Please ensure Javascript is enabled for purposes of website accessibility

Why Globalstar Stock Just Crashed 21%

By Rich Smith – Sep 14, 2021 at 3:41PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

What went up just came back down.

What happened

Shares of satellite communications company Globalstar (GSAT 1.58%), which took off last month on speculation that Apple (AAPL -1.96%) might build satellite telephony capability into its new iPhone 13 smartphone -- doubling Globalstar's stock price in less than a month's time -- came crashing back to Earth on Tuesday. As of 3:15 p.m. EDT, Globalstar stock is down 21%.

And Apple is the reason.

Big red arrow going down over a stock chart.

Image source: Getty Images.

So what

As the theory went, you see, Apple was gearing up to announce new features and capabilities of this year's iPhone iteration, the iPhone 13. Well, as it turns out, Apple did announce the iPhone 13 at a reveal today, and as we just learned, it will have a $799 starting price, an A15 Bionic processor, an AMOLED screen, up to 1 TB in storage...

And no mention of satellite phone capability whatsoever.  

Now what

That's only a bit of a letdown for satcom telephony provider Iridium Communications, which Bloomberg had already confirmed last month would not be partnering with Apple on any hypothetical sat-phone plans. (Iridium stock is down 3.7% anyway, perhaps because some investors were hoping Bloomberg was mistaken about that.)

For Globalstar, meanwhile, the lack of a satcom announcement at Apple's big event was a more crushing blow. Unprofitable and trading for an astounding 38 times trailing revenue as recently as Friday, Globalstar stock was priced as if its partnership on an Apple satellite phone was all but guaranteed to happen.

Now, that bubble has burst -- and I'm not sure there's much standing in the way of Globalstar stock falling back into the same penny stock territory it was trading at as recently as April.

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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Globalstar Stock Quote
Globalstar
GSAT
$1.93 (1.58%) $0.03
Apple Stock Quote
Apple
AAPL
$148.11 (-1.96%) $-2.96
Iridium Communications Stock Quote
Iridium Communications
IRDM
$52.40 (1.22%) $0.63

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
356%
 
S&P 500 Returns
118%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.