Globalstar, Inc. (NYSEMKT: GSAT)
Globalstar had an incredible day in the market yesterday after making a key announcement with regard to a proposed terrestrial low-power service, also known as TLPS. Now, the question is, “Will the stock climb further?” Today, we’ll talk about the news that was released yesterday, what we’re seeing in the market today, and what we can expect to see from GSAT moving forward.
Trade smarter and make more money with Tradespoon!
GSAT Makes A Key Announcement
Globalstar has been working on a product that they are calling a terrestrial low-power service, or TLPS, for quite some time now. Since the company announced its plan, its stock has gained six times what it was worth at the time. The idea behind the product is simple. Terrestrial low power service would essentially convert one of the pieces of a satellite spectrum owned by GSAT into a private Wi-Fi channel. From there, the company will be able to charge money for access to the satellite Wi-Fi channel. However, in order for this to happen, the company will have to receive FCC approval. Yesterday, GSAT made a key announcement; the said that they are expecting the FCC to decide to approve the service. This is incredible news as it has been estimated that Globalstar’s spectrum, if this worked, would be worth about $4.4 billion.
How The Market Reacted To The News
As investors, one of the first things that we learn is that the news moves the market. Any time there is positive news released with regard to a publicly-traded company, we can expect to see gains in the value of the stock associated with the news. Adversely, negative news will ultimately lead to declines. With that said, the announcement out of GSAT that it is expecting the FDA to approve its TLPS systems is overwhelmingly positive news. After all, if the service is approved, it will likely open the door to tremendous revenue and profit opportunities. With that said, the stock climbed dramatically in the market yesterday. While today’s gains aren’t showing such strong momentum, we are seeing positivity out of the stock today as well. Currently (9:58), GSAT is trading at $2.85 per share after a gain of $0.10 per share, or 3.64% thus far today.
What We Can Expect To See Moving Forward
Moving forward, I have a relatively mixed opinion of what we can expect to see from Globalstar. First and foremost, it’s important to look at the financial data from any company that you plan to invest in. With that said, while the technology the company is currently innovating is incredible, it is not coming without a cost. The truth is that GSAT has an incredibly high amount of debt for the size of business that it is.
On the other hand, there is also a positive side to the outlook. The reality is that satellite internet services can be overwhelmingly profitable. If the FCC does allow the company to turn bits of spectrum from their satellite into Wi-Fi channels for sale, the company can earn massive amounts of money. While I have no clue what the FCC will decide to do in this particular case, I do know that companies don’t generally make announcements unless they are pretty sure of what they are announcing. With that said, the fact that GSAT announced that it is expecting the FCC to approve their plans is overwhelmingly positive news for the outlook.
Don’t waste your time! Click here to find winning trades in minutes!
What Do You Think?
Where do you think GSAT is headed moving forward and why? Let us know your opinion in the comments below!
[Image Courtesy of Wikipedia]