CSG’s €58 Billion Slovak Deal Under Scrutiny as Short Seller Drives Shares to Fresh Lows

Czechoslovak Group shares hit all-time low as activist short seller questions production capacity, €58B Slovak deal, and minority shareholder dispute.

Europe’s largest defence IPO has hit a wall of scepticism. Shares of Czechoslovak Group (CSG) tumbled 13.1% on Monday to close at €15.70 — a new all-time low — after US-based activist short seller Hunterbrook Media published a scathing report questioning the company’s core growth narrative. The stock has now shed more than half its value since its Amsterdam listing in January.

The attack lands at a delicate moment. CSG is scheduled to release its first quarterly results as a public company on 20 May, a report that will test whether the group’s impressive headline numbers can withstand the mounting pressure.

Production capacity doubts at the heart of the controversy

Hunterbrook’s report zeroes in on what it claims is a significant gap between CSG’s stated and actual production capabilities. The company’s IPO prospectus touted an annual capacity of 630,000 large-calibre artillery rounds, roughly 80% of which are 155mm shells. But the short seller identified only one facility — the Dubnica plant in Slovakia — as the likely site for final assembly, estimating output there at between 100,000 and 280,000 units annually. CSG declined to provide a breakdown by munition type when asked.

The company fired back, calling the report inaccurate and selectively interpreted. Management said it is reviewing the document in detail and reserves the right to take legal action. All prospectus disclosures, it insisted, remain sound.

A €58 billion question mark

Perhaps the most explosive allegation concerns a Slovak framework agreement that CSG heavily promoted during its IPO roadshow. The deal carries a maximum headline value of €58 billion, but Hunterbrook claims none of the eight countries cited as potential participants have formally signed on. CSG acknowledged that the figure represents maximum potential, not firm orders.

The distinction matters because the agreement was presented as a key growth driver, and its structure may affect access to EU financing. The bloc’s €150 billion “Security Action for Europe” programme offers loans at just 1% interest but requires at least two participating member states. A temporary exemption allowing single-country participation expires at the end of May 2026.

Minority shareholder dispute adds to the turmoil

Complicating matters further is an internal power struggle. Minority investor Petr Kratochvíl exercised a put option shortly before the IPO and is now demanding €1.4 billion for his stake. Kratochvíl holds 10% of CSG Land Systems and retains blocking rights on key corporate decisions — a dynamic that could constrain management’s strategic flexibility.

The company is also dealing with fallout from a separate incident. In March, NATO’s procurement agency suspended a Spanish ammunition factory owned by CSG over alleged sanctions-related practices. CSG described the move as a temporary procedural step triggered by an internal investigation into an agency employee.

Analysts remain defiantly bullish

Despite the stock’s collapse, the analyst community has not flinched. All nine analysts covering the stock rate it a buy, with a median price target of €35.40 — more than double the current level. The most optimistic forecast stands at €42.

The fundamentals, on paper at least, support the optimism. CSG posted revenue of €6.7 billion last year with an operating margin of 24.1%. Its order backlog stretches years into the future. For 2026, management is guiding for revenue between €7.4 billion and €7.6 billion and an adjusted EBIT margin of 24% to 25%.

But the market has so far ignored those numbers. Monday’s session saw the stock swing wildly, briefly plunging 26% before paring losses. The volatility underscores just how much credibility is at stake when CSG reports first-quarter earnings on 20 May. Only hard data on production volumes and contract progress will determine whether this is a buying opportunity or a value trap.