Is Globalstar Stock a Buy After Apple’s Announcement?
Globalstar stock is getting a lot of attention after the recent Apple announcement. It’s big news for the company, but is now a good time to buy shares of Globalstar? Let’s take a closer look at its new partnership with Apple, as well as the business and current valuation…
New Globalstar Apple Partnership
With Apple’s new iPhone announcements, it revealed satellite services. This is a huge move which extends connectivity to remote areas of our world. When traveling out of normal coverage areas, the new phones can connect to satellites.
I can’t recall Apple specifically saying Globalstar in its launch event. However, this SEC filing from Globalstar gives the key details…
The satellites are managed by Globalstar and this partnership has been in-the-works for a while. Globalstar will allocate 85% of its current and future network capacity to support the services.
If this all plays out as expected, it will be a steady stream of revenue for Globalstar. Let’s now take a closer look at the company and its potential going forward…
Is Globalstar Stock a Buy?
The big partnership with Apple and Globalstar is a positive for investors. Although, it might not impact sales and profitability enough to justify the current valuation. Also, competition is picking up in the space – pun intended.
Investors have been able to buy Globalstar stock for well over a decade. And in that time, it’s gone through some big ups and downs. The story behind the company is compelling.
It’s a leading global provider of commercial satellite solutions… but the shares haven’t fared too well. Even with the recent wave of interest, it’s still well within the penny stock category.
There’s no doubt that the company has some impressive technologies. But it’s in a tough industry and sales haven’t been as impressive over the years…
|2021||$124 million||-$112.6 million|
|2020||$128 million||-$110 million|
|2019||$132 million||$15 million|
|2018||$130 million||-$7 million|
|2017||$113 million||-$89 million|
Globalstar total sales have dropped over the past few years. And the company is far from profitable.
On top of that, the company has been diluting existing investors’ ownership. Shares outstanding increased from 1.68 billion in 2020 to 1.80 billion in 2021. And it was even larger dilution in the years before.
Globalstar is also leveraged when looking at its assets compared to liabilities. It has roughly $13 million in cash and short-term investments. And for total current assets, it comes in at just below $70 million. That’s compared to total current liabilities which come in at close to $140 million. And long-term debt is $257 million.
This leverage makes sense since building out and managing satellites is capital intensive. However, this reduces flexibility and makes me wary as a potential investor. The recent price for GSAT stock is also hard to justify. The price-to-sales ratio comes in well above 20.
That’s a steep valuation for a company that hasn’t grown sales over the past few years. On top of that, competition is picking up with the likes of SpaceX’s Starlink and other companies.
Even with the recent backing from Apple, Globalstar stock is far from a great opportunity. That’s at least from the perspective of long-term investors. And of course, anything can happen in the short-term. Far too many investors – or should I say traders – only focus on the news and overlook the underlying business.
Final Thoughts on GSAT Stock
As an iPhone consumer, I’ll likely benefit from the Globalstar Apple partnership down the road. But based on the financial situation, I won’t likely be buying Globalstar stock anytime soon. Instead, I think there are better opportunities today. For example, check out these big investing trends and stocks…
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About Brian Kehm
Brian Kehm double majored in finance and accounting at Iowa State University. After graduating, he went to work for a cryptocurrency company in Beijing. Upon returning to the U.S., he started working with financial publishers and also passed the CFA exams. When Brian isn’t researching and sharing ideas online, you can usually find him rock climbing or exploring the great outdoors.