Something interesting is happening in the satellite space right now, and if you're an investor, it's worth paying attention.

According to Bloomberg, Amazon is in advanced negotiations to buy Globalstar, and the stock market quickly responded to the news. The price for Globalstar's shares (NYSE:GSAT) has risen by 15.7% in pre-market trading (at the time of writing), signaling just how big this potential deal could be.

Let's analyze this further.

Amazon Is Playing Catch-Up

Jeff Bezos’ Amazon (NASDAQ:AMZN) is looking to close in on SpaceX and its Starlink network in satellite internet.

Starlink has launched more than 10,000 satellites and amassed more than 10 million active subscribers worldwide since 2019. Starlink is also projected to earn over $9 billion in revenue by 2026.

In contrast, Amazon’s satellite system (Leo or Project Kuiper) has a plan to launch more than 3,200 satellites; however, Amazon currently has only around 180 satellites in orbit.

There is a huge disparity here. In fact, Amazon applied for an additional two years from the FCC in January 2026 to fulfill a July 2026 requirement to put up half of its satellite fleet.

So, when you talk about this prospective deal with Globalstar, Amazon is simply trying to buy time and capability.

Why Globalstar Could Be a Shortcut

Globalstar already has an active low-earth orbit satellite network. This includes:

  • Existent facilities
  • Existing customers
  • Spectrum rights (which are extremely valuable)
  • Operational expertise over many years

Instead of having to create the entire system from the ground up, buying out Globalstar would enable Amazon to speed up its launch greatly.

Don't forget that the satellite broadband industry is developing rapidly and is starting to become a serious competitor to traditional internet access, especially in rural communities.

This would enable the firm to tap into the multi-billion-dollar industry much sooner.

The Bezos vs Musk Battle Is Heating Up

At the center of all this is a rivalry investors already know well: Jeff Bezos vs Elon Musk.

This is what Amazon has done so far:

  • Made a deal with Delta Air Lines for Wi-Fi in 500 aircraft, starting from 2028
  • Formed a partnership with JetBlue for services, starting from 2027
  • Received contracts for 100 rocket launches, totaling several billion dollars

On the other hand, Starlink has already integrated itself into some major airlines like United Airlines, Alaska Airlines, and Hawaiian Airlines.

The disparity still exists, but Amazon is actively taking steps to close the gap.

And if the Globalstar deal goes through, it could be one of its biggest steps yet.

Here's What Investors Need to Be Careful About

So here is something to take note of. Shares of Globalstar have enjoyed an absolute bull run so far this year: The shares have seen an over 30.8% increase over the last month. It also recorded around 15.4% YTD gains and over 300% return over the past year

Given the strong performance, one can ask just how much of the deal is already priced in.

Based on a discounted cash flow model, the intrinsic value of Globalstar stands at $34.82 per share. This means that Globalstar shares might actually be more than 100% overvalued depending on existing assumptions.

This can become worse when we take into account the price-to-revenue ratios.

The P/S ratio for Globalstar shares stands at 34.79x, compared with its industry average of 1.36x. This represents an extremely aggressive valuation.

So while the story is exciting, the numbers tell you to slow down.

Bull vs Bear Case: Two Very Different Stories

At this point, Globalstar represents a typical case of "story vs valuation" kind of stock.

Bull Argument

  • Valuable buyout from Amazon
  • Strong business growth in the satellite and IoT industry
  • Fair value may be around $75
  • Forecasted annual revenue growth is estimated to be about 16%

Bear Argument

  • The market price of shares is more hype than valuation
  • The business is still relatively small
  • The downside fair value of the stock might be around $3
  • Stock has more of a gamble character

So, as an investor, the question is: do you want to invest in the story or in the company itself?

What This Means for Amazon Stock

Now, let's flip it back to Amazon. Wall Street gives Amazon a Strong Buy recommendation with a price target of about $284, suggesting a 18.5% upside.

This deal could help improve Amazon’s future positioning. However, this is a long-term investment and does not directly increase earnings.

Satellite networks take many years to reach scale, require many billions to build, and still more time to fully utilize.

Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.