Why Globalstar Stock Just Jumped 40%

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What happened

Shares of mobile satellite services provider Globalstar (NYSEMKT:GSAT) soared more than 42% through 3:30 p.m. EDT Monday, the first trading day after company CEO David Kagan appeared online at the 24th Annual Burkenroad Reports Investment Conference to provide a financial update on the company’s historical progress and future plans.  

So what

Kagan’s presentation stretches 22 pages in length and was mostly historical in nature, so it’s hard to be 100% certain what, precisely, it is in that presentation that investors are responding to today. That being said, a few things jump out.  

According to Kagan, Globalstar’s overall revenue growth over the last five years has averaged just 7% per year, but the company’s fastest growing division, which includes providing Internet-of-Things (IoT) services to commercial clients, grew twice as fast — 14% annualized.

Globalstar predicts that the worldwide satellite IoT market that is worth $1.5 billion today will grow to $2.5 billion by 2027, and Globalstar’s satellites are capable of reaching greater than 90% of that market opportunity.

Satellite beaming down to Earth

“Hey, Houston! Have you checked out Globalstar’s stock price today?” Image source: Getty Images.

Now what

What does this mean to investors? Globalstar seems to be saying that 90% of the growth in global IoT revenue is within its grasp, meaning there’s the potential, at least, for this portion of Globalstar’s business to grow another 50% over the next six years.

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On top of this, the company sees a $23 billion addressable market in private LTE cellular services (through 2023) that it can exploit. While I can’t be certain that these are the numbers investors are responding to in today’s trading, with all of Globalstar valued at just $2.1 billion currently, the potential for growth into a couple of multi-billion-dollar markets could be what’s moving the needle on Globalstar stock today.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.



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