Globalstar, Inc. (GSAT) Stock Pulls Back After The Big Jump: Comment from B. Riley Securities

Globalstar, Inc. (NYSEAMERICAN:GSAT) stock is pulling back a bit after a big jump in yesterday’s trading session. The stock is down 6% at $2.52. The stock has soared 78% over the past week.

Analyst Mike Crawford commented, “Buy-rated Globalstar, Inc. (GSAT, $3.25 PT) shares shot up 30% on 9/9, compared with a 1.1% decline in the ^RUT, with again-heavy volume (290M shares) following reports that some were connecting a recent experimental license granted by the FCC to Apple as a potential customer.

Globalstar did get an experimental mobile radio station license for its S-band frequency, which is used as downlink in its LEO constellation, but any connection to Apple remains speculation and also doesn’t explain how an iPhone emergency transmission system would work, if that indeed is the designated use case, as opposed to—say—access to GSAT’s terrestrial Band n53 spectrum for private network deployment.

Then again, GSAT’s mystery project could be something else entirely, a possibility that gains credence when we consider that the company has been recording advance payment cash received as long-term deferred revenue, i.e. not expected to flow through the income statement as GAAP revenue for over a year. On 9/2, GSAT disclosed a 3rd such advance payment from this “potential” customer for a “potential service utilizing certain of (GSAT’s) assets and capacity,” this time for an added $37.5M, bringing total cash in from this project since the beginning of June to $90M, with GSAT using the proceeds to pay down its first lien debt. Indeed, this latest $37.5M boon is incremental to our published model, taking net debt down below $220M—for a company that we believe is sitting on billions of dollars of spectrum.”