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The Nasdaq has fallen 10% over the last month and Globalstar Inc (GSAT - Free Report) is a tech stock that could have more downside risk ahead.
The provider of satellite telephones and data services has seen its stock plummet over 30% year to date, and unfortunately, the decline could continue. Considering such, Globalstar's stock lands a Zacks Rank #5 (Strong Sell) and the Bear of the Day.
Image Source: Zacks Investment Research
Market Sentiment & Global Star
Despite a partnership with tech behemoth Apple (AAPL - Free Report) in regards to satellite communication technology which is used in iPhones, market sentiment has worn thin for Globalstar amid ongoing tariff concerns and economic uncertainty.
This comes as Globalstar reported record revenue and free cash flow (FCF) in 2024 but has struggled to cross the probability line since going public in 2006 (Illustrated in the EPS chart below). Furthermore, analysts have expressed concerns about the sustainability of Globalstar’s free cash flow with the company declining to give any future projections on FCF in its most recent Q4 earnings call in late February.
Image Source: Zacks Investment Research
Monitoring Globalstar’s Balance Sheet
Although Globalstar’s cash & equivalents ballooned from $57 million to $391 million at the end of 2024, what may further concern investors is that it has $1.71 billion in total assets but $1.35 billion in total liabilities.
While Globalstar is still solvent for now, this certainly raises the alarm about future free cash flow and the company’s valuation.
Image Source: Zacks Investment Research
Globalstar’s Uncomfortable Valuation
Taking away from Globalstar’s top line growth is that at $20 a share, GSAT still trades at 10X sales with its Zacks Satellite and Communication Industry average at 0.7X and the S&P 500 at 5.2X. Of course, P/E valuation can’t be used since Globalstar isn’t profitable.
Image Source: Zacks Investment Research
Conclusion & Final Thoughts
The bottom line is that it looks risky to invest in Globalstar’s stock at the moment. Investors haven’t been swayed by a partnership with Apple because Globalstar may be overly reliant on the tech giant as its primary customer. To that point, Apple accounts for 85% of Globalstar’s satellite network infrastructure.
Also, keeping in mind that Globalstar has been public for almost 20 years, the benefit of the doubt has started to go out the window in terms of its future earnings potential. This makes the company’s sales growth less impressive and spurs doubt about operating efficiency at this stage in its corporate life.
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Bear of the Day: Globalstar (GSAT)
The Nasdaq has fallen 10% over the last month and Globalstar Inc (GSAT - Free Report) is a tech stock that could have more downside risk ahead.
The provider of satellite telephones and data services has seen its stock plummet over 30% year to date, and unfortunately, the decline could continue. Considering such, Globalstar's stock lands a Zacks Rank #5 (Strong Sell) and the Bear of the Day.
Image Source: Zacks Investment Research
Market Sentiment & Global Star
Despite a partnership with tech behemoth Apple (AAPL - Free Report) in regards to satellite communication technology which is used in iPhones, market sentiment has worn thin for Globalstar amid ongoing tariff concerns and economic uncertainty.
This comes as Globalstar reported record revenue and free cash flow (FCF) in 2024 but has struggled to cross the probability line since going public in 2006 (Illustrated in the EPS chart below). Furthermore, analysts have expressed concerns about the sustainability of Globalstar’s free cash flow with the company declining to give any future projections on FCF in its most recent Q4 earnings call in late February.
Image Source: Zacks Investment Research
Monitoring Globalstar’s Balance Sheet
Although Globalstar’s cash & equivalents ballooned from $57 million to $391 million at the end of 2024, what may further concern investors is that it has $1.71 billion in total assets but $1.35 billion in total liabilities.
While Globalstar is still solvent for now, this certainly raises the alarm about future free cash flow and the company’s valuation.
Image Source: Zacks Investment Research
Globalstar’s Uncomfortable Valuation
Taking away from Globalstar’s top line growth is that at $20 a share, GSAT still trades at 10X sales with its Zacks Satellite and Communication Industry average at 0.7X and the S&P 500 at 5.2X. Of course, P/E valuation can’t be used since Globalstar isn’t profitable.
Image Source: Zacks Investment Research
Conclusion & Final Thoughts
The bottom line is that it looks risky to invest in Globalstar’s stock at the moment. Investors haven’t been swayed by a partnership with Apple because Globalstar may be overly reliant on the tech giant as its primary customer. To that point, Apple accounts for 85% of Globalstar’s satellite network infrastructure.
Also, keeping in mind that Globalstar has been public for almost 20 years, the benefit of the doubt has started to go out the window in terms of its future earnings potential. This makes the company’s sales growth less impressive and spurs doubt about operating efficiency at this stage in its corporate life.