On Tuesday, Globalstar Inc. (NYSEAMERICAN:GSAT) shares plummeted more than 23% after the latest Apple Inc. (NASDAQ:AAPL) event failed to confirm satellite connectivity for the iPhone 13.
Investors had rallied GSAT shares in the days leading to the event on speculation that the new iPhone would have satellite connectivity, thereby allowing users to call and text when in areas without cellular coverage.
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Reports emerged at the end of August that the iPhone 13 would have satellite connectivity. However, more clarification followed soon after with Bloomberg noting that those features are due soon, but could be available in later versions of the iPhone with a key focus on emergencies.
The new iPhones starting at $799 and $699 (for the iPhone 13 mini) did not detail any of those features.
Should you hold on to your GSAT shares?
Although the new versions of the iPhone did not detail any hardware for satellite connectivity, this does not rule out satellite-enabled iPhones in the future. Moreover, Bloomberg had clarified about the unlikely prospect of Apple announcing these features in the latest event.
In addition, whilst the current satellite phones seem to have issues, analysts believe it is because they use geostationary satellites on high-earth orbit. Globalstar satellites are non-stationary and are in low-earth orbit, meaning connectivity could be stronger and more stable.
It is believed to be the reason Apple chose Globalstar. As a result, the latest Apple event most likely postponed the inevitable, meaning Globalstar could still gain significantly from its partnership with the technology giant.
The current pullback could continue towards 100-day MA
Although GSAT shares plunged substantially on Tuesday, the pullback could continue through Friday before finding support at the 100-day moving average. Moreover, the stock is yet to hit the oversold conditions of the 14-day RSI, leaving room for more downward movement.
Therefore, investors can target extended short-term declines at approximately $1.55 or lower at $1.35, while $1.93 and $2.13 are key support areas.
Globalstar shares closed at $1.75 on Tuesday.
Bottom line: It could be best to hold if you already own Globalstar shares
In summary, Globalstar shares appear poised to continue declining in the short term. However, the company’s long-term growth prospects remain bright, despite Apple’s disappointing iPhone hardware event.
Therefore, while the opportunity to short the stock looks exciting, investors willing to overlook short-term turbulence could net significant gains in the long term.
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