“Alexa, Let’s Go to Outer Space”
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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.
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.
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.
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.
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Chapters
8 chapters
1
What is Amazon's interest in Globalstar and its implications?
0:05–0:43
2
How does the Artemis II launch impact the space industry?
0:43–3:35
3
What are the recent trends affecting RH and its stock performance?
3:35–4:10
4
What factors contributed to RH's stock decline after earnings?
4:10–4:56
5
How does the housing market affect furniture retailers like RH?
4:56–7:07
6
What are the best investing books for beginners recommended in this episode?
7:07–9:20
7
What insights can we gain from Warren Buffett's annual letters?
9:20–10:16
8
How can readers apply lessons from investing books to their strategies?
10:16–19:32