Globalstar Sinks on Apple Deal. ‘Buy the Rumor; Sell the News.’

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Apple
’s
iPhone 14 will have some satellite connectivity. It’s a big deal for space, space-based communications tech, and space companies. So why is

Globalstar

stock tanking on the news of a deal with Apple?

Wednesday, Apple (ticker: AAPL) announced with the coming iPhone 14 users “use Emergency SOS via satellite to text emergency services when you’re out of cellular and Wi-Fi coverage.”

Globalstar (GSAT) will provide the satellite service. The deal will provide Globalstar with hundreds of millions in sales in 2023 alone. Still, shares closed down almost 19% Thursday, while the

S&P 500

and

Dow Jones Industrial Average
rose 0.7% and 0.6%, respectively. What gives?

Starting points matter. That is one reason Globalstar shares, and other satellite stocks, are down Thursday. Globalstar stock is still up about 17% since rumors the iPhone 13 would include satellite communications capability. The S&P 500 is down about 11% over the same span.

Thursday is just another case of an adage playing out: Investors buy the rumor and sell the news. Essentially, it means the stock market is forward looking and the potential for satellite companies to gain from mobile communication applications is already in the stocks. Raymond James analyst Ric Prentiss wrote in a research report this week that the Apple move was “expected.”

An Elon Musk tweet also added to the daily decline. Globalstar stock was down roughly 10% before Musk tweeted that SpaceX and its Starlink space-based internet business had conversations with Apple.

The existing satellite industry competing with SpaceX, apparently, worries investors.

Prentiss doesn’t cover Globalstar stock, but he covers

Iridium Communications

(IRDM) among others. He rates those shares Buy and has a $51 price target.

Thursday’s move in Iridium stock might also confuse investors. Shares are up 0.6% and it didn’t win the Apple business. But Iridium’s stock is up only about 8% since the iPhone 13 rumors in 2021.

Confusion continues. Globalstar will be launching more satellites into low earth orbit, but stock in launch provider

Rocket Lab USA

was off about 3% in midday trading, but closed down 0.5%. Stock in launch provider

Astra Space

(ASTR) was down more than 5%, but closed down 0.4%.

Starting points don’t help investors understand those reactions. Rocket Lab shares are down about 50% since the iPhone 13 rumors. Astra stock is down about 94% over the same span.

It seems like investors are still figuring out the winners and losers from mobile phones connecting with satellites—as well as how big a deal it is for the commercial space business overall.

The only thing investors seem to know now is that the satellite-mobile telephone link up opportunity is real. Don’t forget, T-Mobile US (TMUS) inked a deal with SpaceX in late August for some services. Now there is the iPhone 14.

Write to Al Root at [email protected]