We came across a bullish thesis on Globalstar, Inc. (NYSE:GSAT) on wallstreetbets Subreddit Page by 2ndSifter. In this article, we will summarize the bulls’ thesis on GSAT. Globalstar, Inc. (NYSE:GSAT)’s share was trading at $2.07 as of Dec 31st.
A commercial satellite in the sky, its antennae glimmering in the light.
Globalstar (NYSE:GSAT) plays a key role in Low-Earth Orbit (LEO) communications, offering mobile satellite services globally, including cellular data, satellite monitoring, and emergency services in remote areas. The company’s spectrum licenses, particularly for L-band and S-band frequencies, grant it a significant competitive advantage, enabling access to broader international markets. This advantage is reflected in a 51% increase in revenue from its “Wholesale capacity services” segment for the three months ending in 2024, showcasing its importance to Globalstar’s profits. Despite challenging macroeconomic conditions, the company’s revenue has steadily grown, positioning it well for future expansion.
A major catalyst for Globalstar’s growth is its partnership with Apple, which has taken a 20% equity stake in the company and committed $1.1 billion in funding. This investment underscores Apple’s confidence in Globalstar’s growth potential, positioning the company for rapid future cash flows and expansion. Additionally, institutional ownership in Globalstar has risen, with firms like JPMorgan and Fidelity increasing their stakes. While Globalstar’s past valuation has been impacted by historic balance sheet weaknesses and ongoing share dilution, the recent funding from Apple provides a solid financial cushion, allowing the company to pay down debt and expand its services.
To address share dilution and improve liquidity, Globalstar has filed for a reverse stock split, which could also pave the way for a NASDAQ listing. Despite its historic undervaluation, Globalstar’s strategic partnerships, improving financial outlook, and competitive edge make its current stock price an attractive entry point. The company’s growth prospects, bolstered by its deal with Apple, suggest that its true value may far exceed the consensus price target of $5, with significant upside potential as market sentiment shifts.
Globalstar, Inc. (NYSE:GSAT) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 17 hedge fund portfolios held GSAT at the end of the third quarter which was 16 in the previous quarter. While we acknowledge the risk and potential of GSAT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than GSAT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article was originally published at Insider Monkey.