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What happened
Shares of the satellite communications company Globalstar (NYSEMKT: GSAT), which took off last month on speculation that Apple (NASDAQ: AAPL) could integrate satellite telephony capability into its new iPhone 13 smartphone – double The Globalstar share price in less than a month returned to Earth on Tuesday. As of 3:15 p.m. EDT, Globalstar stock was down 21%.
And Apple is the reason.
Image source: Getty Images.
So what
As the theory went on, you see, Apple was gearing up to announce new features and capabilities for this year’s iPhone iteration, the iPhone 13. Well, in fact, Apple announced the iPhone 13 at a reveal today, and as we just learned, it will have a starting price of $ 799, an A15 Bionic processor, an AMOLED display, up to 1TB of storage …
And no mention of the capacity of the satellite phone.
Now what
This is only a small disappointment for the telephone provider satcom Iridium Communications, which Bloomberg had already confirmed last month would not partner with Apple on any hypothetical satellite phone plan. (Iridium stock is down 3.7% anyway, perhaps because some investors were hoping Bloomberg was wrong about it.)
For Globalstar, meanwhile, the lack of a satcom ad at Apple’s big event was a more crushing blow. Unprofitable and trading for an incredible 38 times turnover as of Friday as of Friday, Globalstar’s stock was listed as if its partnership on an Apple satellite phone was virtually guaranteed.
Now that bubble has burst – and I’m not sure there are many obstacles to Globalstar stock falling back into the same penny stock territory it was trading as recently as April.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.
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