What happened

Shares of satellite communications specialist Globalstar (NYSEMKT:GSAT) closed 12.5% lower on Monday as Tesla (NASDAQ:TSLA) CEO Elon Musk's side project, SpaceX, inched closer to becoming a direct competitor to Globalstar's core services.

So what

In 2017, SpaceX filed regulatory applications for permission to launch a global satellite communications network, totaling more than 12,000 satellites. Stuck in the slow-moving wheels of bureaucracy, that effort stalled for more than a year. Last week, SpaceX's effort took a big step forward as the Federal Communications Commission approved a modified version of the proposed Starlink network, whittling it down to 4,425 low-orbit satellites.

Starlink may very well become a head-to-head rival to Globalstar's satellite communications services, including the company's plan to build a terrestrial network powered by satellite-grade radio spectrum licenses. More competition equals more uncertainty, so Globalstar's shares plunged hard.

Satellite in orbit

Image source: Getty Images.

Now what

The negative market reaction just might turn out to be an incorrect knee-jerk move. In Globalstar's latest earnings call, CEO Jay Monroe spoke highly of Musk and held out hope that SpaceX might become a business partner rather than a competitor.  At the very least, Monroe expects Starlink to serve a different type of end user than Globalstar's planned terrestrial network.

I see you shrugging over Monroe's claims. He could be overplaying his hand in an effort to appease nervous investors. So maybe it's naive to take his big dreams at face value, but his story makes sense to me. All told, Globalstar shares are trading 62% below their year-ago prices and look primed for a rebound -- if and when the company finds a way to implement its innovative terrestrial network plans.