Globalstar, Inc. (NYSEAMERICAN: GSAT) is screaming for the top in the market this morning. However, if you’re looking for press releases or SEC filings that may act as the catalyst, you’ll be hard pressed to find anything.
Nonetheless, there’s a good reason for the gains.
Shortly after GSAT announced that it teamed up with Qualcomm in a 5G related partnership, Qualcomm announced a new 5G partnership in India, which could expand demand for Globalstar products following their partnership.
Here’s what’s going on:
Skip to What You Want to Read
- Qualcomm & Bharti Airtel Enter 5G Partnership
- This Could Lead to a GSAT Short Squeeze
- What Analysts Think About GSAT Stock
- Risks to Consider Before Buying GSAT Stock
- Final Thoughts
Qualcomm & Bharti Airtel Enter 5G Partnership
As mentioned above, Globalstar and Qualcomm recently announced a partnership. In fact, QCOM said that it would be using the Band n53, developed by GSAT, in its new 5G X65 modem.
That’s great news and GlobalStar stock went on a spree because of it. However, the news doesn’t seem to be coming to an end.
News is breaking this morning that an Indian telecom operator known as Bharti Airtel and Qualcomm have teamed up to accelerate 5G in India. This is important as Airtel recently became India’s first telecom company to demonstrate 5G over a live commercial network.
So, why is this good news for GSAT?
Well, Qualcomm and Airtel are teaming up to accelerate the adoption of 5G in India. Of course, for 5G to work, you must have a modem that supports it. Considering the fact that the Globalstar Band n53 technology will be incorporated into Qualcomm’s new 5G X65 modem, this news is related to GSAT as it will likely increase demand.
This Could Lead to a GSAT Short Squeeze
The news could have a more profound effect on the stock than you might think as a short squeeze may be in play here. Recently, members of the Wall Street Bets Reddit have proven just how powerful a group of retail investors can be.
They have pushed short squeezes in GameStop and several other stocks, costing the hedge funds that make money by shorting these stocks millions upon millions of dollars.
Now, it seems as though the Wall Street Bets group is jumping on the GSAT bandwagon, and that could lead to tremendous gains in the value of the stock.
It makes sense too. About 22% of GSAT shares are sold short. As a result, should investors band together around the ticker, volume and price appreciation will head up, leading to shorts being squeezed out of their positions and a potential dramatic, GameStop-like run in the value of the stock.
What Analysts Think About GSAT Stock
At the moment, analysts aren’t the biggest fans of Globalstar. In fact, according to TipRanks, there’s only one analyst covering the stock, and that analyst rates it a Sell with a price target of $0.55.
However, it’s important to keep in mind that the analyst rating on GSAT stock is outdated. It doesn’t take into account the partnership with Qualcomm surrounding 5G technologies, nor the news today that will likely lead to growth in demand.
Risks to Consider Before Buying GSAT Stock
If you’re thinking about diving into Globalstar stock, it’s important that you consider the risk. After all, no investment is complete without risk. When it comes to GSAT stock, the most significant risks include:
- Capital. Globalstar is not a profitable company. So, it has to rely on the money it has in the bank to survive. Should those funds dry up before the company reaches profitability, it will likely look to Wall Street to raise capital, leading to dilution of existing shareholder value and declines.
- Pennies. GSAT is a penny stock. Penny stocks come with increased risk and are often speculative plays.
- Volatility. As a penny stock, GSAT stock experiences high levels of volatility. As a result, entrance and exit decisions are made more difficult and significant losses can take place over a short period of time.
Sure, there are risks to consider before diving into GlobalStar, but the stock is one that’s hard to ignore. At the end of the day, 5G technology is expected to be big business, and GSAT is becoming one of the innovators in the space.
With Qualcomm taking note of the company’s technologies, demand likely lifting as a result of news in India, and retailers getting behind the ticker, we could see a tremendous run in the value of GSAT stock ahead.