Al Root

Amazon.com's blockbuster deal for Globalstar holds a few lessons for investors: The market for space companies is for real, the wireless spectrum arms race is on, and rocketing valuations will always draw competition.

On Tuesday, Amazon said it would buy Globalstar for the equivalent of $90 a share, valuing the satellite communications company at just under $12 billion.

Analysts say the deal is a boon for Amazon. The company is trying to build its own space-based broadband network -- a field currently dominated by Elon Musk's Starlink. The purchase helps Amazon kick-start its space strategy by leveraging Globalstar's existing satellites. With a space-based broadband network, Amazon Web Services customers can move data without ever touching a public internet.

"We view Amazon's announcement...positively as it looks to compete against the much larger and more established Starlink," wrote Truist analyst Youssef Squali in a Tuesday report.

SpaceX has launched more than 11,000 satellites into low-Earth-orbit, and the company's space-based broadband business, Starlink, has amassed more than 10 million customers. The key for SpaceX and Starlink is launch capacity. SpaceX handles more than half of all orbital launches worldwide.

In comparison, Amazon's Leo communications constellation (formerly named Kuiper) has fewer than 300 satellites in orbit.

Amazon was supposed to have some 1,600 satellites in orbit by July 2026, according to its license with the Federal Communications Commission. The tech conglomerate has asked for an extension from the agency, but now Amazon has Globalstar's two dozen satellites, no matter what happens with the FCC.

Overall, Amazon's license allows it to put some 3,200 satellites in orbit by 2029.

"Amazon is effectively solving its FCC deadline problem by acquiring a functioning satellite operator while also leapfrogging into direct-to-device connectivity, a market SpaceX's Starlink has been targeting," Wedbush analyst Michael Piccolo wrote Wednesday.

Direct-to-device connectivity essentially means satellites connecting with smartphones.

The deal also gives Amazon access to critical licensed spectrum infrastructure, Squali says.

Spectrum is a hot asset right now. Wireless spectrum -- the frequencies that wireless calls and data travel over -- is a finite resource that every data provider needs. Just as two radio stations in the same city can't broadcast on the same frequency, companies such as AT&T, Verizon, and SpaceX need spectrum for their customers' calls and data.

In September, EchoStar announced a deal to sell its AWS-4 and H-block spectrum licenses to SpaceX. As part of the deal, EchoStar got $8.5 billion in SpaceX stock. EchoStar got another $2.6 billion in SpaceX shares by selling more spectrum in November. In March, the FCC released the application status for the coming auction of advanced wireless spectrum, or AWS-3. SpaceX was among the bidders.

Most satellite stocks, such as Iridium Communications and Viasat, rose after the Globalstar deal. Shares of AST SpaceMobile went in the other direction, dropping 10.5%.

"We conclude that the market's response to the news was directionally rational.... due to the prospects of another well-capitalized competitor attempting to enter the direct-to-device space," wrote Deutsche Bank analyst Bryan Kraft in a Wednesday note.

Through Tuesday trading, AST shares have skyrocketed more than 4,000% over the past two years. The stock is valued at $35 billion, more than Globalstar, Iridium, and Viasat combined.

That valuation -- along with the growth of SpaceX, which is planning a midyear initial public offering valuing the company at as much as $2 trillion -- shows that space-based communications technologies will be big. But valuations like that will draw competition.

And competition for direct-to-device customers will likely be fierce. That's the market that SpaceX, Amazon, AST, and others are going after.

"We continue to think of direct-to-device as a very large market with room for multiple competitors to succeed," Kraft writes. "There are about six billion mobile lines in service worldwide and about 2.5 billion people without broadband service."

He lowered his price target on AST to $117 from $139, assuming that pricing will be 15% lower with new competition. But he is keeping his Buy rating on the stock.

Write to Al Root at allen.root@dowjones.com

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April 15, 2026 14:11 ET (18:11 GMT)

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