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Why Globalstar Stock Just Crashed 13%

By Rich Smith – Aug 31, 2021 at 10:38AM

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Bloomberg just popped Globalstar's bubble.

What happened

Shares of satellite communications company Globalstar (GSAT 0.54%) soared 64% on Monday on reports that Apple (AAPL -0.34%) appeared to be planning to build satellite telephony capability into its new iPhone 13 smartphone.

But Globalstar is down today -- plunging a disheartening 13% as of 10 a.m. EDT -- following a report that yesterday's news, while technically true, may not be as big of a deal as initially thought.

Satellite in space.

Image source: Getty Images.

So what

As Bloomberg reports this morning, Apple is in fact building a limited satellite communications capability into its new phones, but the new capability is geared primarily toward enabling a phone user to report a car crash or similar emergency when stranded in an area outside of cellphone coverage.

Make no mistake -- this is pretty great news for Apple, and will likely help it to sell more iPhones. But it also means that Globalstar investors can't expect their company to pick up a whole lot of new traffic (or new revenue streams) from Apple.  

Now what

For that matter, we still don't know for certain that it's Globalstar that Apple will pick to provide emergency satcom service. Bloomberg reports that Globalstar rival Iridium Communications will not be Apple's partner, so I suppose that's good news for Globalstar -- scratch one alternative off the list.

Apple might decide to link up with another satcom player entirely -- perhaps even an upstart like AST SpaceMobile, which is staking its entire future on its ability to build a cellphones-to-satellites network from scratch.

To me, that sounds like exactly the kind of company that would happily give Apple a nice price, if it asks.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.

Stocks Mentioned

Globalstar Stock Quote
Globalstar
GSAT
$1.87 (0.54%) $0.01
Apple Stock Quote
Apple
AAPL
$147.81 (-0.34%) $0.50

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