Telefónica shares sold at €3.51: €211 loss on 3,000 units

3,000 Telefónica shares at €3.51: Exit with a €211 loss

The order executed at €3.515 per share. Three thousand Telefónica titles, over ten thousand euros committed, and a plan announced without hesitation: hold for a few days and sell at €3.75. It lasted less than expected. The position closed at €3.45, resulting in a €211 loss. No drama, no epic tale: just entry, exit, and confession. Those putting money into Telefónica know what they are buying; they accept capital exposure to a company with heavy debt and a business that consumes cash.

The buyer himself wrote it down: it was an inversión paco (a speculative short-term trade). The calculation, he said, was different: netting €700 after taxes in a few days.

Why did Telefónica at €3.51 seem like a good entry?

The most common argument among value defenders is dividend yield. With the share price around €4 and a payout of 30 cents per title, the circulating figure is 7.5%. For someone who doesn't do complex division, this percentage makes a deposit account look ridiculous. The full breakdown, including entry price effects and taxation, paints a much less bright picture, and it is no coincidence that this is the most repeated calculation when the stock rises.

That 7.5% relies on two assumptions nobody signs off on: that the dividend remains stable and that the company can pay it in hard cash. Recent history suggests caution on both fronts.

The scrip dividend that distributes no cash

Telefónica chose the scrip dividend for 2020 and confirmed it for 2021. Translated: instead of distributing cash, the company increases capital and issues new shares. Some describe this as a disguised capital increase, where dividends remain a mere accounting illusion. This mechanism is not exclusive to the telecom giant; Santander used it for years to distribute returns without releasing a single euro.

The domestic precedent does not help either. A decade ago, group management proposed a dividend of €1 per share. Today, payments are debated in cents. Between one thing and another, shareholders have seen their remuneration shrink while the price plummeted.

From €30 to €3: The company selling assets to pay debt

"It fell from 30 to 3," summarizes one of the most repeated comments. The list of divestitures over the last decade is long: Cesky Telecom, operations in Central America, data centers, Antares—the subsidiary managing employee health insurance in Spain—and Telxius, among others. The underlying thesis is uncomfortable: it is a company that generates profits, yes, but does not grow and sells assets to reduce liabilities.

Telefónica trades below its market capitalization of €19 billion and heads toward its annual lows, situated at €3.38. Technical analysis warns that losing this support level and falling to €2.50 cannot be ruled out. Competition from more agile operators in each business segment and limited structural growth potential appear in all reports.

Towers, Cellnex, and the debate on undervalued assets

The sale of towers for €7.7 billion—approximately $9.4 billion—placed American Tower in Europe and peine an uncomfortable question: if those assets were worth that much, how much are the rest worth? Comparison with Cellnex is inevitable and cuts both ways. Some argue Telefónica's assets were undervalued; others counter that Cellnex suffers from the opposite problem, overvaluing its own assets.

The fundamental conclusion remains unchanged: buying Telefónica means buying a capital-intensive business, dependent on debt, with shareholders at the back of the queue.

Enagás, Endesa, ACS, or directly Nasdaq

Alternatives listed against this stock are conservative: Enagás, Endesa, and ACS, with the warning that European telecommunications regulation is the variable that could change everything. Some prefer Atresmedia, offering a net 5% in June and another in December. Others simply discard Spanish equities and place money in Asian or tech-focused equity funds.

Opportunity cost is the most repeated argument: money invested in the telecom company would have multiplied if placed in a tech stock. However, nobody has a crystal ball.

Up 15% later, but already out

The share later reached €4.06: 15% above the purchase price. The position was closed, carrying its €211 loss. Three thousand shares, two decisions, and a question left unanswered: if the entry price was so good, why exit the next day?