Its likely because during the samsung announcement people that bought it up to $3.70 are getting out

The Etherstack (ASX:ESK) share price is soaring 10% higher today. Here’s why.

Aaron Teboneras | December 7, 2020 1:31pm | More on: ESK

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The Etherstack PLC (ASX: ESK) share price is soaring higher today on news the company’s subsidiary, Etherstack Pty Ltd scored a major contract win with the Australian Department of Defence. At the time of writing, the Etherstack share price is up 9.3% to 71 cents.

Etherstack operates in wireless communications technologies for customers in the public safety, defence, utilities and mining industries. The company’s protocol stacks are exported globally and licensed by leading radio manufacturers.

Its Australian solutions partner and subsidiary, Auria Wireless, manufactures complete digital radio networks using Etherstack software.

What’s driving the Etherstack share price up?

The Etherstack share price shot up today after the company advised that it has entered a technology licensing contract with the Australian Department of Defence. The local deal bolsters the company’s track record of delivering its products to allied defence organisations and radio manufactures in Europe and North America.

Under the agreement, Etherstack will supply its technology and associated delivery services to the Australian government. The first stage of the proposed multiple work packages is estimated to be worth $4.1 million. Most of the revenue from the initial phase will be included into the company’s FY21 report.

In light of this, Etherstack expects a modest contribution to the current financial year ending 31 December.

While future work packages are not guaranteed, the company expects to meet its performance-based targets, thereby leading to continued business.

Management commentary

Etherstack CEO David Deacon welcomed the news, saying:

This program builds upon existing Etherstack technology and creates a significant Australian export opportunity to both other nations and international military equipment manufacturers.

The supplied solution is repeatable and the first of its kind that will be compliant to a specific military standard. Etherstack expects interest from existing and new radio manufacturer customers internationally, as well as other nations, and will attempt to rapidly capitalise through licensing the solution to other countries.

Etherstack share price summary

If investors picked up Etherstack shares at 12 cents before its Samsung partnership announcement in June, shareholders would be sitting on gains of 500%. The Etherstack share price reached an all-time high $3.70 on 1 July, the day after the Samsung deal.

However, investors quickly took profit off the table, sending its share price lower again, to hover between 60 and 70 cents.