Continue Reading Below
Shares of Globalstar (NYSEMKT: GSAT) fell 15.1% in September 2017, according to data from S&P Global Market Intelligence. The price drop started when the provider of satellite-based voice and data communications services filed a response to the WiMAX Forum's petition for approval of a new wireless network for air-traffic-control systems.
The so-called AeroMACS system is meant to standardize the way traffic controllers communicate with aircraft and other important connection points, adding broadband data capacity and better error correction to the process. But the wireless spectrum bands allocated to this system, which has not yet been approved by the Federal Communications Commission, sit close to Globalstar's licensed spectrum bands and in some cases overlap with them.
The company's response highlighted the many ways an active AeroMACS implementation might hurt Globalstar's operations, and investors took it as a new risk that could reduce Globalstar's future cash flows.
Continue Reading Below
These days, it's almost impossible to predict which new technologies will make it through the hyperpartisan FCC approval process. For what it's worth, the American Association of Airport Executives broadly supports the AeroMACS initiative, but with the caveat that it may cause interference with other services. So, no clear guidance from the industry's sidelines there.
Globalstar shares are trading at nosebleed valuations today, making the stock more vulnerable to knee-jerk reactions. The AeroMACS system has been in the works since 2011, and the final stamp of approval may still be years away -- assuming that the FCC will accept the new standard at all.
10 stocks we like better than Globalstar
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Globalstar wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of October 9, 2017