Shares of the Franco-British satellite operator Eutelsat (ETL.PA) rose on Thursday, increasing its gains over the past four days to nearly 650%, driven by a rally that shows signs of active retail trader influence on stocks with high short positions.
The assumption that the company could replace Starlink from Elon Musk in providing internet access in war-torn Ukraine has helped shift sentiment towards its shares, which had previously been at a record low.
After a sixfold increase in the previous three sessions, Eutelsat shares rose another 18% on Thursday, boosting the company’s market capitalization to more than €4 billion ($4.3 billion) before slightly correcting. As of 10:19 GMT, they lost 12% in the fourth consecutive day of high-volume trading.
“This is a classic short squeeze of unprecedented proportions, but to be fair, it is proportional to the tectonic shifts we are seeing in global geopolitics following Trump’s election,” noted Bernstein analyst Alexander Peters.
The rally began after a public dispute between Ukrainian President Volodymyr Zelenskyy and U.S. President Donald Trump that took place on Friday, after which Washington suspended military aid to Ukraine.
Analysts at Kepler Cheuvreux suggest that the use of leverage by individual investors may have amplified market volatility, triggering mass short position closures and creating a “French version of the GameStop effect”.
The American video game retailer GameStop was at the center of the so-called “meme-stock rally” in 2021 on Wall Street when the bullish bets of stock influencer Keith Gill sparked a surge in trading among retail investors.
In France, Boursorama Retail reported intense discussions about Eutelsat shares, indicating strong interest from retail traders. Similar activity is observed in other parts of Europe.
On the German exchange Tradegate, popular among retail traders, Eutelsat became one of the most actively traded assets this week. On Thursday, it took first place, surpassing even defense companies Rheinmetall (RHMG.DE) and Hensoldt (HAGG.DE).
“Eutelsat is a stock that retail traders like,” said Stefan Ecolo, equity strategist at TFS Derivatives in London. “Hedge funds didn’t account for the risk of a short squeeze, and we’re seeing a real bloodbath.”
Eutelsat declined to comment on the dynamics of its shares.
In January, the rating agency Moody’s downgraded Eutelsat’s rating to a speculative level, citing weak financial performance of OneWeb satellites and pressure on cash flows due to significant investment needs.
“The stock price now reflects expectations that Europe will provide more support to the company, but the fundamental issues that caused its previous fall have not disappeared,” said Hamish Lowe from Enders Analysis.
Eutelsat is negotiating with the European Union for the supply of additional satellite internet to Ukraine.
Additionally, Eutelsat is one of the companies currently negotiating with the Italian government to provide a system for secure satellite communication, according to two Reuters sources familiar with the matter.