Santander back to €1.60 as second wave hits

Banco Santander at €1.60: the second wave devours the IBEX

The Banco Santander has once again traded around the €1.60 per share mark, a territory where the stock price is measured in cents and every tenth weighs heavily, with the second wave of the cobi19 as a backdrop. This was not the only negative news: Deutsche Bank shed 6% in a single trading session, and US futures peine down 2%, a combination that some forum users interpret as a potential Black Monday.

Why is Santander falling?

The forum suggests that its natural markets are doubly fragile: Spain, with economic activity in a coma, and Latin America, with economies already grappling with their own crises. Looming over this is an argument gaining traction in the sector: loan defaults, and a second wave would swell the list of bad debtors.

Added to this is the structure of the index itself, concentrated in banking, energy, and construction companies with domestic businesses. Some summarize the problem in four points: meager revenues, an aging market, oversized management teams, and a younger workforce that is overqualified and underpaid, earning less than €25,000. The diagnosis is generalized and therefore flawed, but it points to a circulating idea: the Spanish index is trading at a structural discount, not just a bad day.

The figures from the downward trend, in order of appearance:

• Santander: -1.22% in one session and -3.32% in another
• Deutsche Bank: -6% in one session
• US futures: -2% before the opening
• Telefónica: -3.48%

Is it a good time to buy Santander shares at €1.60?

The honest answer is that nobody knows, and this uncertainty dictates the two dominant market bets. Some argue that at these prices, the worst has already been priced in, and waiting for the exact bottom is an elegant way of never buying. The symbolic target mentioned is to enter below one euro, at €0.99, to be able to say that the bank was bought in cents.

The other camp responds with timing. Not yet: let the new lockdown arrive, let there be one or two days of collapse, and then we can talk about long positions. Between these two blocs is a piece of data that one forum user interprets as a signal: no significant sales are detected among executives, but there are purchases. It’s the kind of argument that is reassuring right up until it isn’t.

The bank as a public service: the thesis that it is no longer judged by profit

There is a reading that gains weight with each red day: that Santander will not go bankrupt because it is no longer measured by profitability, but by utility. According to this thesis, the pandemic has accelerated a model where large companies exist to fulfill a function within the state, and the state supports them as long as they do so. The parallel cited is that of the GDR, which managed to last half a century on an empty treasury.

Within this framework, the income statement matters less than the narrative, and corporate communication’s wear and tear comes into play. While the stock plummeted, the bank’s chairwoman published that only by working together can global challenges, from climate change to inequality, be addressed. The contrast between that message and a free-falling balance sheet did the rest.

Not everything circulating withstands scrutiny. Some discussions devolve into personal attacks on the chairwoman, unsubstantiated theories, and unverified complaints about customer accounts. None of this supports an investment thesis; at best, it measures the anger.

What happens if October brings a lockdown?

The central scenario shifts from a rebound to a bottom. The sequence considered is simple: lockdown, two sessions of panic, and then the perennial question: was €1.60 the bottom, or just a stop on the way to cents? The temptation to buy cheap coexists with the certainty that nobody knows how much further it will fall.

And there is one detail that is not looked at enough: Santander’s fall was not an isolated accident, but part of a European movement. When Deutsche Bank loses 6%, the problem is not local management; it’s the entire sector.

If a lockdown arrives in October, there will be another bearish leg, and the market will once again discuss the €0.99 mark. If not, the rebound could be as rapid as the collapse. Nobody can guarantee which scenario will unfold.