Elon Musk forged ahead with an ambitious plan – blanket the globe with high-speed internet.
The task seems impossible.
Yet, Musk, whose tenacity took the mothballed electric vehicle market and drove it to ascendency, remained undeterred.
Interestingly, he wasn’t the first to attempt this feat.
As early as the 1990s, companies rose and fell trying to launch a network of internet satellites, most bankrupted in the process.
That hasn’t stopped these zombies from coming back to life.
Recent surges in TrackstarIQ searches for little-known Globalstar (GSAT) piqued our interest.
Shares of the low-earth orbit internet provider skyrocketed from $0.33 a share in late 2020, to nearly $3.00 in February before pulling back to $1.00.
With current price sitting just below $2.00, B.Riley analyst Mike Crawford slapped a $3.25 target on the stock.
Which makes us wonder whether there’s more here than meets the eye.
Globalstar’s backstory
The short version is the company tried this satellite internet thing in 100 and went bankrupt in 2002.
They didn’t do much again until 2007.
Since then, the company’s services provide connectivity to commercial and government customers in remote areas.
As the internet of things (IoT) expands, so did their solutions and revenues.
In total, the company counts 745,00 subscribers worldwide in industries including government & public safety, transportation, energy, construction, commercial maritime, agriculture, and forestry.
The company’s goal is to move from a heavy reliance on SPOT revenues, which include consumer products like the SPOT Gen4 Satellite GPS messenger, towards terrestrial spectrum, or mobile satellite services business.
It’s worth mentioning that their services are available only with equipment designed to work on its network two-way voice communication and data transmissions using mobile or fixed devices, and one-way data transmissions using a mobile or fixed device that transmits its location and other information to a central monitoring station.
Or putting it succinctly – they offer private wireless networks which work great for places needing secure communications.
A 5G under the radar
Globalstar owns S-band, L-band, and C-band spectrum assets around the world. In recent years, they’ve obtained approval for 5G operations in its 2.4GHz S-band spectrum (AKA Band 53).
At the same time, Qualcomm (QCOM) announced its new 5G X65 smartphone modem would include support for Band 53).
While it’s not massive, it is significant for a company of Globalstar’s size.
A debt problem
The real problem facing GSAT continues to be their debt and lack of operating income.
With $327 million in debt on their balance sheet, it’s tough to see a pathway to profitability when they are lucky to make $22 million in operating cash flow on an annual basis and burned more than $36 million in the most recent quarter.
And their debts aren’t cheap either.
The first traunch of $182 million is due in December 2022 and costs a hefty 4.75% interest.
Their second $199 million credit line cost them 13.5% annually, due in 2025.
Our hot take
Globalstar may be on the right path to prosperity. But unless they get their debt rolled over, they’ll never live long enough to see it.
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