GSAT Rises Again with AAPL as Stakeholder?
When Did It Begin?
It was over a little 2 years ago that $Globalstar(GSAT)$ first became “known” to investors.
It happened on 07 Sep 2022, when $Apple(AAPL)$ formally announced that they have selected Globalstar Inc, as its partner for an iPhone14’s feature that allowed users to send emergency messages from remote locations. (see above)
Two years on, the two companies are taking another step to work even closer.
Apple will be taking a 20% stake in its iPhone satellite connectivity partner, a stake that is worth $400 million, as part of Apple’s expansion deal with GSAT.
In addition, Globalstar will also receive a prepayment of $1.1 billion from Apple to be used to improve its satellite infrastructure.
Since September 2022, Apple has relied on GSAT’s satellites to enable to send (a) emergency text messages, (b) iMessage reactions, and more through the skies in areas with no cell signal.
Recently, Globalstar disclosed details of an expansion deal, in an SEC filing, that includes:
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A new satellite constellation.
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Expanded ground infrastructure.
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Increased global licensing (mobile satellite services.
Apple’s Emergency SOS first available on the iPhone 14 (2022), has enlarged its coverage to include iOS 18 as well.
This greatly empowered off-grid users to send and receive texts, emoji, and Tapbacks over iMessage and SMS, out in the wilderness.
Apple has intentions to charge for the satellite connectivity service, some point in time.
For now, access to its satellite features has remained FOC (free of charge) for the past 2 years.
In a surprised move, iPhone 14 owners have been given another year of free service, lasting until November 2025.
Q2 2024 earnings.
Is GSAT profitable ? Quick recap of this mobile satellite service provider:
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Total Revenue: $60.4 million, a +10% YoY increase.
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Service Revenue: increased $9.0 million, a +18% YoY gain.
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Cash on Hand: $64 million at the end of the quarter.
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EBITDA (adjusted): grew by +20% with a margin of 54%, up from 49% in the prior year.
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Revenue Guidance: Raised to a low end of $235 million, indicating an +8% YoY gain.
Historic Earnings.
Since the initial collaboration from Q3 2022, GSAT earnings seemed to have turned the corner. (see above)
Its revenue, earnings per share and profit margin was at an all-time low when Q3 2022 earnings were announced.
With the collaboration kicking in, its performance improved for the subsequent 3 quarters and profit margin even broke above 0% in Q2 2023 at 0.02%.
This was also the time where Fed funds rate was at its peak of 5.00% - 5.25%, making it very expensive to do business.
It (revenue, eps and profit margin) bottomed in Q4 2023 and attempts to stage a mini recovery in 2024 and with improvements in its revenue, earnings per share and profit margin.
Historic Stock Price.
GSAT’s stock price movement is consistent with its income statement. (see above)
When the tie up was announced in September 2022, stock price actually fell further before peaking on 31 Oct 2022 at $2.03 per share.
Unfortunately, it could not find support at the peak price and traded down, with the Fed raising interest rate by 0.25% twice before H1 2023 was over.
Twist Of Fate.
One of the “surprise” event that happened in September 2023, might just be the catalyst that helped GSAT to rise and achieved a 2nd peak in January 2024. (see below)
In September 2024, GSAT announced the appointment of a new CEO, Paul Jacobs. who was the former CEO of $Qualcomm(QCOM)$.
The “mission”-ary CEO has brought with him a team of experienced wireless experts.
They're bringing technologies from their previous venture, XCOM, to GSAT.
These technologies can efficiently transmit large amounts of data over limited wireless spectrum.
This could position Globalstar to play a key role in the "Internet of Things" (IOT), connecting devices like electric vehicles (EVs) to the internet.
GSAT Q3 2024 - EPS forecast & Rating.
Third Time’s A Charm ?
Will Fri, 01 Nov 2024 press release on further collaboration between Apple and Globalstar help to drive the company’s stock price back to the $2.03 peak, or even higher, now that Apple Inc has become a stakeholder ?
With the company slated to report its Q3 earnings on Thu, 07 Nov 2024 after market closed.
Will the third time’s a charm for this satellite service provider, with overlooked attributes of owning both satellite and terrestrial wireless spectrum?
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Do you think Apple will buy into Globalstar if it does not see value in the company ?
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Do you think Globalstar is poised to rise further on the run up to Q3 earnings reporting?
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