Shares in Franco-British satellite operator Eutelsat (ETL.PA) pulled back on Friday after soaring nearly 500% this week on the prospect of potentially replacing Starlink in Ukraine.
By 0855 GMT, Eutelsat's shares were down 16.6% at 5.77 euros, after rallying 477% this week as of Thursday's close.
Analysts suggested retail traders were amplifying a short squeeze in the stock.
Suggestions the company could replace Elon Musk's Starlink in providing internet access to war-torn Ukraine have fuelled a turnaround in sentiment this week for a stock that had been languishing at record lows.
The rally started after the public row last Friday between Ukrainian President Volodymyr Zelenskiy and U.S. President Donald Trump, which led to Washington pausing military aid to Ukraine.
The unprecedented rally was dubbed by Kepler Cheuvreux analysts the "French version of the Gamestop effect". Video game retailer Gamestop was at the centre of 2021's so-called "meme stock" rally on Wall Street, when stock influencer Keith Gill's bullish bets sparked a trading frenzy among mom-and-pop investors.
In January, Moody's cut Eutelsat's rating further into junk territory, citing underperformance of its OneWeb satellites and pressure on cash flow given significant investment needs.
The company, however, is now talks with the European Union to supply additional internet access to Ukraine.
Eutelsat is also among companies currently in talks with the Italian government about providing a system for secure satellite communications, two sources close to the matter have told Reuters.
Italy's co-ruling League party has criticised Eutelsat though, saying it would be odd for Rome to pick a French entity over a more advanced one like Starlink.
Users on Boursorama's Retail forum in France have been discussing the stock intensively since Monday.
"You'll need to wait for (the stock to get to) 5 euros before reloading, volumes are still high," one user said on Friday morning.
About 2.6 million Eutelsat shares were traded in the first hour of trading on Friday, near their 30-day average full-day volume of 2.7 million.
If the situation with Starlink in Ukraine escalates, Eutelsat might become the "cheapest defence company on planet Earth", Latvia-based investor Martins Krusts said in a post on X.
Eutelsat has declined to comment on its share price performance.
On Friday, Goldman Sachs reversed its opinion on Eutelsat's shares, saying its previous "sell" rating was a wrong call and upgraded the stock to "neutral".
"We materially underestimated the upside risk from government support," Goldman Sachs analysts said in a note while noting that shifting geopolitics and rising defence spending could drive a wide range of outcomes for Eutelsat.
