Investors are still on edge regarding Globalstar, Inc. (NYSEAMERICAN:GSAT). Interestingly, the stock has had gains and pops in the last one year that is nothing but confusing to investors. However, favorable news regarding the firm’s equipment is likely to push the stock up.
Globalstar’s shares are finding it difficult to breach the $0.382 resistance especially after breaching it twice in a month. The stock rallied for a moment after the announcement of the results for the third quarter of 2018.
Globalstar’s stock is still likely to sink even further given the strength of its price action. In the last few trading days, the stock has been stuck in a strong bear market that threatens to sink the price further downwards.
The subscriber numbers for the Duplex devices does not help much in the direction of the stock. In the third quarter, the firm reported a 9% decline in the number of users in the Duplex subscriber base. As such, the total revenue did not rise to the optimal level.
Further, the firm experienced poor sales and production issues about their proprietary device, SPOT XTM. However, the devices are ramping up. This seems to be taking time to reflect on the performance of the stock.
According to Jay Monroe, CEO of Globalstar at the time of releasing Q3 results, the firm did well. Notably, he noted that the third quarter produced strong results concerning all fundamentals. He said that the firm improved fundamentally regarding revenue and operations.
However, he did not understand why the equity market was not responding to the positive growth. He further noted that the markets could still be fixated on the litigation that rolled back most of the growth they had achieved.
“Despite the continued fundamental improvement of the operating business and the potential of the Company’s vast spectrum holdings, the equity market appears to be focused on litigation and required future capital raises. As we have done in the past, we are working to resolve these issues,” Monroe said while commenting on the Q3 results in November.
However, the firm expects the equity market to change its mind given that the litigation is winding up. In a press release, Globalstar together with its fellow litigants revealed that they were gearing up for settlement.
Previously, Mudrick Capital Management and Warlander Asset Management, LP filed a suit against Globalstar regarding merger plans. Particularly, Jay Monroe, the ex-CEO had proposed a merger of Globalstar and another company affiliated with him.
However, the firm’s largest independent shareholders objected the move which culminated into the litigation. Further, the litigation set off a downtrend in the firm’s stock that started in August.
The settlement agreement reached and the fact that Monroe left the CEO position of Globalstar should breathe fresh life in the firm’s stock.
The Settlement Agreement reached introduces a lot of freshness in the firm including new directors. Further, the agreement formed a new standing Strategic Committee which among other things will review the firm’s refinancing options.
Besides, the committee will exclusively review crucial events like the botches acquisition of the Monroe-affiliated firm. Further, it will have exclusive authority for oversight of future mergers and any other major transactions in that line.
The equity market is very fragile and responds to certain developments asymmetrically. Interestingly, the apparent settlement of the litigation is the most important signal investors have been waiting for.
Further, the fact that Jay Monroe left his position for an individual less conflicted as Dave Kagan shows the seriousness for Globalstar to shift gears. Also, the formation of the Strategic Committee promises more transparency in the firm’s actions.
As such, the firm will likely see more investors take up its stock. This is just what it needs if it is to breach the MA (50) and the MA (200) resistance.