Amazon: Firm Officially Acquiring Globalstar at an Eye-Popping Multiple

Key Morningstar Metrics for Amazon

• Fair Value Estimate
  : $260.00
• Morningstar Rating
  : ★★★★
• Morningstar Economic Moat Rating
  : Wide
• Morningstar Uncertainty Rating
  : Medium

After reports of a deal began circulating on April 1, Amazon AMZN formally announced its acquisition of Globalstar, a provider of low Earth orbit satellite connectivity services, for $11.6 billion. The deal is yet to be approved by the Federal Communications Commission.

Why it matters: Amazon is acquiring Globalstar for $11.6 billion, or about 40 times 2026 revenue. Globalstar shareholders can elect to receive either $90 per share in cash or 0.321 shares of Amazon. Cash is capped at 40% of Globalstar shares.

• Amazon also signed an agreement with Apple to provide satellite connectivity for current and future iPhone and Apple Watch services. This extends a more limited agreement between Apple and Globalstar.

The bottom line: We maintain our fair value estimate of $260 per share for wide-moat Amazon, as the deal is immaterial to the firm’s $2.5 trillion market cap. While we expect Amazon to have interesting plans for Globalstar, the deal is clearly dilutive and adds more stress to an extremely high AWS investment cycle.

• Amazon’s rationale centers around future direct-to-device services and service extensions for mobile operators serving hard-to-reach customers. We see the spectrum as a valuable asset and believe the deal bolsters Amazon Leo, which has been hampered by recent delays.
• The downside is the price of 40 times forward revenue, which dilutes shareholders and diverts cash that might be better deployed in AWS investments.

Big picture: Satellite providers have not been a particularly attractive investment area for shareholders since 2000, and we are unconvinced that the market will be large enough to deliver compelling returns on the required investment between both Leo and Starlink.

• Amazon already intends to invest $200 billion in capital expenditures this year, largely to support AWS capacity additions for AI and its modernizing ecommerce capabilities. The firm has delivered returns in these areas over time.