Globalstar CEO Paul Jacobs: Why the Move from NYSE to Nasdaq

Globalstar, a satellite and communications services provider, made headlines recently by delisting from the New York Stock Exchange (NYSE) and debuting on the Nasdaq. The company's CEO, Paul Jacobs, joined CNBC's Squawk Box to discuss the strategic move and its implications for the company's future. In this article, we explore the reasons behind Globalstar's decision to switch exchanges and the potential benefits for the company and its investors.

Enhanced Visibility and Institutional Appeal

One of the primary reasons for Globalstar's move to the Nasdaq is the desire to enhance the company's visibility and attract a more diverse and institutional shareholder base. As Jacobs explained, "We did a reverse split — we're a multibillion dollar company, but our stock price was down in the dollar-ish range. And people thought of us as a penny stock, and some investors couldn't invest in us, so we're here sort of in conjunction with that." By uplisting to the Nasdaq Global Select Market, Globalstar aims to attract more sophisticated institutional investors and improve overall liquidity.

Improved Trading Dynamics and Liquidity

The reverse stock split, which involved a 1-for-15 ratio, also plays a crucial role in enhancing Globalstar's trading fundamentals. By reducing the float while maintaining market capitalization, the company expects to improve trading dynamics and liquidity. Jacobs noted that the reverse stock split was intended to align trading fundamentals with peers, improve liquidity, and attract greater investment participation from a more diverse set of institutional investors.

Alignment with Industry Peers and Technical Characteristics

The reverse stock split is also designed to better align Globalstar's trading fundamentals with those of its industry peers. By increasing the share price, the company aims to make its stock more comparable to other companies in its sector, making it easier for investors to analyze and value the stock. Additionally, the uplisting to the Nasdaq, known for its technology-focused companies, could help reposition Globalstar as a next-generation telecommunications infrastructure provider, driving additional passive investment flows and increasing visibility.

Potential Inclusion in the Nasdaq Composite Index

Upon transferring to the Nasdaq Global Select Market, Globalstar expects to meet the eligibility requirements for inclusion in the Nasdaq Composite Index. This could drive additional passive investment flows and increase the company's visibility among investors. Being part of a major market index can make the stock more appealing to index funds and other passive investors, further increasing the shareholder base.

In conclusion, Globalstar's strategic move to the Nasdaq Global Select Market and the reverse stock split align with the company's long-term business strategy and growth objectives. By enhancing visibility, attracting a more diverse and institutional shareholder base, improving trading dynamics and liquidity, and aligning with industry peers, Globalstar aims to unlock value for shareholders over the near and long term. As Jacobs stated, "We look forward to discussing these initiatives in more detail at our upcoming investor day on December 12."