-gen constellation investment, flat-to-negative EBITDA, and high leverage would lead to restructuring and equity value destruction. Instead, over the ~15.6 years since the pitch, Iridium funded and completed its Iridium NEXT replacement, grew cash flows, and never restructured — the stock appreciated roughly fivefold, producing a -481% return for the short position, decisively opposite to the thesis. With nearly 16 years elapsed and the outcome unambiguous, the thesis is clearly broken.