Globalstar, Inc. (NYSEMKT:GSAT) is back at the bottom if its trading range. GSAT has recovered well from the manipulation attempts by Kerrisdale Capital and Jim Cramer who wrongly thought they could short this one into oblivion.
GSAT has been around for years; 1st on the Nasdaq where it traded over $10 per share and boasted a market valuation of several billion, then on the OTCBB at $0.22 per share after the bankruptcy, delisting and restructuring. Finally, Globalstar has emerged on the NYSE and has been taking the market by storm since!
Globalstar, Inc. (NYSEMKT:GSAT) is the World’s largest provider of satellite based mobile voice and data services with a global network of 36 low orbit satellites that service over 560,000 subscribers. The Company is growing quickly; over the past year, Globalstar added approximately 7,000 net Duplex subscribers, 15,000 net SPOT subscribers and 56,000 net Simplex subscribers. Revenues are also growing with GSAT reporting a growth of 9% and 10%, respectively, to $18.5 million and $52.6 million for the three- and nine-month periods ended September 30, 2014,
The big story on GSAT surrounds their rights to an electro-magnetic spectrum in the US and the rest of the World used for satellite communications called space-to-Earth Mobile Satellite Service (MSS).
The Spectrum just happens to sit right next to the band of spectrum that is used for WIFI and according to GSAT could boost U.S. WIFI capacity by as much as 33%. The Company wants to create a super network of WIFI hotspots in the US if they can gain FCC approval to re-zone the spectrum for terrestrial use.
Globalstar is asking the FCC for permission to do is change (augment) that allotment to include an ancillary terrestrial component (ATC) use which Globalstar calls TLPS/AWS-5.
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The TLPS portion would use existing unlicensed, unprotected Part 15 WiFi frequencies. The AWS-5 portion would use the MSS allotment. However, using the MSS allotment terrestrially creates a conflict with existing TV Broadcast Auxiliary Service (BAS) stations. These are grandfathered TV BAS Channel A10 stations, which are co-primary, not secondary to MSS, and there is no sunset date on the grandfather rights. Between co-primary users, the newcomer must protect the incumbent(s). There are grandfathered A10 stations in Boston, Chicago, Denver, Detroit, Los Angeles, Miami, New York City, Philadelphia, Phoenix, Sacramento, Salt Lake City, San Diego, San Francisco, Washington DC, and other cities. (thanks to Dane Ericksen for clarifification on this point)
From the beginning the FCC has been very open to the idea and all evidence so far suggests they will rule in favor of GSAT.
The games on GSAT started on July 1 of last year when the stock was trading at $4.18 per share with Jim Cramer calling Globalstar the mother of all speculative names, a stock that’s as high risk, high reward as they come saying ”I don’t care if I missed it I don’t think it’s done going higher, I think it could go a lot higher”
This turned out to be one of the worst calls in recent small cap history as GSAT reached a low of $1.56 after the Kerrisdale Capital short attack 3 months later. Anyone who listened to Cramer the 1st time around on GSAT was down close to 70% on their investment.
On October 6 Kerrisdale Capital, a dodgy hedge fund with a dismal history of aggressively shorting ”dubious” company’s announced they were short GSAT and launched a very well organized and well planned short attack on Globalstar.
The attack was marked by a significant media blitz via press releases and twitter that included an in depth report and a live investor presentation on GSAT suggesting that their spectrum was worthless and the stock should go to $0.
Announcement! We’re presenting on new multibillion-dollar short Monday, Oct 6. It’s the best short we’ve come across, ever. Stock worth $0
— Kerrisdale Capital (@KerrisdaleCap) October 1, 2014
— Kerrisdale Capital (@KerrisdaleCap) October 6, 2014
Since GSAT hit a low of $1.56 the day after the Kerrisdale Capital short attack the stock has done nothing but rise and continue to make explosive gains. Contrary to what Kerrisdale is saying investors sentiment on GSAT seems to be more positive than ever….
Insiders have been loading up with corporate secretary Richard S. Roberts disclosing he bought 50.8K shares the other day at $2.69. Director Patrick McIntyre discloses he bought 40K shares on Wednesday at $2.71. Director William A. Hasier disclosed the purchase of 10K shares at $2.62 as well as CEO James Monroe III buying 175,000 shares on November 11.
Last week GSAT announced first Q 2015 financial results; revenues improved to $21.0 million for the first quarter of 2015 from $20.5 million for the first quarter of 2014, which was driven primarily by a 12% increase in the total subscriber base from March 31, 2014 to March 31, 2015. The material appreciation of the U.S. dollar over the past twelve months negatively impacted first quarter revenue by approximately $1.0 million. Worldwide activations continued to increase significantly; however, the adverse impact of converting our international subsidiaries’ revenue at a lower exchange rate offset the revenue growth that would have otherwise been recognized.
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Currently trading at a $2.2 billion market valuation GSAT continues to sit at the top of many speculators watch lists. The stock has been highly successful in attracting a loyal shareholder base who has been busy bidding up the price. We will be updating GSAT as events unfold so make sure you are subscribed to Microcapdaily so you know what is going on with GSAT.
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Disclosure: we hold no position in GSAT either long or short and we have not been compensated for this article.