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EchoStar (SATS) initially sustained its high orbit today following news that the FCC granted the company's 5G network buildout framework on Friday after the close. However, upon market opening, gains quickly faded.

While pay-TV remains SATS's primary business, comprising two-thirds of total revs in Q2, the company has been investing heavily in wireless as part of a plan to replace Sprint's presence after it was acquired by T-Mobile (TMUS) in 2020. SATS's wireless banner operates as Boost Mobile, which utilizes Dish Wireless towers in combination with towers from AT&T (T) and TMUS. Dish Network, which owns Dish Wireless and is all under the SATS umbrella, has poured tens of billions into constructing towers and purchasing spectrum licenses. As a result, Dish Network's financials -- ultimately SATS's financials following a merger earlier this year -- have deteriorated over the years, making setbacks sting considerably.

However, by that same token, good news can usher in a wave of buying support. Shares of SATS are still up roughly +80% from August lows. The stock was initially kicked into gear by a Bloomberg report earlier this month noting that Dish Network was in discussions to settle a lawsuit with creditors surrounding a transfer of assets. Buyers then stepped on the gas after Bloomberg reported last week that AT&T was discussing a merger between DirecTV and Dish Network.

• The FCC granting SATS's buildout framework is meaningful. One of the major hurdles Dish Network faced before it merged with SATS was making the jump from covering a required 70% of the U.S. population to 75%. While a 5% leap seems simple, it meant having to cover rural areas, which required paying for new infrastructure. With the FCC's approval, SATS now anticipates covering 80% of the U.S. population by the end of this year, an additional 30 mln households from its 70% requirement.
• Part of the higher coverage relies on AT&T and TMUS. Individuals in areas where SATS has yet to deploy 5G coverage will tap into its partners' networks. This also translates to greater efficiency as it reduces the resources required to install infrastructure twice at each tower.
• So why are shares sluggish today? Investors have priced in plenty of good news in a relatively short timeframe, taming Friday's announcement. Also, SATS is still operating on shaky ground. Exiting Q2, its balance sheet carried over $24 bln in net debt. Meanwhile, sales are contracting yr/yr, hindered by cord-cutting trends eroding the demand for Dish Network, putting constant pressure on net income.

The sentiment surrounding SATS has gone from bleak to energetic in just a span of three weeks after a string of uplifting stories rushed to center stage. While investors initially responded positively to Friday's FCC announcement, a rapid run-up over the past few weeks combined with a concerning balance sheet stunted today's gains. There is plenty of uncertainty swirling around SATS, which can produce big price swings in either direction. As such, SATS should be viewed cautiously, especially after its monster rally.