iQSTEL Inc. (NASDAQ:IQST) shares surged more than 40% on Thursday, with trading volume eclipsing 98.8 million shares—roughly 15 times the company's outstanding share count. The spike followed a binding agreement to acquire a majority stake in ULTRANET Telecom Group, a deal that could significantly boost the company's top line.
The stock closed at $1.515, up 43.5 cents from the prior close, after trading between $1.15 and $1.87. The session's volume was about 77 times the stock's average daily volume of 1.29 million shares, according to Google Finance data.
ULTRANET Acquisition Details
In a June 25 shareholder letter, iQSTEL announced a binding memorandum of understanding to purchase 51% of ULTRANET. The company estimates the acquisition would contribute approximately $130 million in annual revenue and $4.5 million in net income, along with $21 million in assets and $13 million in shareholders' equity, should the transaction close.
CEO Leandro Jose Iglesias highlighted the company's platform reaching 2.3 billion end users and its strategy to push fintech, cybersecurity, AI, and digital health products through that network.
Buyback and Preferred-Share Concerns
While the ULTRANET news drove the rally, the company's capital structure remains a focal point. The board authorized a buyback of up to 1 million common shares, representing about 15% of the listed shares outstanding. However, the company has not set a timeline and cautioned that actual repurchases depend on price, market conditions, and capital needs.
Adding complexity, a June 17 amendment to the Series B preferred stock allows holders to convert at any time with five days' notice. As of March 31, 59,276 Series B preferreds remained outstanding, each convertible into 12.5 common shares—potentially adding roughly 741,000 new shares. The amendment also includes a one-year leak-out provision tied to prior monthly liquidity.
Financial Performance and Analyst Views
iQSTEL's first-quarter results show revenue of $97.9 million but a gross profit of just $2.08 million and a net loss of $1.39 million, with cost of revenue eating up $95.8 million. Litchfield Hills Research analyst Barry M. Sine, who rates the stock a buy with an $18 price target, called the ULTRANET deal favorable and projected ULTRANET revenue of $130.9 million in 2025 with net income around $4.6 million. Sine noted iQSTEL trades at roughly 0.04 times his 2027 revenue estimate, versus 2.4 times for selected telecom peers.
The analyst disclosure notes that Litchfield Hills is not a U.S. broker-dealer or FINRA member and receives compensation from iQSTEL for distribution and investor-targeted services.
Financing and Outlook
The shareholder letter indicated first-year transaction payments for the ULTRANET deal are around $7 million. Management is in talks with commercial banks, institutional lenders, and financing groups for long-term debt, aiming to avoid equity issuance. The company plans to provide further details on its share buyback plan in upcoming quarterly and annual reports.
The combination of a transformative acquisition, a buyback program, and potential dilution from preferred conversions keeps investors on watch for how iQSTEL's share count and capital structure evolve.
