Investors deciding whether to invest in Globalstar (NYSEAMERICAN:GSAT) stock will be waiting for its partnerships to blossom.
The firm’s Q2 earnings appeared slightly disappointing as revenues declined and operational losses increased on a year-over-year basis. Despite that, share prices trended upward on the news. This was likely attributable to improving losses.
A bullish position on the mobile and voice data communications company will rely on intuition about the firm’s future prospects rather than fundamentals alone.
Intuition and news regarding prior deals make Globalstar worth considering. Globalstar shares had traded below $1 for the entirety of 2019 and 2020. They appeared to have settled into the 30 cent range until rocketing upward in early 2021.
Back then, Globalstar’s partner Nokia (NYSE:NOK) announced that it was entering into an agreement with Tideworks Technology.
The news that the two companies would deploy Globalstar’s Band 53 spectrum at Terminal 5 of the Port of Seattle sent prices rising.
The 30 cent doldrums where GSAT stock had stagnated for the previous nine months were no more. It quickly moved from 34 cents to $1.24 in a span of 10 days. That 250% price appreciation put the penny stock on the radar.
The spectrum deployment was technically significant in that it allows fewer access points during user deployments leading to greater security. It was also the second time that Globalstar and Nokia had collaborated to launch at a U.S. port.
Roughly a month later Globalstar shares would double again, rising to $2.50. The catalyst behind that particular rise was another well-known name in Qualcomm (NASDAQ:QCOM).
GSAT Stock and the QCOM Deal
On Feb. 9 Qualcomm announced that it was including Globalstar’s Band n53 on its 5G X65 Modem. The X65 is Qualcomm’s flagship 5G modem
“Qualcomm’s support of Band n53 represents a significant milestone in our efforts to commercialize our spectrum in the US and all other countries where we have or expect to obtain terrestrial authority,” Kyle Pickens, Strategy VP said at the time.
Globalstar saw the news as having the potential to significantly expand the device ecosystem of Band n53. If, as Globalstar anticipates, the move opens up more smartphones, laptops, tablets, automated devices and IoT devices broadly, its revenues could multiply.
However, that announcement coincided with GSAT stock’s high price in 2021. Since then it has vacillated between $1 and $2, moving on news releases.
Piecing Together an IoT Strategy
Globalstar clearly gained a significant boost from the brand name value of being associated with Nokia and Qualcomm. That said, the company is still in the process of defining itself within the realm of IoT.
In April it signed a deal with Cisa Trading of Brazil to track all 4,400 of its containers with its SmartOne Solar devices.
Then in July, the company announced a few more deals, both related to safety and tracking.
The first is a partnership with FocusPoint International. The service is aimed at extreme sports enthusiasts and provides worldwide evacuation services. It offers catering to travelers and adventurers who may require crisis response and evacuation.
Then on July 14, Globalstar announced that its GPS messengers will be used to track scientists and surveyors working in the Yorkshire Dales area of England.
All of this makes for an interesting company, but despite that contention, investors are going to struggle to see a firm reason to invest in GSAT stock based on its fundamentals.
In the first quarter of 2021 revenues reached $26.929 million, down from $32.194 million a year earlier. The company explained it away due to the timing of engineering service revenue, but it doesn’t matter much.
In Q2 Globalstar recorded $25.617 million in revenues, down from $27.09 a year prior.
The bigger issue was that the company lost $38 and $36 million in each of those first quarters, respectively. In the second quarter, Globalstar has reversed course in a sense: It reported a net loss of $21.449 million in Q2 ’21, much better than the $24.736 million net loss in Q2 ’20.
That incremental improvement is clearly helping the firm’s stock price, and if its big-name partnerships take off it can rise again.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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