Globalstar's (GSAT +0.64%) stock recently popped amid reports that Amazon (AMZN +3.49%) was in talks to acquire the satellite maker for $8.8 billion. Let's see why Amazon might be interested in Globalstar, and if a takeover would drive its stock higher.
Why could Amazon be interested in Globalstar?
Amazon is already the world's largest e-commerce and cloud infrastructure company, but it's been quietly building its own low-earth orbit (LEO) satellite business to challenge SpaceX's Starlink and AST SpaceMobile (ASTS 2.88%) in the nascent market.
Image source: Getty Images.
Amazon Leo, the company's LEO satellite business formerly known as Project Kuiper, has already deployed 180 satellites and aims to deliver cellular connectivity to rural areas that terrestrial towers can't reach. The Federal Communications Commission (FCC) already approved Amazon's plan to launch a constellation of more than 3,200 satellites in 2020.
Amazon Leo is much bigger than AST SpaceMobile, which has only launched eight satellites so far. Still, it's tiny compared to Starlink, which operates a network of over 9,500 satellites. Starlink already serves over nine million users globally -- including individual consumers, businesses, and government agencies -- and accounts for 50%-80% of SpaceX's revenue.
Globalstar currently has 48 satellites in orbit, plans to launch another 48 in the near future, and has a long-term target of building a constellation of 3,080 satellites. So while buying Globalstar won't help Amazon catch up to SpaceX ahead of its planned IPO, it could support the expansion of its LEO satellite business into a new revenue stream alongside its core e-commerce, cloud, and digital advertising businesses. It could also support the expansion of its cloud platform, Amazon Web Services (AWS), into more edge networks and Internet of Things (IoT) devices.
NASDAQ: AMZN
Key Data Points
Will buying Globalstar boost Amazon's stock?
Amazon's stock has declined 8% year to date. Most of that decline can be attributed to its plans to invest up to $200 billion in its cloud and AI infrastructure this year, the attacks on its data centers in the Middle East, and the impact of rising oil prices on its e-commerce business.
Therefore, Amazon's investors probably aren't too thrilled about its rumored interest in Globalstar, an unprofitable company that only generated $273 million in revenue in 2025. An $8.8 billion bid would value the satellite maker at 32 times its trailing sales.
In addition to that premium valuation, Amazon might need to increase its bid to convince Apple -- which owns 20% of Globalstar's shares -- to approve that takeover. While it might make strategic sense for Amazon to buy Globalstar as an ecosystem-expanding investment, I'd expect a deal to drag down its stock rather than lift it to new heights.
