Why Globalstar, Inc. Stock Fell 27.7% in March

The satellite communications company can't find a partner to launch a groundbreaking data network, and investors are running out of patience.

Anders Bylund
Anders Bylund
Apr 9, 2018 at 4:23PM
Technology and Telecom

What happened

Shares of satellite communications veteran Globalstar (NYSEMKT:GSAT) fell 27.7% in March of 2018, according to data from S&P Global Market Intelligence. The company didn't have a whole lot of news to report last month, but investors are losing patience with the company's innovative-but-difficult plans to build a next-generation terrestrial data network.

So what

The company got its final regulatory approvals last summer and has been looking for partners since then, hoping to get a high-speed network going in a sparsely populated slice of licensed radio spectrum. But no partnerships have been announced, and Globalstar's share prices keep falling as the radio silence continues. March was no exception.

Satellite floating above city lights at night

Image source: Getty Images.

Now what

Investors with a yen for high-risk gambles could start a position in Globalstar today, hoping to capitalize on the company's quest to find a suitable networking partner. To be clear, the company is not planning to become a network service operator itself, but a provider of new technologies and solutions in an unused spectrum band. That type of deal can be very profitable, especially for a smaller company like Globalstar with just $113 million in annual sales and negative free cash flow of $7.4 million.

But if you do, please bear in mind that this is more of a gamble than an investment. Globalstar's management are keeping a stiff upper lip these days but are clearly running out of ideas. 5G wireless technologies just might provide the final piece of the puzzle, but even that idea is a long shot now.

Personally, I prefer to just keep an eye on Globalstar's innovative antics from the sidelines. Your mileage may vary.