Globalstar, Inc. (NYSEAMERICAN: GSAT) is skyrocketing in the market this morning, following up on the dramatic gains seen out of the stock yesterday. The gains all started when it was announced that Qualcomm has included the company’s Band n53 in its new 5G X65 modem. Here’s what’s going on:
Skip to What You Want to Read
- Globalstar Announces 5G News
- Management Commentary
- A Short Squeeze in Play
- What Analysts Think About GSAT Stock
- Risks to Consider Before Buying GSAT Stock
- Final Thoughts
Globalstar Announces 5G News
As mentioned above, Globalstar is flying in the market this morning after compelling gains yesterday. The company announced that Qualcomm has included its Band n53 in its new 5G X65 modem.
In the release, GSAT explained that the X65 is Qualcomm’s flagship 5G modem, adding global 5G band support for n53. With this support, the potential device ecosystem will be expanded significantly to include the most popular smartphones, laptops, tablets, automated equipment and other Internet of Things modules.
GSAT went on to explain that Qualcomm represents the newest commercial partner in the continued development of its terrestrial ecosystem. The X65 will extend the capability of the mobile broadband, fixed wireless, industrial IoT and private network applications. Moreover, the tech offers greater 5G deployment flexibility with increased spectrum aggregation options.
In a statement, Kyle Pickens, VP of strategy at Globalstar, had the following to offer:
Qualcomm’s support of Band n53 represents a significant milestone in our efforts to commercialize our spectrum in the US and all other countries where we have or expect to obtain terrestrial authority.
The above statement was followed up by Jay Monroe, Executive Chairman at GSAT. Here’s what he had to say:
As we continue to build momentum in our terrestrial spectrum commercialization, this partnership substantially expands Globalstar’s potential. We have appreciated a close relationship with Qualcomm since the inception of the company and want to thank the team there for their hard work in helping us deliver on Band n53’s promise.
A Short Squeeze in Play
Beyond the overwhelmingly positive news that will likely lead to a significant increase in revenue, it seems as though a short squeeze is now in play with the stock. In fact, retail investors are taking to social media, rallying the troops for what may become a massive run.
Keep in mind, before the news, short volume on the stock sat at about 33%. That’s massive. With the stock ticking up, these shorts will need to cover their positions, leading to more buying and significant growth.
We’ve also seend what retail investors can do when they band together, which seems to be beginning as we speak. So, the squeeze on GSAT stock could lead to massive gains.
What Analysts Think About GSAT Stock
While investors seem to love Globalstar stock at the moment, analysts seem to hold a different opinion. In fact, there’s only one analyst covering the stock, but they rate the stock a Sell with a price target of $0.55 per share.
Keep in mind that this analyst’s coverage is beginning to age and definitely doesn’t take recent positive news into account. Considering today’s news, I’m expecting that other analysts will initiate coverage in a more positive way.
Risks to Consider Before Buying GSAT Stock
If you’re thinking about investing in GSAT, or any other stock for that matter, you’re going to have to be willing to accept risk. After all, there’s no such thing as a risk-free investment. When it comes to GSAT, the most significant risks to consider include:
- Penny Stock. GSAT is a penny stock. As such, it is subject to extreme levels of volatility, making entrance and exit decisions more difficult. This volatility could also lead to significant declines over a short period of time.
- Speculation. Globalstar is a very small company with a business model that has not yet reached profitability and hasn’t yet been proven. As a result, an investment in the stock is a speculative play, which adds to the risk.
- Capital Risk. Finally, as a company that doesn’t generate profits, GSAT is dependent on the money it has in the bank. If the well runs dry in the bank before profitability is achieved, the company may look to public markets as a way to raise funds, leading to dilution and declines.
While there are risks to consider before investing in Globalstar, there are risks to consider before making any investment. Nonetheless, with the news today, it’s clear that the company is on the right track.
Considering that the company’s Band n53 will be used in Qualcomm’s 5G systems, a significant revenue opportunity is likely ahead, making GSAT a stock that’s well worth watching.