Globalstar, Inc. (NYSEMKT:GSAT) has never seen an upside since 2007 on the stock market until late 2013. There is a reason for the stock to grow and this would not just help the stock of the company, it would also try to solve the spectrum congestion problem, United States and many other countries face currently.
Jim Cramer on CNBC had called the stock of Globalstar, Inc. (NYSEMKT:GSAT) as the mother of all speculative stocks because it’s a stock which has the highest risk and at the same time highest possible rewards in the near future.
“It’s got $4 and change stock and the stock has tripled over the last 12 months and rallied a 140% year to date.” Cramer said about the position of Globalstar, Inc. (NYSEMKT:GSAT)’s stock.
Cramer feels that Globalstar, Inc. (NYSEMKT:GSAT) is not done going higher and he thinks it can keep advancing. The reason for the stock to grow is not because of its satellite business or even something similar and rather from a possibility of the company’s spectrum to be used by carriers.
“Globalstar owns something else beyond satellites, something that could make this company incredibly valuable even if you believe that Sat phone business is worthless. I am referring to Electro Magnetic Spectrum.” Cramer stated.
The mobile data traffic has increased by over 70% last year in the USA and even the Wi-Fi providers are facing serious congestion issues. The wireless providers are trying to snap the spectrum where ever they can find it and that is where Globalstar, Inc. (NYSEMKT:GSAT) enters into the picture. Its spectrum for satellite communication is just next to the spectrum used by Wi-Fi and hence if this spectrum can be leveraged it could boost the US Wi-Fi capacity by over 33%.
The problem with this possibility is that the spectrum Globalstar, Inc. (NYSEMKT:GSAT) owns can only be used for satellite communication and the company has filed a petition with the FCC to rezone the spectrum so that it can be used for integrating different applications and create a network of super-fast Wi-Fi hotspots. The FCC then issued a notice of proposed rulemaking which looks extremely favorable for GSAT and if the spectrum gets approved to be used in terrestrial applications, it would be worth several billions based on what the carriers pay to get the spectrum from Globalstar, Inc. (NYSEMKT:GSAT).
Cramer, however was cautious while recommending the stock and said that the probability of the stock gaining further is high and it can go upto $7 by the end of the year. So it’s a gain of about 75% from the current position which is hard to avoid at this position. All of this is dependent on the FCC and if it approves the spectrum to be leveraged, it might open up a world of possibilities for Globalstar, Inc. (NYSEMKT:GSAT).