Space and satellite stocks are jumping as speculation grows that the next version of Apple’s iPhone will be equipped to handle space-based mobile communications, making calls possible even beyond the reach of cellular networks.
The news outlet MacRumors reported Sunday that Ming-Chi Kuo, an analyst with TF International Securities known for tapping contacts in the Asian supply chain for insights about Apple products, believes that the iPhone 13 will use a Qualcomm (QCOM) chip that supports low-earth-orbit satellite communications.
Apple (ticker: AAPL) wasn’t immediately available to comment on the report. But investors are taking it seriously.
Stock in Globalstar (GSAT), which the MacRumors article said is most likely to work with Apple in terms of technology and service coverage, was up 64% on Monday. Iridium Communications (IRDM) shares rose about 15%. Those two already operate more than 100 satellites in low earth orbit, or LEO.
Stock in AST SpaceMobile (ASTS), which is building a constellation of small, low-cost LEO satellites to offer mobile communications infrastructure, gained about 12%. The S&P 500, meanwhile, was up 0.4% and the Dow Jones Industrial Average finished off 0.2%.
“Providing satellite connectivity to a smartphone has been a holy grail that has never been accomplished,” wrote William Blair analyst Louie DiPalma in a Sunday report. Space-based connectivity, to this point, has required larger devices. SpaceX, for instance, has at least 100,000 users of its space-based internet service, but that system requires relatively large terminal hardware to connect to the web.
Iridium operates about 66 LEO satellites, while Globalstar has about 48.
“If Apple/ Qualcomm /Iridium figure it out, an iPhone user in theory could make calls without using his or her cellular carrier,” DiPalma wrote. “Note that the Iridium connectivity would be low capacity, thus there would still be a need for a cellular carrier.”
DiPalma rates Iridium at Outperform, which is the Blair equivalent of Buy, but he doesn’t have a target for the stock price. He doesn’t cover Globalstar stock.
Apple (AAPL) stock gained 3% Monday, while Qualcomm gained 0.8% as investors weigh the complex implications of space-based mobile communications infrastructure.
Investors in existing cellular providers, and the infrastructure they use, appear not to be concerned. Shares of AT&T (T) were up 0.4%. Its business wouldn’t necessarily be disrupted by the technology because it could license what are effectively space-based cellphone towers. Stock in American Tower (AMT), a real estate investment trust that owns cellphone towers, gained 2.2%.
The launch-services companies Rocket Lab USA (RKLB) and Astra Space (ASTR), which could benefit if more companies want to put satellites into space, were down 3.1% and 19%, respectively. An Astra test flight failed to reach orbit Saturday, reminding investors of the risks the companies face.
Write to Al Root at email@example.com