Small space stocks soar on report of Amazon interest in Starlink peer

Shares of Iridium Communications and Viasat, two small-cap satellite communications providers, surged more than 15% on Thursday. The rally was triggered by a Financial Times report that Amazon is in talks to acquire their peer, satellite company Globalstar.

Shares of Viasat, which has a capitalization of $7.3 billion on the Nasdaq, jumped nearly 19% on Thursday to $53.70 apiece. That was its highest mark since November 2021. Shares of Iridium Communications rose more than 15% to $32.90 apiece – a two-year high. The company’s market capitalization is now at $3.4 billion.

The rally followed the FT report on Amazon’s interest in acquiring Globalstar. A flurry of space-related news is reshaping the market for satellite companies and leading investors to reassess their prospects, Barron's notes. Globalstar itself rose more than 13% to $77.70 per share.

According to FT sources, Amazon and Globalstar are discussing deal terms, but the negotiations are complicated by the fact that about 20% of the satellite company is owned by Apple. As a result, any acquisition would also need to be approved by Apple.

The potential deal would strengthen Amazon’s Project Kuiper satellite initiative, which competes with Starlink from SpaceX. Amazon has so far deployed about 200 satellites and plans to build out a network of another 7,700, but it is facing delays. Meanwhile, Starlink already operates more than 10,000 satellites and serves over 9 million users.

Viasat has access to the largest amount of satellite communications spectrum among the three companies, William Blair analyst Louie DiPalma explains. It is followed by Globalstar and Iridium. “AST SpaceMobile and SpaceX will likely seek to acquire more spectrum to add capacity to their networks,” the analyst wrote.

Among other drivers of gains in space-related stocks, Barron’s points to the launch of Artemis II by NASA, which sent four astronauts on a 10-day journey around the Moon. The mission also includes the deployment of four miniature satellites for research purposes.

Viasat shares have gained 55% year to date. Six Wall Street analysts rate the stock “buy,” one recommends “hold,” and one “sell.” The average target price is $51.50 per share – about 4% below the latest closing level after Thursday’s rally.

Iridium shares have surged 89% year to date. The stock has seven “buy” ratings from Wall Street analysts, two neutral ratings, and one bearish recommendation. The consensus target price of $28.50 per share is 13% below current levels.