Why Globalstar Stock Jumped Today
Key Points
Amazon needs Globalstar's help to take on SpaceX's Starlink.
Apple is set to be a major customer.
- 10 stocks we like better than Globalstar ›
Shares of Globalstar (NASDAQ: GSAT) climbed on Tuesday after the satellite operator struck a deal to be acquired by Amazon (NASDAQ: AMZN).
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The space race is intensifying
Under the terms of the deal, Globalstar's shareholders would have the option to receive $90 in cash or 0.3210 shares of Amazon stock for each share of Globalstar stock they own, subject to certain caps. The agreement values Globalstar at over $11 billion.
The deal is projected to close in 2027, subject to regulatory approvals and satellite deployment milestones.
Chasing Starlink
Rocket shortages led Amazon to miss its launch goals for its forthcoming satellite-delivered internet service, Leo. Buying Globalstar could bolster Amazon's satellite network and help it close the gap with industry leader Starlink, which is owned and operated by Elon Musk's SpaceX.
Starlink has more than 10,000 satellites in orbit and 9 million customers. Amazon has launched approximately 240 Leo satellites and has only recently begun signing up customers for when the service goes live.
Partnering with Apple
Integrating Globalstar would also allow Amazon to offer direct-to-device (D2D) cellular services. Amazon also plans to debut its own next-generation, high-speed D2D satellite network in 2028.
Apple (NASDAQ: AAPL) purchased a 20% stake in Globalstar in 2024 to help fund the build-out of its satellite communication network. As part of its deal to purchase Globalstar, Amazon agreed to supply Apple with satellite services for its iPhone and Apple Watch devices.
"Apple and Amazon have a long and proven track record of working together through Amazon's core infrastructure services, and we look forward to building on that collaboration with Amazon Leo," Apple executive Greg Joswiak said.
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Joe Tenebruso has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Apple and is short shares of Apple. The Motley Fool has a disclosure policy.
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