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Why Globalstar Stock Just Jumped 27.5%

By Rich Smith – Jun 18, 2020 at 1:42PM

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The C-band 5G revolution is underway.

What happened

Shares of penny-stock satellite communications company Globalstar (NYSEMKT: GSAT) jumped nine pennies in price this afternoon, which doesn't sound like much, but it was enough to drive the stock up 27.5% through 12:50 p.m. EDT on Thursday.

So what

Globalstar is in the business of providing voice and data communications services globally through a "constellation of Low Earth Orbit ("LEO") satellites" and 22 "terrestrial gateways" on earth, the company says in its latest 10-K filing. It also says it has licenses to transmit via "radio frequencies in the 1.6/2.4 GHz band." The company also controls a certain amount of C-band spectrum, such as the Federal Communications Commission has targeted for use (and auction) in expanding 5G internet service.  

Satellite beaming down a signal to Earth

Image source: Getty Images.

Globalstar's 10-K isn't very specific on how much C-band spectrum it possesses, or its likely value at auction. Still, FierceWireless, a website that follows the wireless communications industry, confirms that Globalstar's C-band spectrum is at least valuable enough to "be applicable to current discussions."  

Now what

In this regard, it's worth noting that earlier this week, Spaceflightnow.com reported that two of the largest licensees of C-band spectrum, Intelsat (INTE.Q) and SES, have just placed more than $1 billion worth of orders to acquire 10 or more new C-band satellites from Boeing, Northrop Grumman, and Maxar Technologies so as to better comply with the FCC's order earlier this year "to clear 300 megahertz of C-band spectrum for the rollout of 5G mobile connectivity networks."  

Although this FCC order, and these satellite purchases, don't seem directly relevant to Globalstar, they do suggest that the move to 5G internet is making progress now. The more progress it makes, the more valuable Globalstar's spectrum should become.

It's only a hunch, but in the absence of any other news, it's my hunch that this speculation is what's driving Globalstar stock higher today.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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