This Small-Cap Space Stock Rocketed 500% Last Week, and You Probably Didn't Notice

Source The Motley Fool

A funny thing happened on the way to President Donald Trump's tariffs war, and his threats to pull out of Nato and cut off military aid to Ukraine. Europe discovered it needs to spend more on its own defense.

Shares of European defense companies have been on an upsurge ever since. One European satellite company in particular caught my eye last week when it suddenly rocketed more than 500% over just five days of trading: From Feb. 28 through March 5, shares of satellite telecommunications stock Eutelsat (OTC: ETCM.Y) -- which you can mentally pronounce to yourself as "EU telsat" as a reminder of what it is -- jumped from just $0.35 per share to close at $2.21. It's given back some of those gains over the last few days, granted, but at Friday's prices, remained up more than 300% from its price at the end of February.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Introducing Eutelsat

What's behind this insanely good performance from a little-known (in the U.S., at least) space stock?

At first, you might look at the share price and dismiss the move as nothing new. A $0.35 stock becoming a $2 stock, then subsiding? That happens with penny stocks all the time -- except the cultural concept of "penny stocks" differs on different sides of the ocean. Here in the U.S., stocks costing less than $5 a share are infamous for their volatility and rightly regarded with skepticism, as they so often turn out to be fly-by-night operations, value traps, and not serious businesses.

Over in Europe, however, things work differently. Giant, well-funded companies like British Telecom and British Airways parent International Consolidated Airlines, for example, routinely trade for just a couple of bucks a share.

And that's the case with Eutelsat, too. Although its market cap is just $3 billion, Eutelsat is a sizable company doing $1.4 billion in annual business and generating substantial cash flow.

Neon illustration of satellites and communication nodes including a satellite and Earth.

Image source: Getty Images.

Why Eutelsat is rising

And why is this satellite company's stock going up all of a sudden? European Union nations are planning to increase their defense spending in response to U.S. threats to cut off military aid and access to satellite intelligence to Ukraine, which has been fighting off a Russian invasion for just over three years.

Ukraine's backers in the EU seem especially concerned that Ukraine might lose access to Starlink satellite communications services provided by SpaceX, which are seen as crucial to the war effort. In response to this threat, Eutelsat was quick to point out in a media statement that its OneWeb satellites "can provide an alternative for certain government and defense applications." Eutelsat added that it is in talks with "European institutions and business partners [to] enable the swift deployment of additional user terminals" to plug any gap created if Ukraine is deprived of Starlink services.

It's not an empty promise, either. Bloomberg reported that the 630 orbital satellites comprising Eutelsat's OneWeb constellation are "the second-biggest portfolio of low-earth orbit satellites after Starlink." It might not be as large or as capable as Starlink's constellation, but it's literally the next best thing.

And it could get better if Europe follows through on plans to increase defense spending to plug any holes left by an exiting U.S. European nations are currently in talks to boost defense spending by as much as $841 billion under a new "REARM Europe" program. If even a portion of these funds are devoted to military space capabilities, they could be used to build out OneWeb's capabilities and provide a shot in the arm to Eutelsat's revenue growth rate.

United Kingdom seen from space.

Image source: Getty Images.

Is Eutelsat a buy?

It wouldn't even take much of that $841 billion to move the needle on Eutelsat. With only $1.4 billion in annual revenue, earmarking just 1% of the EU's planned increase in defense spending to buying satellite services from Eutelsat would be enough to grow annual revenue more than 60%.

How much of a difference would that make?

Well, for context, analysts polled by S&P Global Market Intelligence were projecting Eutelsat's revenues to grow just 2.5% this year, and its losses were expected to exceed $1 a share. That was before Europe started getting serious on defense spending, though. If spending levels do increase, things could change for Eutelsat in a hurry, much like increased spending on Starlink helped transform SpaceX from an unprofitable rockets company into a very profitable satellites company in a matter of just a few years.

Will the same thing happen to Eutelsat? Only time will tell. But for investors who've bid the stock up already, I'd say that's exactly what they're hoping will happen.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

  • Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $315,521!*
  • Apple: if you invested $1,000 when we doubled down in 2008, you’d have $40,476!*
  • Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $495,070!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

Continue »

*Stock Advisor returns as of March 14, 2025

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
Gold rallies to a new all-time high in its sprint toward $3,000Gold’s price (XAU/USD) hits a fresh all-time high above the $2,990 level at the time of writing on Friday, registering a weekly gain of over 2.5% for now.
Author  FXStreet
Yesterday 09: 55
Gold’s price (XAU/USD) hits a fresh all-time high above the $2,990 level at the time of writing on Friday, registering a weekly gain of over 2.5% for now.
placeholder
Tesla Stock Plunges 36%! Trade War Threats Escalate, Manufacturing Costs May Rise!TradingKey - Tesla's stock has plummeted over 36% this year, with the company warning in a letter to the USTR that Trump's trade war could make it a target for retaliatory tariffs.  Recently, U.S. aut
Author  TradingKey
Yesterday 07: 31
TradingKey - Tesla's stock has plummeted over 36% this year, with the company warning in a letter to the USTR that Trump's trade war could make it a target for retaliatory tariffs.  Recently, U.S. aut
placeholder
GBP/USD loses momentum below 1.2950 on downbeat UK GDP dataThe GBP/USD pair loses ground to near 1.2925 during the early European session on Friday.
Author  FXStreet
Yesterday 07: 30
The GBP/USD pair loses ground to near 1.2925 during the early European session on Friday.
placeholder
EUR/USD drifts lower below 1.0850 on US-EU tariff disputeThe EUR/USD pair edges lower to around 1.0835 during the Asian trading hours on Friday.
Author  Mitrade
Yesterday 05: 56
The EUR/USD pair edges lower to around 1.0835 during the Asian trading hours on Friday.
placeholder
XRP Price Builds Base—Short-Term Rally May Be BrewingXRP price started a fresh recovery wave above the $2.120 zone. The price is now consolidating and might clear the $2.350 resistance zone. XRP price started a fresh recovery wave above the $2.120
Author  NewsBTC
Yesterday 05: 55
XRP price started a fresh recovery wave above the $2.120 zone. The price is now consolidating and might clear the $2.350 resistance zone. XRP price started a fresh recovery wave above the $2.120
goTop
quote