Amazon (AMZN) Shares Surge 4% on $11.6B Globalstar Acquisition as Morgan Stanley Eyes $300

Key Highlights

• Amazon finalized a deal to purchase Globalstar for approximately $11.6 billion to strengthen its Leo satellite network
• Shares of AMZN climbed roughly 4% after the deal was revealed
• The acquisition includes 24 operational satellites, commitments for 50+ additional units, and valuable L and S band spectrum rights
• Morgan Stanley’s Brian Nowak maintains an Overweight stance on AMZN with a $300 target price (representing ~20% potential gain)
• The transaction may pressure Amazon’s cash generation, adding to $200 billion in projected 2026 capital spending

Amazon has finalized an agreement to purchase Globalstar in a transaction valued at roughly $11.6 billion, marking a significant step in the company’s strategy to expand its Amazon Leo satellite network and compete more aggressively with SpaceX’s Starlink service.

Shares of AMZN gained approximately 4% in the wake of the announcement.

Amazon.com, Inc., AMZN

The transaction provides Amazon with Globalstar’s fleet of 24 functioning satellites plus contracts for approximately 50 additional units. Perhaps most significantly, the acquisition delivers valuable L and S band spectrum licenses, which are essential for enabling direct-to-device (D2D) satellite communications.

D2D technology allows mobile devices to communicate directly with satellites in low Earth orbit, bypassing traditional cellular infrastructure. Amazon has targeted this emerging market, with plans for comprehensive deployment around 2028.

The acquisition also transfers Globalstar’s current commercial arrangement with Apple to Amazon. This partnership powers Emergency SOS, Messages, Roadside Assistance, and Find My features on iPhone 14 and later models, along with Apple Watch Ultra devices. Amazon has committed to continuing and enhancing this collaboration.

To put things in perspective, Amazon currently operates only 241 satellites. Under its 2020 FCC authorization, the company must deploy at least half of its planned 3,236-satellite network by July 30, 2026. Amazon has already submitted a request to the FCC for additional time.

Meanwhile, SpaceX has launched more than 10,000 satellites and maintains its own rocket fleet. This launch infrastructure advantage remains Amazon’s most significant competitive challenge.

Morgan Stanley Endorses Strategic Direction

Morgan Stanley’s Brian Nowak identified five compelling reasons why the Globalstar transaction advances Amazon Leo’s strategic objectives.

He highlighted the spectrum licenses, the enlarged satellite fleet, entry into the D2D market, Globalstar’s Band 53 terrestrial spectrum that could support future warehouse automation and robotics applications, and the inherited Apple partnership as critical benefits.

“We believe this acquisition provides important signal for investors that AMZN is committed to Leo/Space,” Nowak stated.

Nowak maintained his Overweight recommendation on AMZN while increasing his price objective to $300, suggesting approximately 20% appreciation potential from present levels.

Wall Street sentiment remains overwhelmingly positive. Among 45 analysts tracking the stock, 42 assign Buy ratings and 3 recommend Hold. The consensus 12-month price target stands at $284.77, indicating about 14% upside potential.

Capital Expenditure Concerns Mount

This transaction compounds Amazon’s already substantial investment commitments for the year. The company has projected $200 billion in capital expenditures for 2026, which may result in negative free cash flow.

Should Leo program investments escalate further in 2027, the strain on cash generation could persist for multiple years ahead.

Amazon has secured some initial commercial agreements, including partnerships with airlines and telecommunications providers, as CEO Andy Jassy noted in his latest shareholder communication. However, the Leo venture carries greater uncertainty compared to Amazon’s established cloud computing and retail operations.

Amazon’s most recent satellite deployment brought its total operational count to 241 satellites, still significantly below the FCC’s upcoming mid-year deployment requirement.