Globalstar (GSAT) Stock: Is There Validity to This Recovery?

Globalstar, Inc. (NYSEMKT: GSAT)

Globalstar is having an incredible day in the market today. However, you may not have guessed the gains were coming after the stock recently declined more than 50%. So, what was the cause of the drop, why is the stock recovering, and what can we expect to see moving forward? I’ll do my best to answer all of these questions today!

Why GSAT Fell So Hard

As mentioned above, Globalstar fell dramatically, giving up more than 50% of its value in a single trading session recently. The declines surround a recent proposal the company submitted to the FCC. You see, the company has invested tons of time and money into a technology that’s expected to expand wifi service by about a third. However, in order for this plan to go through, GSAT will need to gain access to airwaves that are currently reserved for satellite signals only. This is where the FCC comes in.

You see, GSAT competitors like Google, Microsoft and more contend that if the company is able to use these waves to extend WiFi services, it will jeopardize mobile signals and cause quite a bit of issues with mobile connectivity when it comes to cell phone services. So, the 5 member FCC will be voting on whether or not Globalstar will be able to use these airwaves after weighing the pros and cons associated with their decision.

There has already been 1 no vote cast when it comes to the proposal. However, recently, a second member of the FCC voted against the proposal, bringing chances of approval down dramatically. Now, GSAT will need a positive vote from all 3 remaining members in order to carry out its plans. This is what caused a decline of more than 50% in a single trading session.

Why We’re Seeing Gains In The Stock Today

While GSAT recently had an incredibly hard time in the market, things seem to be changing. Today, we’re seeing incredible gains in the value of the stock. Currently (3:08), the stock is trading at $1.28 after a gain of $0.14 per share or 12.83% thus far today. So, what’s causing the gains?

The truth is that there has been no recent fundamental news that suggests that gains are coming. At the end of the day, the gains are simply a correction from the recent declines we’ve seen on the stock. At this point, investors are realizing that while the chance is slim, there is a chance that GSAT’s proposal will be approved by the FDA.

What We Can Expect To See Moving Forward

Moving forward, I have a relatively mixed opinion of what we can expect to see from Globalstar. In the short and mid term, things aren’t looking great. The reality is that chances of the company receiving a yes vote from the remaining 3 members of the FCC are relatively slim. So, when the next votes are cast, we can expect to see declines. While there is a chance of approval, I can’t stress how very small that chance actually is enough! However, the company is driving innovation in the networking sector. As this innovation continues, the stock will likely grow in the long run. Just don’t expect anything spectacular tomorrow!

What Do You Think?

Where do you think GSAT is headed moving forward and why?