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‘Gamestop Effect’ Drives Eutelsat’s 650% Surge Amid Retail Traders’ Frenzy

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Shares of Franco-British satellite operator Eutelsat surged dramatically this week, with gains reaching nearly 650% over four days, as retail traders appeared to be behind the movement, reminiscent of the “Gamestop effect” seen in 2021. This sudden rally in Eutelsat’s stock follows speculation that the company could replace Elon Musk’s Starlink in providing internet access to war-torn Ukraine, reigniting investor interest in a stock that had previously hit record lows.

On Thursday, Eutelsat’s shares rose another 18%, pushing the company’s value to over €4 billion ($4.3 billion), although they eventually retreated by 11% in the face of heavy trading volumes. This followed a six-fold increase in the prior three sessions, marking a remarkable short squeeze, according to Bernstein analyst Aleksander Peterc. The move is seen as one of the most substantial short squeezes, driven by retail traders amplifying the effects of geopolitical tensions and speculations about the company’s future role in satellite communication for Ukraine.

The rally began after a public dispute between Ukrainian President Volodymyr Zelenskiy and U.S. President Donald Trump last Friday, which led to the suspension of military aid to Ukraine. The excitement around Eutelsat also gained momentum from intense discussions in French retail forums, particularly on Boursorama, and continued interest in platforms like Germany’s Tradegate. Eutelsat has become one of the most traded stocks on these platforms this week, surpassing even major defense stocks.

Stephane Ekolo, an equity strategist, pointed out that retail traders were likely behind the short squeeze, as hedge funds had shorted the stock, leading to heavy covering of positions. Despite this surge, analysts caution that the stock’s price reflects investor hope more than solid fundamentals. In January, Moody’s had downgraded Eutelsat’s rating, citing struggles with its OneWeb satellites and cash flow pressures due to significant investment needs.

Additionally, Eutelsat is reportedly in talks with the European Union about providing more internet access to Ukraine, potentially boosting its prospects further. The company is also discussing a deal with the Italian government for secure satellite communications. Despite this, Fitch downgraded the company’s long-term rating, citing its need for additional funding of $4.2 billion by 2032.

Italy’s Parliament Rejects Opposition Amendments to Space Bill

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Italy’s parliament has rejected opposition amendments to a space bill that aimed to prevent the government from acquiring satellite services from non-EU companies, including those owned by U.S. tech billionaire Elon Musk. The amendments, proposed by the Democratic Party (PD), were viewed by some as attempts to limit competition in favor of European entities.

The draft bill, which still requires approval from both houses of parliament, outlines a framework in which Italy’s communications would be transmitted solely through satellites owned by operators based in the EU or the Atlantic Alliance (NATO). The goal is to ensure secure satellite communications for Italian diplomats and officials working in high-risk regions.

PD lawmakers sought to impose additional restrictions, proposing that Italy only work with non-EU satellite providers when absolutely necessary. They also pushed for exclusive Italian ownership and control over encryption and software and hardware components used in such services. However, the ruling coalition led by Prime Minister Giorgia Meloni opposed these amendments.

Among the companies that could potentially provide these satellite services is Starlink, a satellite internet service owned by Musk’s SpaceX. Starlink has been a key contender for securing the government contract. However, the PD has voiced concerns about working with Musk, a prominent ally of former U.S. President Donald Trump, describing the proposed deal as an “anti-Musk” move.

Andrea Stroppa, a representative for Musk in Italy, criticized the opposition’s stance, describing it as a “crusade” against the billionaire and warning that Starlink is not a “toy for politicians.” Additionally, other companies like Franco-British satellite operator Eutelsat (ETL.PA) have also been in talks with the Italian government regarding the secure communications contracts.

The rejection of the amendments has sparked debate, with PD lawmaker Andrea Casu calling for better guarantees regarding the use of public funds, especially when foreign companies are involved.

Eutelsat Competes for Secure Satellite Telecoms Contract in Italy

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Eutelsat, a Franco-British satellite operator, is reportedly in discussions with the Italian government to provide secure satellite communication systems, a move that places it in direct competition with Elon Musk’s Starlink. The Italian government is seeking to ensure encrypted communications between officials, diplomats, and defense personnel working in high-risk areas. Sources close to the matter confirmed that Eutelsat, alongside Starlink, is being considered for the contract, which is critical to Italy’s national security.

The involvement of Eutelsat has not been previously disclosed, highlighting Europe’s desire to establish alternatives to Starlink, which currently dominates the satellite communication sector. This interest in European alternatives comes amid rising geopolitical tensions, particularly regarding the war in Ukraine, where Starlink’s role has become more contentious.

Eutelsat, which merged with OneWeb in 2023, operates a constellation of around 650 low Earth orbit (LEO) satellites. While its satellite network is smaller than Starlink’s 6,700 active satellites, Eutelsat’s shares have surged recently due to ongoing discussions with the European Union regarding internet access for Ukraine.

The company has confirmed its regular engagement with European governments to provide secure satellite communication services. However, Eutelsat declined to comment specifically on its talks with Italy, citing confidentiality.

The Italian government has expressed concerns about relying on foreign companies for sensitive national security contracts. Prime Minister Giorgia Meloni’s right-wing government has faced criticism for considering Starlink, especially given its ties to Elon Musk, who is also a close ally of U.S. President Donald Trump. While no contract has been signed with Starlink, Italy is considering alternatives, including developing its own low-orbit satellites. However, progress on this front has been slow, with delays in the EU’s IRIS² satellite project.

Reports suggest that Italy may consider a deal with Starlink worth 1.5 billion euros ($1.61 billion) over five years, although no agreement has been finalized.