Shares of Canadian satellite manufacturer MDA Space Ltd. experienced a significant decline, dropping nearly 16% amid concerns surrounding the potential loss of a major contract.
MDA Shares Plunge Amid Satellite Contract Loss Concerns
On a recent Thursday, MDA’s stock plummeted as reports surfaced about its client, Globalstar Inc., contemplating a sale. This speculation raised alarms among investors about MDA’s future prospects.
Details of the Contract
In February, MDA announced a substantial $1.1 billion contract with Globalstar for satellite development aimed at enhancing its low-Earth-orbit constellation. However, Bloomberg’s report indicated that Globalstar is in early discussions with SpaceX, owned by Elon Musk, regarding a potential acquisition.
- Contract Value: $1.1 billion with Globalstar
- Potential Buyer: SpaceX
- Market Reaction: Shares closed below $29 on the Toronto Stock Exchange
Analyst Insights
Doug Taylor, an analyst from Canaccord Genuity, remarked that if SpaceX assumes satellite manufacturing for Globalstar, it could negatively impact MDA. He acknowledged that many uncertainties surrounded this speculation, possibly fueling investor anxiety.
As trading continued, MDA’s shares fell sharply in the last 80 minutes, raising further concerns about investor sentiment. The company later released a statement claiming it was monitoring its stock fluctuations attributed to “unconfirmed and speculative media reports” regarding mergers and acquisitions within its client base.
Recent Challenges for MDA
This dip follows another setback for MDA, which lost a significant $1.8 billion contract when EchoStar Corp. sold its spectrum to SpaceX. This event caused MDA’s stock to tumble by 25% on September 8. During that time, MDA CEO Mike Greenley conveyed to analysts that the company had a robust opportunity pipeline valued at $20 billion, with $13 billion designated for satellite constellations. Excluding the EchoStar contract loss, MDA reported a backlog of $4.6 billion at the end of the second quarter.
Despite these hurdles, the future holds potential for MDA as it navigates these market challenges. Analysts and investors will continue to closely monitor developments regarding Globalstar and SpaceX.
