Satellite stocks were hot for investors on Thursday, and one beneficiary was the telecommunications services giant. Iridium Communications (NASDAQ: IRDM). Following a widely read media report about the peer company’s possible acquisition, Iridium’s share price fell more than 15%. That crushed the low performance of S&P 500 index.
Before the opening of the market, i Financial Times published an article to that effect Globalstar had conversations with him Amazon about possible acquisitions. Such a deal would strengthen Amazon’s current satellite internet efforts, called Leo (not coincidentally, short for low Earth orbit, the region of the Earth’s orbit most populated by satellites).
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Citing unnamed “people familiar with the matter”, the FT wrote that the two companies have been discussing a deal for some time. There were no indications of how much this would cost.
One thing that is complicated, according to FT sources, is an applewhich holds a 20% stake in Globalstar. The newspaper said that Apple and Amazon are also in talks.
Amazon may not be Globalstar’s only suitor. Late last year, it reportedly discussed a possible acquisition with Elon Musk-led Elon Musk. At the time, according to Bloomberg, this was in the midst of discussions with other companies that were interested in buying the company.
None of the companies mentioned have officially commented on the FT article.
The clear interest in Globalstar from deep strategic investors highlights the importance of satellite networks. This is rightly considered the “next frontier” not only in the telecommunications and defense industries, but also in the white-hot tech sector of artificial intelligence (AI). A popular topic in the tech world is the possibility of building AI-capable data centers in space.
That said, the sudden surge in investor interest in satellite stocks after the report sounds like a fluke. While companies like Iridium have their merits, it’s always risky to trade on second-take speculation. I will leave the Iridium and peers alone for the next few days as that is cold.
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Eric Volkman has positions in Apple. The Motley Fool has positions and recommends Amazon and Apple and is short Apple shares. The Motley Fool has a policy of disclosure.
Why Iridium Stock Got the Market Thursday was first published by The Motley Fool
