Shares of Canadian satellite manufacturer MDA Space Ltd. MDA-T sank nearly 16 per cent Thursday, after reports about a potential U.S. deal involving one of its clients spurred fears that MDA could lose a major contract.

In February, MDA announced it had signed $1.1-billion contract with U.S. telecommunications company Globalstar Inc. GSAT-A to build satellites for its planned low-Earth-orbit constellation.

But on Thursday, Bloomberg reported that Globalstar is exploring a potential sale and has held early talks with Elon Musk’s SpaceX, citing confidential sources.

SpaceX, as a vertically integrated company, has its own satellite manufacturing capabilities.

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“This is perceived as negative for MDA, given the potential for SpaceX to take Globalstar’s future satellite manufacturing in house in that scenario,” said Canaccord Genuity analyst Doug Taylor.

He added there are lots of “ifs” involved in the speculation. However, several analysts told The Globe and Mail it was sparking concern among investors.

Shares of MDA plunged in the last 80 minutes of Thursday trading, closing below $29 on the Toronto Stock Exchange.

In a statement, MDA said it is monitoring fluctuations in its share price that appeared to be the result of “unconfirmed and speculative media reports related to mergers and acquisitions in our customer base.”

The company said that as a matter of policy, it does not comment on rumours or speculation.

SpaceX and Globalstar could not immediately be reached for comment.

MDA has already suffered one major blow in recent months. On Sept. 8, it lost another major contract, when U.S. telecom EchoStar Corp. pulled out of a $1.8-billion satellite contract after announcing it was selling its spectrum to SpaceX. That day, MDA’s stock tumbled by 25 per cent.

On that day, MDA CEO Mike Greenley told analysts that MDA’s opportunity pipeline stood at $20-billion, of which $13-billion related to satellite constellations.

Not including the lost EchoStar contract, MDA had a backlog of $4.6-billion at the end of the second quarter this year, he said.

With reports from Sean Silcoff and Pippa Norman