On Wednesday, Globalstar Inc. (NYSEAMERICAN:GSAT) shares rallied more than 5% amid speculative chatter about whether Apple Inc. (NASDAQ:AAPL) will announce a satellite phone service feature in its upcoming second hardware event.
GSAT shares spiked sharply before Apple’s first hardware event last month amid speculation the iPhone maker would announce a satellite phone. However, after failing to mention satellite services during the event, the Louisiana-based company’s shares plummeted to erase the gains.
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GSAT shares are up 388% this year and more than 410% over the last 12 months.
Should you bet on GSAT?
From an investment perspective, GSAT shares have gained significantly this year because of the company’s partnership with Apple. Some investors still expect Apple to announce a satellite phone feature despite a low-key iPhone 13 event last month.
In addition, Apple only hinted that satellite capability may not be available in any more than an emergency-response capacity, thereby limiting the number of satellite supported devices.
Therefore, even if the company eventually rolls out the satellite iPhone services, it may not boost GSAT’s top line significantly. Therefore, with shares trading at a steep P/S ratio of 23.94, it may be best to monitor the developments before buying.
Technically, GSAT shares seem to have spiked after finding support off the 100-day moving average. However, the stock is still far from reaching the overbought conditions of the 14-day RSI.
Therefore, investors could still target extended short-term gains at about $1.86, or higher at $2.11. On the other hand, if the stock pulls back amid fears Apple may fail to announce a satellite service, it could find support at $1.46, or lower at $1.19.
Time to take some GSAT profits?
In summary, although GSAT shares are far from reaching overbought conditions, the recent spike presents an opportunity to take some profits ahead of a potential pullback.
With Apple unlikely to announce a satellite service any time soon, GSAT shares could plummet again after the technology giant’s second hardware event.
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