Having shed approximately 80 percent of its value since 2022, Eutelsat’s shares have become a primary concern for investors in Europe’s space sector. However, just as a critical rights issue gets underway, a surprising vote of confidence has emerged from Wall Street, leaving market participants to wonder if the worst is finally over.
A Strategic Lifeline and State Backing
The company’s rescue mission enters a decisive phase with the launch of its rights offering, a final step designed to stabilize its financial standing. The terms are steep but deemed essential for the company’s future:
- Deeply discounted shares: New shares are priced at a competitive 1.35 euros each.
- Significant dilution: Shareholders are offered 8 new shares for every 11 they currently own.
- Tight deadline: The subscription period is open until December 9.
- Substantial backing: A safety net is in place, with 71% of the offering volume, equating to roughly 475 million euros, already guaranteed.
Notably, the French state is making a substantial commitment, positioning itself to control nearly 30 percent of the voting rights. Combined with backing from the British government, strategic oversight is now firmly in the hands of state entities—a powerful geopolitical statement in an era of uncertainty.
JPMorgan Shifts Stance on the Satellite Operator
Providing a fresh perspective, analysts at JPMorgan have upgraded their rating on the satellite operator. They moved the stock from “Underweight” to “Neutral.” While the bank did reduce its price target to 1.90 euros, the core message carries more weight: following the dramatic share price collapse, they believe the risks are now largely reflected in the valuation.
Should investors sell immediately? Or is it worth buying Eutelsat?
The immediate potential for further decline appears limited. JPMorgan maintains its skepticism regarding Eutelsat’s costly Low Earth Orbit (LEO) strategy, but concedes that the current valuation has reached a level that compels even critics to reconsider their position.
The Uphill Battle Against Tech Titans
The capital raised serves a singular, monumental purpose: to ensure Eutelsat’s survival in an intensifying battle against Elon Musk’s Starlink and Amazon’s forthcoming satellite network. The company is channeling billions into its OneWeb fleet, yet the path to profitability remains long and arduous. According to data from Visible Alpha, market experts do not anticipate a consistently positive free cash flow until the 2030s.
The bond market has already responded favorably to the company’s debt reduction efforts, with yields declining. For equity holders, however, the situation remains precarious. Investors who choose not to participate in the capital increase will see their ownership stake nearly halved. The central question for the market is whether this substantial government support can ultimately counterbalance the formidable technological and competitive risks that lie ahead.
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