Globalstar (GSAT) stock rose almost 30 percent on Sep. 8 but was lower in premarket trading on Sep. 9. The stock has been rising on rumors of an Apple partnership. How high could GSAT stock go? Is it a good buy despite having risen almost eightfold in 2021?
Globalstar, which provides satellite services for individuals and businesses, surged in 2021's first quarter along with other penny meme stocks, and then tumbled. In Jun. 2021, B. Riley issued a bullish note on the stock, triggering a buying spree.
Why is GSAT stock rising?
B. Riley analyst Mike Crawford said that after years of investments, Globalstar would now start realizing returns and could monetize its spectrum assets in the U.S. and internationally.
The stock rose after the news, and just when it seemed about to lose steam, TFI Securities analyst Ming-Chi Kuo predicted that Apple could partner with Globalstar to bring satellite connectivity to its upcoming iPhone.
Markets speculated that Apple would announce the partnership with GSAT at an event, and on Sep. 8, Apple announced an event would be held on Sep. 14. GSAT stock soared and is now only 9.7 percent below its 52-week high.
How high can GSAT stock go?
B. Riley has assigned GSAT a $3.25 target price, which implies a 21 percent upside. It's worth noting, however, that the brokerage gave that target before the reports of GSAT's partnership with Apple—if the deal is confirmed, the stock could soar. Likewise, if there's no deal announcement, the stock could plunge.
What would the Apple partnership mean for Globalstar?
Apple is the world’s most valuable company. It sold almost 200 million smartphones in 2020, while rival Samsung sold over 235 million. These are massive volumes for a company of Globalstar’s size.
Despite its massive surge in 2021, GSAT has a market cap of just under $5 billion. In 2020 and amid the COVID-19 pandemic, the company's revenue fell 2.5 percent year-over-year to $128.5 million. Analysts polled by TIKR expect the company’s revenue to fall in 2021 as well.
The best satellite stocks to buy
Grand View Research expects the satellite communication market, worth $66.6 billion in 2020, to grow to $71.5 billion in 2021 and then 9.8 percent compounded annually to reach almost $138 billion by 2028. Other satellite stocks set to benefit from the growing demand for satellite connectivity are:
- Iridium Communications.
- Gilat Satellite Networks.
- Maxar Technologies.
Satellite connectivity could be among the hottest investment themes for the next decade as smartphone makers look to add satellite connectivity to their new models. The craze for space travel is set to further boost demand for the promising technology.