Shares in rival Starlink fall 7.5% after SoftBank's stake is cut

Shares in Elon Musk's French rival Starlink, satellite group Eutelsat, fell 7.5% after news that Japanese investor SoftBank has cut its stake in the company, CNBC writes.

SoftBank sold about 26 million shares, which is about half of its stake in the satellite operator, the TV channel writes.

Eutelsat owns satellite internet provider OneWeb, which it merged with in 2023 in an attempt to challenge Starlink's market dominance, CNBC notes. But the French group has found it difficult to wrest market share from the U.S. company - Eutelsat now has more than 600 satellites in orbit compared to Starlink's more than 6,750, according to data on the companies' websites.

Eutelsat is seen as a key element of European ambitions for technological sovereignty, the channel said. In June, France led a €1.35 billion ($1.57 billion) investment round in Eutelsat, becoming its largest shareholder with a stake of about 30 percent.

In early March, Eutelsat's shares soared more than 600% amid Europe's desire to strengthen its technological sovereignty after the U.S. cut military support to Ukraine. Since then, however, the company's securities have lost more than 70% of their value.

Last week, on November 28, AlphaValue cut its target price on Eutelsat from €4.01 to €2.89, but maintained a buy recommendation. Its estimate implies a 38.3% rise in the stock relative to the closing price of the last trades.

The stock as a whole is tracked by eight analysts, and five of them have a neutral stance on it. Three of them advise to sell them.

SoftBank is actively seeking funds to finance new investments in AI. SoftBank has invested $7.5 billion in OpenAI this year and plans to invest another $22.5 billion in the startup in December. The company is also looking to acquire chip developer Ampere for $6.5 billion. In order to cover these costs, the Japanese company sold all of its shares to Nvidia for $5.8 billion shortly before cutting its stake in Eutelsat.