Bear of the Day: Globalstar (GSAT)

The Nasdaq has fallen 10% over the last month and Globalstar Inc GSAT is a tech stock that could have more downside risk ahead.The provider of satellite telephones and data services has seen its stock plummet over 30% year to date, and unfortunately, the decline could continue. Considering such, Globalstar's stock lands a Zacks Rank #5 (Strong Sell) and the Bear of the Day.Image Source: Zacks Investment Research Market Sentiment & Global Star Despite a partnership with tech behemoth Apple AAPL in regards to satellite communication technology which is used in iPhones, market sentiment has worn thin for Globalstar amid ongoing tariff concerns and economic uncertainty.This comes as Globalstar reported record revenue and free cash flow (FCF) in 2024 but has struggled to cross the probability line since going public in 2006 (Illustrated in the EPS chart below). Furthermore, analysts have expressed concerns about the sustainability of Globalstar’s free cash flow with the company declining to give any future projections on FCF in its most recent Q4 earnings call in late February.Image Source: Zacks Investment Research Monitoring Globalstar’s Balance Sheet Although Globalstar’s cash & equivalents ballooned from $57 million to $391 million at the end of 2024, what may further concern investors is that it has $1.71 billion in total assets but $1.35 billion in total liabilities.While Globalstar is still solvent for now, this certainly raises the alarm about future free cash flow and the company’s valuation.Image Source: Zacks Investment Research Globalstar’s Uncomfortable ValuationTaking away from Globalstar’s top line growth is that at $20 a share, GSAT still trades at 10X sales with its Zacks Satellite and Communication Industry average at 0.7X and the S&P 500 at 5.2X. Of course, P/E valuation can’t be used since Globalstar isn’t profitable.Image Source: Zacks Investment Research Conclusion & Final Thoughts The bottom line is that it looks risky to invest in Globalstar’s stock at the moment. Investors haven’t been swayed by a partnership with Apple because Globalstar may be overly reliant on the tech giant as its primary customer. To that point, Apple accounts for 85% of Globalstar’s satellite network infrastructure.Also, keeping in mind that Globalstar has been public for almost 20 years, the benefit of the doubt has started to go out the window in terms of its future earnings potential. This makes the company’s sales growth less impressive and spurs doubt about operating efficiency at this stage in its corporate life.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.3% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Globalstar, Inc. (GSAT): Free Stock Analysis Report Apple Inc. (AAPL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks