Shares of mobile satellite communications specialist Globalstar (NYSEMKT:GSAT) – which focuses on providing communication channels in areas outside traditional cellular network coverage – jumped sharply on Tuesday. Undergirding sentiment was the announcement earlier that former Qualcomm (NASDAQ:QCOM) CEO and Executive Chairman Paul E. Jacobs, Ph.D., has been appointed Globalstar’s CEO, effective immediately. GSAT stock gained 25% in the morning session before adding to the return.
Naturally, investors are enthused about the executive transition. In addition to Jacobs’ impressive tenure at Qualcomm — where he grew the technology giant’s revenues from $5.7 billion to $25.7 billion as CEO from 2005 to 2014 — he also was the founder and CEO of Xcom Labs, a developer of wireless tech. Per the accompanying press release, Jacobs will succeed David Kagan, who will retire from the top post.
In addition, Globalstar entered into a strategic perpetual licensing agreement for exclusive access to certain key Xcom technologies and personnel, per the release. “The license covers a number of XCOM’s novel technologies for wireless spectrum innovations, including XCOMP, XCOM’s commercially available coordinated multipoint radio system.”
In particular, Jacobs looks forward to leveraging Xcom’s differentiated tech to “deliver for private network customers with mission-critical needs.” He also anticipates an upside in Globalstar’s innovations in satellite connectivity.
GSAT Stock Faces a Credibility Test
On the surface, circumstances appear very favorable to GSAT stock. One of the most respected names in the global tech ecosystem, Jacobs’ acumen has few parallels. Moreover, the underlying core business — providing connectivity in remote areas — commands significant economic and social implications. Still, Globalstar may represent the biggest challenge yet for Jacobs.
On the positive side, Globalstar benefits from a key relationship with consumer tech juggernaut Apple (NASDAQ:AAPL). Last year, according to Reuters, the satellite specialist partnered with Apple to allow iPhone 14s to send distress signals from areas outside cellular coverage.
Better yet, Apple pledged $450 million to further develop its emergency SOS infrastructure last November. Most of this fund has been earmarked for Globalstar, symbolizing a significant endorsement of GSAT stock.
Moving forward, Globalstar will attempt to take a giant chunk of the private network infrastructure market. Per Counterpoint Research, this subsector printed revenue of $2.5 billion at the end of 2022. By 2030, experts project that the space could reach a valuation of $21.8 billion.
Still, not all investors are enthused about GSAT stock. In the trailing one-year period, shares tumbled about 33%. At one point this year, shares traded hands at less than a buck, presenting a massive credibility concern.
Why It Matters
At the moment, analysts peg GSAT as a consensus buy though no updated price target is available, per TipRanks. The most optimistic target comes from B. Riley Financial’s Mike Crawford, who forecast a price of $3.75 about 10 months ago.
On the date of publication, Josh Enomoto 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.
