What Happened?
Shares of satellite communications provider Globalstar (NASDAQ: GSAT) jumped 10.9% in the afternoon session after the company agreed to be acquired by Amazon.
The deal, valued at approximately $11.6 billion, offered Globalstar shareholders either $90 in cash per share or a set amount of Amazon stock. This move was designed to expand Amazon's Leo low Earth orbit satellite network by incorporating Globalstar's satellites and operational expertise. The acquisition enabled Amazon to add direct-to-device (D2D) services, allowing mobile network operators to extend voice, text, and data coverage.
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What Is The Market Telling Us
Globalstar’s shares are extremely volatile and have had 49 moves greater than 5% over the last year. But moves this big are rare even for Globalstar and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 8 days ago when the stock dropped 6.8% as the stock pulled back following a significant rally driven by reports of a potential acquisition by Amazon.
The decline came after shares had previously surged more than 24% when news broke that Amazon was reportedly in talks to buy the mobile connectivity provider. However, the initial investor optimism appeared to be tempered by the complexities of a potential deal. A key challenge noted in reports was that Apple controlled a large part of Globalstar's satellite capacity. This existing arrangement would likely complicate any agreement with a major competitor like Amazon, leading to pressure on the stock after its sharp run-up.
Globalstar is up 25.4% since the beginning of the year, and at $80.22 per share, has set a new 52-week high. Investors who bought $1,000 worth of Globalstar’s shares 5 years ago would now be looking at an investment worth $4,818.
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