GSAT Breakout Report

Investor Analysis

Date: October 26, 2023

Globalstar (GSAT) Investor Summary

Note: GSAT has gained approximately 52.3% since its recent breakout.

Business Overview

Globalstar, Inc. (NASDAQ: GSAT) is a leading provider of mobile satellite services (MSS) and satellite-based connectivity solutions. The company operates a Low Earth Orbit (LEO) satellite constellation and associated ground infrastructure to offer voice and data communications services globally. Globalstar serves a diverse customer base across government, public safety, disaster relief, commercial (maritime, oil & gas, forestry, utilities, transportation), and consumer sectors. A significant strategic focus and growth driver is its role as a provider of critical satellite capacity for Apple's satellite features, including Emergency SOS via Satellite and Find My via Satellite, leveraging its S-band spectrum.

Key Competitive Moats

• LEO Satellite Constellation: Operates a resilient and established LEO constellation providing global coverage, particularly in remote areas beyond terrestrial network reach.
• Valuable Spectrum Holdings: Owns significant S-band and L-band spectrum (notably Band 53), which is highly valuable for both satellite and potential terrestrial applications, offering unique flexibility and monetization opportunities.
• Strategic Apple Partnership: Exclusive long-term agreement with Apple for satellite capacity is a foundational revenue stream and validates Globalstar's technology and spectrum assets.
• Proprietary Technology & Infrastructure: Developed specialized chipsets and a robust ground infrastructure network (gateways and operations centers) to support its services.
• IoT Market Leadership: Strong position in satellite-enabled Industrial IoT (IIoT) solutions, providing connectivity for remote asset tracking and monitoring.

Projected Revenue and Earnings Growth Drivers (2025/2026)

Globalstar is strategically positioned for accelerated growth in 2025 and 2026, driven primarily by the full ramp-up of its Apple partnership, the deployment of its new second-generation satellites, and the potential monetization of its Band 53 spectrum. Analysts project significant improvements in both top-line revenue and profitability as the company moves past its initial capital expenditure cycle.

• Q1 2025 (Quarter ending March 31, 2025): Expected to show continued strong year-over-year revenue growth from Apple capacity lease and subscriber activation, with improving EBITDA margins.
• Q2 2025 (Quarter ending June 30, 2025): Anticipated to reflect ongoing benefits from increased penetration of Apple's satellite features globally and potential expansion of other IoT services.
• Q3 2025 (Quarter ending September 30, 2025): Key period for assessing the impact of new Apple product cycles and any further integration of Globalstar's technology. Growth rates are expected to remain robust.
• Q4 2025 (Quarter ending December 31, 2025): Revenue and earnings expected to be positively impacted by holiday sales of satellite-enabled devices and continued IoT expansion, culminating a strong growth year.
• 2026 Outlook: Further acceleration is projected into 2026, with revenue growth driven by sustained Apple partnership revenue, potential new partnerships leveraging Globalstar's spectrum or satellite assets, and the full operational impact of new satellite deployments enhancing service capabilities. Profitability is expected to expand as high-margin capacity lease revenue increases and operating leverage improves.

Recent Catalysts

• Expanded Apple Integration: Continued expansion of Apple's satellite features into new iPhone models and geographical regions, solidifying long-term revenue.
• New Satellite Constellation Development: Progress on the construction and planned deployment of its second-generation LEO constellation (with MDA Ltd. and Rocket Lab), ensuring future capacity and service reliability.
• Spectrum Monetization Progress: Ongoing efforts and potential announcements regarding partnerships or licensing agreements for its valuable Band 53 spectrum for terrestrial or hybrid network use cases.
• Strategic IoT Growth: New contract wins or partnerships in the growing satellite IoT market, expanding its subscriber base and recurring revenue streams.
• Positive Market Momentum: The stock's recent significant breakout (52.3% gain) reflects increasing investor confidence in its growth trajectory and strategic value.

Main Risks

• Concentration Risk (Apple): A substantial portion of future revenue is tied to the Apple partnership. Any change in Apple's strategy, demand for satellite features, or partnership terms could significantly impact Globalstar.
• Capital Expenditure Requirements: High ongoing and future capital expenditures are required for satellite construction, launches, and ground infrastructure maintenance, which could necessitate further financing.
• Technological Obsolescence & Competition: Rapid advancements in satellite technology and increasing competition from other LEO providers (e.g., Starlink, AST SpaceMobile) pose potential challenges.
• Regulatory & Spectrum Risks: Dependence on favorable regulatory environments globally for spectrum use and satellite operations; changes could impact business.
• Operational Risks: Satellite launch failures, in-orbit malfunctions, and natural disasters affecting ground infrastructure could disrupt services and incur significant costs.
• Market Adoption: Slower-than-anticipated adoption of satellite-enabled consumer devices or industrial IoT solutions could delay revenue ramp-up.

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