Why Globalstar Stock Popped Today

Shares of Globalstar (NASDAQ: GSAT) jumped on Thursday, following reports that Amazon (NASDAQ: AMZN) is thinking about buying the mobile connectivity services provider.

A race for space

Amazon is ramping up Project Kuiper, its multi-billion-dollar plan to launch thousands of satellites into low Earth orbit in the coming years. It has deployed about 200 satellites to date.

Amazon plans to offer satellite-delivered internet services as part of this project. That will place the e-commerce and cloud computing colossus in direct competition with SpaceX's popular Starlink.

Amazon's Elon Musk-led rival already has over 10,000 satellites in orbit and 9 million customers.

Amazon is reportedly in talks to acquire Globalstar to strengthen its competitive position in this intensifying space race, according to the Financial Times.

The Financial Times noted that a deal may not be completed. Apple's 20% stake in Globalstar could be a sticking point, as it will likely make the discussions more complex.

Closing the gap will be expensive

Amazon has struggled to hit its launch targets, due partly to a shortage of available rocket capacity. In addition to partnering with companies like founder Jeff Bezos' Blue Origin, Amazon has been forced to pay SpaceX to launch some of its satellites.

CEO Andy Jassy may be looking at a potential acquisition of Globalstar as a way to accelerate the expansion of Amazon's satellite constellation and reduce the strain on its launch partners.

A deal, however, won't come cheap. Globalstar's market cap currently stands at about $10 billion.

Joe Tenebruso has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Apple and is short shares of Apple. The Motley Fool has a disclosure policy.