Globalstar Shares Surge After Apple Investment

Shares of Globalstar (NYSE:GSAT) skyrocketed around 40% in premarket trading on Friday after the satellite services provider announced an expansion of its deal with Apple (NASDAQ:AAPL).

Agreement Details

As part of the updated agreement:
– Apple will invest an additional $1.1 billion in upfront infrastructure prepayments to expand satellite service capacity.
– The tech giant will purchase 400,000 Class B shares in Globalstar for $400 million, equating to a 20% equity interest in the new satellite network. The deal allows Apple to potentially buy back the units under certain conditions.

These investments will support the creation and deployment of a new satellite constellation and the expansion of ground infrastructure, all owned and managed by Globalstar.

Under the terms, Apple will make upfront payments for services, while Globalstar retains all revenue from both terrestrial and satellite services, dedicating 85% of its network capacity to Apple.

Financial Projections

Globalstar anticipates its total annual revenue will more than double compared to 2024 annualized levels in the first full year following the launch of the expanded satellite services.

The company plans to hold an investor day in December to share further details on its business strategy.

Previous Investment

Apple had previously announced a $450 million investment in U.S. infrastructure in November 2022 to support the launch of its Emergency SOS texting feature via satellite.

To facilitate this service, Apple provided Globalstar with $252 million as an advance payment to cover satellite manufacturing, launch, and associated costs for the constellation supporting Emergency SOS, introduced with the iPhone 14.

Originally available in the U.S. and Canada, the feature expanded to most of Western Europe in December 2022, and is now also available in Japan, New Zealand, and Australia.