Globalstar Shorts Could Get Slammed

Globalstar Inc GSAT shot up 44% on Monday and Tuesday after B. Riley initiated coverage on the stock and announced a price target of $3.25.

Globalstar, a Covington, Louisiana-based satellite communications company, has not traded above $3 since April 2015 and until 2021 had spent the previous three years trading under $1.

In January, Globalstar became popular in Reddit communities and was targeted in a short squeeze that caused its shares to shoot up about 650% between Jan. 7 and Feb 10, topping out at $2.98.

Although the short interest on Globalstar’s stock is relatively low at 6.94% some members of Reddit communities, such as WallStreetBets, have noticed irregularities in the stock’s statistics.

Globalstar has very high levels of ownership, with insiders owning 59.43% of the total available shares and institutions owning 16.58%. With just over 76% of Globalstar’s 628.58 million share float tied up, that leaves only about 150 million shares of the company available.

On Tuesday, 161 million shares of Globalstar changed hands which is 11 million more than what is available to retail traders.

The high level of volume on Globalstar’s chart shows there is massive interest in the stock again and it could be setting up another big short squeeze.

The Globalstar Chart: After its meteoric rise at the beginning of the year, Globalstar plummeted over 70% between Feb 10 and April 21 when it found a bottom and reversed course.

The stock spent much of May and June trading sideways on relatively low volume until Monday when massive volume entered following the analyst’s coverage.

On Tuesday sustained bull volume pushed Globalstar up over a resistance level at $1.66 that had been holding it down since March 18. The same day, Globalstar printed a large engulfing candlestick with a larger lower wick than at the top. This indicates when the price dipped into the low $1.50 level buyers came in and purchased the stock. This type of candle often means higher prices will come in the near future.

Globalstar is trading above both the eight-day and 21-day exponential moving averages (EMAs) with the eight-day EMA trending above the 21-day EMA, all of which are great signs for the bulls. The stock is also trading above the 200-day simple moving average which indicates the overall sentiment in Globalstar is bullish.

Bulls want to see continued bullish momentum push Globalstar’s stock up over its next resistance level at $1.92. If it can regain the level as support, it was room to trade up toward $2.05.

Bulls should not feel disappointed to see some consolidation on Globalstar take place before its stock reaches higher levels because its relative strength index is overheating at about 72% and needs to cool down.

Bears want to see Globalstar reject its upper resistance level and for sellers to come in and drop the stock back down toward $1.66. If it were to lose that level as support it could fall back down to the $1.50 mark.

GSAT Price Action: Shares of Globalstar were trading down at 0.27% at $1.86. 

(Image by Jan Vašek from Pixabay)