Why Amazon Just Spent $12 Billion on a Money-Losing Satellite Company — And the Supply Chain Stock That Benefits Most

This section discusses Amazon's recent announcement to acquire Globalstar for approximately $11 to $12 billion, despite Globalstar's modest revenue of $273 million and lack of profitability. The move is driven by strategic interests like spectrum rights, an existing customer base including Apple for emergency SOS services, and a head start in the satellite internet space, competing with SpaceX's Starlink. Amazon's broader goal is to become a broadband internet provider, which is crucial for expanding its ecosystem and enhancing the Amazon flywheel—selling more products and services by increasing global internet accessibility. The acquisition also involves leveraging Globalstar's existing relationships and infrastructure to accelerate Amazon Leo, their satellite-based internet project.

This section covers Amazon's satellite internet project, formerly Project Cooper, now known as Leo. Expected to launch in mid-2026, Leo aims to provide better performance at lower costs than existing solutions, while seamlessly integrating with AWS to enhance cloud services and enterprise connectivity. The project targets enterprise and government clients like Delta, AT&T, and others, with the goal of improving broadband access worldwide, especially in regions with poor connectivity. This initiative exemplifies Amazon’s strategy to use satellite internet to fuel its e-commerce and AWS flywheels by enabling more customers and businesses to connect easily.

Focusing on the supply chain, this section highlights MDA Space, a Canadian satellite manufacturer with a $4 billion CAD backlog largely tied to Globalstar's satellite constellation. MDA Space's revenue growth and backlog provide visibility and confidence that the contract with Globalstar remains intact following Amazon's acquisition. The discussion includes valuation insights, a reverse DCF analysis estimating a fair value around $33 per share, and the significance of customer concentration risks. The segment also outlines how MDA Space fits into a broader satellite manufacturing ecosystem involving Blue Origin and other players, emphasizing the importance of satellite builders in Amazon’s satellite ambitions.

This part delves into the competitive landscape, including SpaceX and EchoStar, and Amazon's timing in entering the satellite internet field. The interplay between different satellite providers, spectrum licensing, and launch capabilities is explored, emphasizing Amazon's strategic moves to secure infrastructure and spectrum rights, and to potentially outpace competitors like SpaceX's Starlink. The discussion underscores how Amazon's investments in satellite technology complement its other business segments and support its long-term goal of broad internet access.