Shares of small space companies soared amid Amazon's interest in their competitor

Shares of Iridium Communications and Viasat, two small satellite communications companies, soared more than 15% on April 2. The rally was triggered by a Financial Times report that e-commerce giant Amazon is in talks to buy their rival Globalstar.

Quotes of Viasat, whose market value on the Nasdaq is $7.3 billion, jumped on April 2 by almost 19% to $53.7. This is the maximum mark since November 2021.

Iridium Communications shares rose more than 15% to $32.9. They have not cost so much since the beginning of 2024. As a result, the company's capitalization reached $3.4 billion.

The rally began against the background of the publication of the FT about the interest of Amazon to buy a competitor of these two players - satellite company Globalstar, notes Barron's. Quotes of Globalstar itself rose by more than 13% - to $77.7.

As sources told the FT, Amazon and Globalstar are discussing the details of the deal, but it may be complicated by the fact that about 20% of the shares of the space company belong to Apple. Thus, the purchase needs to be agreed with it as well.

The potential deal would strengthen Amazon's Kuiper satellite project, which competes with SpaceX's Starlink. Amazon has flown about 200 satellites to this point and plans to deploy a network of another 7,700, but is facing delays. Whereas Starlink already has more than 10,000 satellites and over 9 million users.

Viasat has the largest amount of satellite frequencies among the three companies, explains William Blair analyst Louis DiPalma. GlobalStar and Iridium follow. DiPalma notes that spectrum is a major source of competitive advantage in this market. "AST SpaceMobile and SpaceX are likely to seek to acquire more spectrum to increase the capacity of their networks," says the analyst.

Among other reasons for the growth of quotes of players related to the space industry, Barron's calls the start of NASA's Artemis II mission, which sent four astronauts on a 10-day trip to the moon. As part of it, four miniaturized satellites will be put into orbit for research purposes.

Quotes Viasat has grown since the beginning of the year by 55%. Six Wall Street analysts advise to buy the company's securities, one - to hold and one - to sell. The average target price is $51.5 - after Thursday's rally, it is already 4% below the last close.

Iridium shares have soared 89% since the beginning of the year. Its securities have seven buy recommendations from Wall Street analysts, two neutral ratings and one bearish. The consensus target of $28.5 is 13% below the current quotations