Chapter 1: What is Amazon's interest in Globalstar and its implications?
The space industry is moving at light speed. This is Motley Fool Money. Welcome to Motley Fool Money. I'm Tyler Crowe, and today I'm joined by longtime Fool contributors Matt Frankel and John Klost. Got a pretty full schedule here. We're going to talk about RH, what used to be Restoration Hardware and its struggles, kind of following up from yesterday's discussion about Nike.
We're going to get some listener questions, but we wanted to get started first with space and space investing in particular.
Chapter 2: How does the Artemis II launch impact the space industry?
It has been one heck of a week when we talk about space in general. Just yesterday, the Artemis II launch, which, look, it happened. I don't care how many times we see rocket launches. Those things are wicked cool to watch.
Yeah. Not to brag, but as a Floridian, I got to see the Artemis launch from my front yard yesterday. Me and my nine-year-old ran outside right after we watched the countdown on YouTube. Man, I'm pumped about space right now.
Talk about seeing smoke. There is a lot of smoke happening in the industry of space as well. We've talked about the SpaceX IPO. We've mentioned it before in our IPO show. This week, that chatter is getting louder and louder by the day. So it seems like the SpaceX IPO is coming pretty soon.
And also in space news today, satellite company Global Star is up about 8% as we tape on rumors that Amazon is looking to acquire it. Now, one of the deals that we saw recently, I want to say in the past year or so, or maybe even further back, was SpaceX acquiring Spectrum from Echo Star. It's basically the ability to use broadband spectrum for communications.
In doing so, it established the ability for SpaceX to use cellular data transmission via satellite networks. Now, I'm not saying this is precisely why SpaceX made that happen. And I'm not saying that's precisely why Amazon is making this acquisition of GlobalStar. But GlobalStar does have a very large Spectrum license for the next 15 years. So, Matt, I have to imagine that was part of the deal.
Simply put, Amazon needs to scale its satellite, build out faster. They have grand plans. I think the latest number I saw was 3,200 satellites of its own it wants to get into orbit to rival Starlink, but it's not there yet. Starlink, just to put it in perspective, has over 10,000 active satellites. Amazon has about 200.
acquiring GlobalStar and its Spectrum licenses would speed up the timeframe, because that's something, no matter how much money you have, you just can't speed that up. John is going to dive into GlobalStar's business a little more in a bit, but it does own valuable Spectrum licenses that Tyler said It's almost certainly a big reason that Amazon's interested here.
Like I mentioned, these are highly regulated. They require years of navigating regulation, not only in the U.S., but all over the world. GlobalStar holds licenses for a valuable spectrum in more than 120 countries around the world. It does help accelerate the timeline of what Amazon's trying to do.
Certainly seems like there's some sort of trail here as to spectrum and making this a much more prominent part of the business. Now, look, the deal isn't finished yet. This is, like I said, this was a lot of rumors and the stock is up on rumors.
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Chapter 3: What are the recent trends affecting RH and its stock performance?
And we don't have a price tag on it. But at the same time, GlobalStar is about an $8 billion company. And it's not like... for a company the size of Amazon, that there are huge valuation concerns here for acquiring this. It's certainly not going to break Amazon's bank to make an $8 billion acquisition. So with that in mind, what opportunity do you see here for Amazon, the stock?
Is this something that's a real needle mover, or is it more like a, hey, this is nice to have, but I'm not building my investment thesis around it? When I think of Amazon... I think of like Prime Video.
Chapter 4: What factors contributed to RH's stock decline after earnings?
You can agree or disagree, anyone you like, but I don't think anyone's building a investment thesis on Amazon based on it has Prime Video. And something like Global Starts sort of feels like on that level.
I think that's fair, Tyler. You're not building an investment thesis around this necessarily, but Amazon does have space aspirations. I think what this does that has value for Amazon is that it gets it a revenue stream from space that's reliable while it tries to build out that space business. Breaking down GlobalStar's business is actually pretty fascinating here.
A single customer accounted for 63% of revenue in 2025. We don't know for sure, but that customer is likely Apple. Apple owns 20% of the business.
Chapter 5: How does the housing market affect furniture retailers like RH?
It owns 85% of GlobalStar's capacity, or at the very least, 85% of the capacity is dedicated to one customer. That customer is likely Apple. What is interesting here is, when we think about the monetization of space, everybody wants to do space, but the monetization aspect gets tricky on the edges. GlobalStar does provide Apple with the SOS emergency signal.
That is actually a pretty important thing. It's a valuable business. We have one of the most important, valuable companies in the world, Apple, locked in as this GlobalStar customer. and locked in for the long-term. If you're Amazon, I get this space business, a reliable income stream from space as I continue to push forward with my own aspirations.
I think that that's the valuable thing here for Amazon.
Tyler's point, Prime Video should be a part of the thesis, more so than a lot of people think. It's a big part of Amazon's advertising platform, which is one of the fastest-growing and most profitable parts of the business. We'll leave that for another conversation. But to me, Amazon space investments are a nice-to-have.
I'm an Amazon shareholder, and 100% of my thesis is built around the e-commerce platform and AWS. Now, there's a solid argument to be made that Amazon building out its satellite account would be a big competitive advantage for AWS. Microsoft and Alphabet, which are the two closest competitors, they don't have that.
These satellite capabilities, they can remove geographical constraints at the edge. Right now, their reach is limited to where the internet goes. It'll let Amazon's customers move data without using the public internet at all, something its competitors can't offer. It can be a competitive advantage that helps AWS keep or even grow its already leading market share.
It could be a very nice thesis driver, but right for now, it's a nice to have.
I would say at the most generous, I think this acquisition and Amazon's budding space business is extremely early. I wouldn't even say early innings.
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Chapter 6: What are the best investing books for beginners recommended in this episode?
It's like watching the pitcher warm up before the game even starts in terms of early innings here. It could be a fascinating thing to watch because clearly Amazon or Jeff Bezos as the chairman has had very ambitious plans for space with Blue Origin, which isn't necessarily tied to Amazon, but it's clearly something that Jeff Bezos has wanted to do.
And I have to imagine that somewhere that is embedded in the DNA of Amazon. So coming up next, we're going to talk about another struggling retailer in the form of Restoration Hardware.
The Civil War and Reconstruction was a pivotal era in American history. When a war was fought to save the Union and to free the slaves. And when the work to rebuild the nation after that war was over turned into a struggle to guarantee liberty and justice for all Americans. I'm Tracy. And I'm Rich.
And we want to invite you to join us as we take an in-depth look at this pivotal era in American history. Look for The Civil War and Reconstruction wherever you find your podcasts.
Shares of RH, which used to be called Restoration Hardware, I think I like the older name better, shares plunged about 19% yesterday after the company reported earnings and offered guidance. John, was it the guidance or the earnings that really had the market saying no thank you to whatever management had to say?
Well, the earnings were not fantastic, but definitely the guidance is a big part of what's going on with RH and investors' adverse reaction to the report. Basically here, if you look ahead to the first quarter, it just reported fourth quarter results, but if you look ahead to the first quarter, it's looking at a sales decline.
This is after already a couple of years of just mediocre, lackluster results. But then, guidance for the year is modestly positive. If you take that in combination, what management is saying is, hey, our business trends are actually about to get worse, but don't worry, they'll be better before the end of the year.
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Chapter 7: What insights can we gain from Warren Buffett's annual letters?
And I think, just as an outsider perspective, I think the management has cried wolf one too many times here in recent years. What I mean by that is, it seems like that is routinely now the guidance. Things are about to be bad, but don't worry, it'll pick up in a couple of quarters, and investors just aren't buying it right now. Everything that drives RH's business
housing prices, interest rates, even the stock market, all of these things are trending in the wrong direction. That's the point here. It's doing okay under the circumstances, but it's not great being under the circumstances, and investors don't know when the circumstances will get better.
I don't think that it was buying what management was selling, and that's why the stock is down after the report.
Well, you can certainly say that the report is a continuing trend that we've seen with RH because this is not anything new.
Chapter 8: How can readers apply lessons from investing books to their strategies?
Over the past five years, shares of RH are down 81%. And I don't care how you slice it, that is not good. Now, there's clearly some internal problems, as you said, John, and there's some broader macro problems as well. And because this is furniture mostly and home goods and things like that, People buy furniture when they buy a new home or move.
That tends to be the most frequent time that these purchases happen. The challenges existing homes in the United States from 2022 to today are at about the same rate that we saw from 2008 to 2012 when, you know, we had that thing called the Great Recession going on and housing was not in a great place.
Now, at the same time, retail struggling and businesses struggling with their turnarounds is not a new story. I mean, yesterday, Travis, Lou, and Raystral were talking about Nike and their seemingly multi-year turnaround strategy that hasn't quite...
gain traction yet it seems to be like where rh is in a similar position so look we know it's some sort of combination and like if i were to just ask which one is it we would all say it's a combination of both so i'm going to make you guys be a little more specific here i want you to put percentages to when you look at this situation how much of a percentage is it's the company and its problems versus it's just a really bad market and how would you break that kind of share into what to blame for rh's woes
Before I give my percentages, as you mentioned, the housing market is pretty terrible right now, and that's weighing on the business for sure. It isn't just that people aren't moving into new homes and buying furniture for their new home, but people are largely not tapping into their home equity to complete big home purchases.
That's generally talked about with projects like building a new deck and renovating a kitchen. But it also is a very common source of funding if people want to replace a few rooms worth of furniture. So, because of interest rates, that's generally not happening right now.
Plus, with the inflationary pressures over the past few years, economic concerns, consumers are generally feeling squeezed, especially when it comes to making nice-to-have purchases, like updating furniture. Although the company missed estimates, There's an argument to be made that 4% year-over-year revenue growth in this environment isn't that terrible.
But there are some things not to like about the company. Its debt levels are high. I feel like management should be a little more conservative right now when it comes to investing for growth and really trying to innovate in this type of environment. In all, I would say 70-30 market versus company.
Yeah. Maybe I'm being a little bit too harsh here, but I'd put it closer to 50-50. But I agree with everything that Matt just said. It is true, the housing market is a huge reason that RH's business isn't booming like investors hoped. There's only so much that the company can do in that environment. And management does point out, as Matt alluded to, that it is growing or
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