Today’s Change
Current Price
Amazon (AMZN +3.83%), e-commerce giant and cloud provider, closed Tuesday at $249.02, up 3.81%. The stock moved higher after Amazon agreed to acquire satellite service provider Globalstar (GSAT +9.71%) in an $11.6 billion deal. Investors will be watching how this supports Amazon’s “Leo” satellite internet project and AI-driven cloud growth.
Trading volume reached 70 million shares, coming in about 37% above its three-month average of 50.9 million shares. Amazon IPO’d in 1997 and has grown 254,169% since going public.
How the markets moved today
The S&P 500 (^GSPC +1.18%) advanced 1.18% to 6,967, while the Nasdaq Composite (^IXIC +1.96%) gained 1.96% to finish at 23,639. Within internet retail, peers saw more moderate gains as Alibaba Group (BABA +2.71%) closed at $131.4, up 2.65%, and MercadoLibre (MELI +0.43%) finished at $1,840.66, up 0.48%.
What this means for investors
Amazon will pay $90 per share for Globalstar, representing a more than 50% premium from where Globalstar stock was trading one month ago. Amazon also today announced a deal with Apple (AAPL 0.17%) to deliver satellite connectivity for Apple’s phone and watch devices. Apple also has a 20% stake in Globalstar.
Complexities related to that stake and regulatory hurdles are perhaps why Globalstar stock closed well off the acquisition price. Amazon wants the company’s current satellite operations, infrastructure, and assets to help it compete with Elon Musk’s SpaceX in delivering broadband connectivity to user devices on earth.
With a SpaceX IPO coming soon, investors will be digging into the valuation of its Starlink business. Amazon has been proactive with plans to acquire a competitor before that high-profile IPO.
Howard Smith has positions in Amazon and Apple. The Motley Fool has positions in and recommends Amazon, Apple, and MercadoLibre and is short shares of Apple. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.
