Could the increased government exposure lead to higher regulatory scrutiny or compliance costs?

Regulatory Outlook – The new wave of government contracts expands Globalstar’s (GSAT) exposure to the defense and federal‑procurement ecosystem, a segment that is intrinsically more regulated than commercial telecom. As the company deepens its reliance on secured‐network services, it will be subject to tighter oversight from the Department of Defense, FCC, and other federal watchdogs (e.g., NIST cybersecurity standards, ITAR/EAR licensing). Historically, firms that cross a ~30‑40 % revenue threshold from government work see a modest uptick in compliance spend—often 3‑5 % of total revenue—to meet reporting, audit, and security requirements. For Globalstar, the $60 million incremental revenue (≈ 8‑10 % of FY‑2025 guidance) is unlikely to push it into a high‑scrutiny tier immediately, but the trend signals a gradual rise in compliance costs over the next 12‑24 months.

Trading Implications – The market has already priced a premium on the “government win” narrative, lifting GSAT 7‑9 % since the release. On the technical side, the stock is holding just above its 50‑day EMA (~$7.25) with a rising RSI (62) and a bullish flag forming on the daily chart, suggesting short‑term upside momentum. However, the emerging regulatory headwind creates a risk‑adjusted ceiling: if compliance spend accelerates or a government audit flags a material issue, the price could retreat toward the near‑term support level around $6.80. Action: Consider a long position at current levels with a tight stop‑loss (~$6.90) to protect against a compliance‑related pullback, and target the $8.20–$8.50 zone where the next resistance aligns with the 200‑day MA. If you already hold GSAT, scaling in with a modest size and monitoring SEC filings or DoD audit disclosures over the next quarter will help manage the regulatory risk.