E-commerce and cloud computing giant Amazon (AMZN) is in advanced discussions to acquire satellite operator Globalstar (GSAT), with a deal expected to be announced as early as Tuesday, Bloomberg reported. GSAT stock was up 10% in Tuesday’s pre-market trading in reaction to the news.
Claim 30% Off TipRanks
New trading tool for AMZN bullsInterestingly, GSAT stock surged 13.4% on April 2 when the Financial Times initially reported talks between the two companies to acquire Globalstar for about $9 billion.
It is worth noting that Apple (AAPL) invested nearly $1.5 billion in Globalstar in 2024 and took a 20% stake. Globalstar’s network supports critical services, including Apple’s emergency feature on iPhones.
Here’s How Amazon Could Benefit from Globalstar Deal
Reportedly, a final agreement hasn’t been reached between Amazon and Globalstar, and the discussion might end without a deal. However, if talks are successful, it will help Amazon compete with Elon Musk’s SpaceX, which is seeing rapid growth in its Starlink satellite internet unit.
Satellite broadband is a lucrative growth market, as it is seen as an attractive alternative to ground-based services, particularly in remote locations.
The Globalstar acquisition could accelerate Amazon’s efforts to ramp up its low-earth-orbit satellite network, called Amazon Leo. Notably, Leo aims to offer high-speed internet in rural and remote areas and operate over 7,700 units. However, Amazon Leo has been struggling to achieve its goals due to several challenges, including rocket shortages and manufacturing disruptions.
According to Bloomberg Intelligence analyst John Davies, Globalstar operates an already functioning satellite network, which could help Amazon accelerate its Leo business. He also expects Amazon to gain from Globalstar’s spectrum rights.
Wall Street’s Take on AMZN and GSAT Stocks
Wall Street has a Strong Buy consensus rating on Amazon stock, with the average price target of $284.20 implying 18.5% upside potential. Meanwhile, Globalstar stock scores a Moderate Buy consensus rating, with the average price target of $71 indicating downside risk of 2.6%. AMZN stock has risen 4% year-to-date, while GSAT stock has gained more than 19%.
