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Sunday, December 4, 2022

Globalstar, Inc. (NYSEMKT:GSAT) is the Comeback Kid

Globalstar, Inc. (NYSEMKT:GSAT) recently tested support at $2.50 for the 3rd time in recent weeks but held strong. The stock has been making higher highs and higher lows since the lows of $1.56 in October on the Kerrisdale Capital short attack.

GSAT has been one volatile stock over the past few months due to heavy manipulation by Kerrisdale Capital and Jim Cramer. Kerrisdale short campaign seems to be heading for epic failure which seems justified considering their hugely aggressive way over the top smear campaign.

Globalstar, Inc. (NYSEMKT: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. 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 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.

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 recently 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.

The general thesis seems to be that the FCC will rule in favor of GSAT and this could happen any day. If it does GSAT valuation could rise as much as 600% according to many close to the Company. It would also make GSAT a highly attractive buyout candidate to many operating in the space including Amazon and even Google.

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GSAT dropped 10% in after-hours trading on Friday after Cramer again injected himself into the situation, this time saying he wishes he never heard of Globalstar. It amazing that anyone would still listen to him especially after his terrible call at $4.18 per share back on July 1.

I stopped listening to Cramer years ago when he made the preposterous statement that Lenny Dykstra “one of the all-time greats” of investing. This after Lenny Dykstra, who made close to $100 million playing on the Mets for 12 years squandered everything and ended up penniless in Jail for Grand theft auto.

Ever since the Kerrisdale Capital short attack tanked GSAT to a low of $1.56 on October 6, the stock has been exploding in their faces on record breaking volume. It was Kerrisdale that brought this upon themselves; it was them that led a massive short position into GSAT and it was them and Jim Cramer that then brought massive publicity to the situation.

The stock does not lie and the stock has been doing nothing but exploding on massive buy side volume and widespread positive investor sentiment. Rather than selling GSAT investors are buying GSAT betting on a favorable ruling from the FCC.

If this happens, the short squeeze is going to be EPIC, spelling massive gains for investors and huge losses for Kerrisdale Capital.

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Disclosure: we hold no position in GSAT either long or short and we have not been compensated for this article.

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