Globalstar (NYSEAMERICAN:GSAT) has been in business for decades, but much of that history has been troubled. After emerging form bankruptcy in 2004 then refinancing its debt in 2019, the satellite company’s shares finally found their way out of penny stock status in 2021. It’s all about smartphones. News Qualcomm (NASDAQ:QCOM) was including GSAT support in new modems for mobile devices sent GSAT stock surging to a $2.57 closing high in February. The next big rally was in September. Rumors that Apple (NASDAQ:AAPL) would include GSAT connectivity in new iPhones sent GSAT to a $2.69 closing high in September.
When it turned out that the iPhone 13 would not include Globalstar satellite connectivity, GSAT stock quickly dropped. At this point its price is well off 2021 highs, but still up an impressive 360% since the start of the year. Is now the time to add this Internet of Things (IoT)-focused satellite company to your portfolio? Or were the Qualcomm and Apple surges one-time events that are unlikely to have any real long-term upside for the company?
Internet of Things Opportunity
When you think about low Earth orbit satellite operators like Globalstar, the business people automatically think of is communications. Satellite phones, specifically. These are the specialty phones that connect to satellites instead of a cellular network. They offer reliable communications, with coverage in areas where cellular networks don’t operate. This makes them ideal for remote use. Satellite phones are also unaffected by technical issues that can impact cellular networks in emergency situations. That makes satellite phones a favorite for emergency responders.
Globalstar sells a full range of devices with plans to communicate with its satellites.
However, a much larger opportunity has been opening up in the Internet of Things. There has been a push to have everything connected to the internet. Consumer devices like smartphones and laptops, but also industrial devices and sensors. That’s easy enough to do in North America, but there are many remote locations (plus the oceans) where cellular connectivity isn’t an option. Satellite connectivity is an option.
In addition, Globalstar owns a section of the radio spectrum called n53. The company has been gaining approval for that spectrum to be used on the ground for communications.
As mentioned above, GSAT stock surged in February after it was announced that Qualcomm would add support for Globalstar’s Band n53 spectrum in a new 5G modem. That opens a door for Globalstar to commercialize its spectrum for use with IoT applications on a much wider scale. Think of it like a private cellular network for these applications and for phones that support it.
Would Apple Really Bring Satellite Connectivity to iPhone?
GSAT stock surged again in September on rumors that Apple would include connectivity to Globalstar satellites in the iPhone 13 — effectively turning it into a satellite phone for emergency use.
Semianalysis does a pretty good job of debunking that rumor. Basically, the power required to transmit between a low Earth orbit satellite and a phone on the ground is very high. The phone needs to have a high gain antenna as well. Can you imagine Apple making an iPhone larger to accommodate the battery required, and adding a big antenna? I didn’t think so.
Apple could be planning to offer the option of ground-based support for Globalstar’s Band n53 spectrum. However, technology simply has not yet caught up to devices as svelte as an iPhone being an effective satellite phone.
Bottom Line on GSAT Stock
Profitability has yet to arrive for Globalstar, but the stars are finally showing signs of aligning for the company. Having Qualcomm add support for its radio frequencies in particular is a win, opening up the potential for a booming IoT business for connected devices that don’t want to rely on Wi-Fi and are not in areas with reliable cellular coverage. The potential is also there for manufacturers like Apple to add to Globalstar satellite communications as an option for their smartphones eventually — with access to a private Band n53 spectrum network if not a direct satellite service.
This Portfolio Grader “B” rated stock has long-term growth potential, especially if it can commercialize that Band n53 spectrum. In the meantime the company has the cash needed for at least a year of operation based on current losses. If you’re considering a GSAT stock investment, you might want to wait a week and watch for what the company has to say when it reports Q3 earnings.
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On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
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