What happened

Shares of Globalstar (NYSEMKT:GSAT) spiked on Friday, and are up 16.6% here in the final minutes of trading, at 3:40 p.m. EDT.

The question is why -- and it's a great question.

Satellite transmitting to Earth

Image source: Getty Images.

So what

There isn't any news about Globalstar, a provider of mobile satellite voice and data services, on the wires today. No earnings are out. No upgrades (or downgrades) have been announced. Honestly, as far as I can tell, the only logical explanation for the spike in share price is that Globalstar published its fiscal Q1 2018 earnings on May 10.  And therefore, although the company hasn't announced an earnings release date for Q2, if you assume earnings will come out three months after the last report, then they should arrive in a week or two.

Could be, investors are positioning themselves for a good report.

There's also the possibility that investors are betting for (or against) the likelihood that Globalstar will consummate a deal, announced in April, that would see the company issue new stock worth $1.65 billion to acquire Thermo Acquisitions Inc., an entity controlled by Globalstar's own CEO. If that deal is consummated, Globalstar will acquire Thermo's assets, which include:

  • metro fiber provider FiberLight LLC
  • 5 million shares of common stock of CenturyLink
  • $100 million of cash and minority investments in "complementary businesses"
  • and other assets worth $25 million.

It will also dilute Globalstar's shareholders significantly. Issuing $1.65 billion worth of new Globalstar stock would probably increase the company's share count by about 250% from current levels.

Now what

Another two weeks of waiting may be required to find out the real reason for today's share price jump, whether that be earnings (probably arriving on or about Aug. 10) or the merger deal, which at last report, was still expected to close "in the third quarter of 2018" -- which we're one-third of the way into already.

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.