Eutelsat Shares Plunge as Market Digests Equity Offering

The equity of satellite operator Eutelsat is experiencing a severe sell-off, closing the week at a new low of €1.61. This represents a staggering weekly decline exceeding 20 percent. Neither the recent completion of a capital increase nor substantial insider share purchases have been able to arrest the downward spiral, as investors price in a scenario of extreme risk.

As retail investors exit, major shareholder Bharti Space Limited is capitalizing on the depressed price. On December 16, the strategic anchor investor acquired 88.7 million shares at the subscription price of €1.35 per share. This move consolidates its position alongside the French state as a core shareholder and is interpreted as a vote of confidence in the company's long-term direction. The continued market sell-off despite this action underscores the profoundly negative sentiment currently prevailing.

Equity Dilution Weighs Heavily on Sentiment

The primary catalyst for the pressure appears to be the recently finalized capital raise. The company secured approximately €1.5 billion to reduce debt and fund its low-Earth-orbit (LEO) satellite constellation, OneWeb. The cost of this financing was significant: nearly 500 million new shares were issued, flooding the market with additional supply.

The subscription price of €1.35 is now acting as a powerful psychological magnet, pulling the share price downward. The market must first absorb this substantial overhang of new equity. Currently, investors are assigning far greater weight to the immense associated investment costs than to any potential long-term opportunities.

Should investors sell immediately? Or is it worth buying Eutelsat?

Key Data Points:
* Friday's Closing Price: €1.61 (down 5% on the day)
* Weekly Performance: Down 20 percent
* Insider Buying: 88.7 million shares purchased by Bharti Space at €1.35
* Price Targets: BNP Paribas at €2.00; Deutsche Bank at €2.30
* Capital Increase Subscription Rate: 133 percent

Analysts Identify Potential Upside

Equity researchers see value emerging after the sharp correction. BNP Paribas initiated coverage with a price target of €2.00. Deutsche Bank assigns a "Hold" rating, citing a fair value estimate of €2.30 per share. The average of these targets sits considerably above the current trading level.

This discrepancy reflects what the market is demanding as an extreme risk premium. Eutelsat now faces the critical task of demonstrating that its multi-billion euro investments in OneWeb can be monetized swiftly to justify the ambitious strategy.

Critical Support Level in the Spotlight

All attention is now focused on the €1.35 mark as a crucial level of technical support. A sustained break below this price could trigger another wave of selling pressure. Market volatility is expected to remain exceptionally high until the vast quantity of new shares is fully digested by investors. While the show of faith from Bharti Space has not halted the near-term downtrend, it provides a significant data point for those with a longer-term investment horizon.