"but with the leaves very sparse ( spaced out)". This is probably because the plant is reaching for the light, and indoor lights don't give it enough. I try to keep mine outdoors once started, ( being mindful of the temperature however )

"I could see inside the thick stem, it's hollow... ". The dahlia stems are indeed hollow. Sometimes if broken, water will get inside the hollow spot and cause rot. In that case I try to trim it back to just above a leaf node.

"I thougt maybe I would get laterals develop, but nothing.... " Often it will develop laterals if pinched back, but it does take some time.

"What should I do with it? Will it recover?" It may develop more sprouts. It have another eye that will develop. Give it some time. If it does, the time waiting was well spent. If it doesn't, that is the frustration that all gardeners face. Squirrels will indeed eat the dahlia leaves and buds. Here is a shot of a small grey chewing on a dahlia, just a few feet away from me. Cheeky little devil.

{{gwi:639558}}

Funny - squirrels here never touch any of my dahlias. But I also have a brigade of cats :)

Thank you so much for answering!
Well, it's not dying and it's not growing either. It sits there, exactly in the dead center of my fence.
None of the tubers developed a second eye or stem. Each just one, thick and tall....

And squirrels, well, they are horrendous this year. Through the winter they ate at the burlap I covered my roses with, now in spring they dig and also deadhead my tulips, and now they destroy anything else I planted. ( including lots of tiny seedlings, as I ventured into Wintersowing.... I think they're just too hungry all the time, I pity them but I still hate what they do out of my backyard....
I will update if I have any changes with the unlucky dahlia, but nothing at all seems to happen .

I share your frustration--I have never had trouble with squirrels like this year. Here is what I have done:

Bot and sprayed "RO-PEL. I spray in the evening because I do not want the squirrels to see me doing the spraying. I have no idea why the contents work, but I admit the next morning there was not a squirrel in sight. However, as the day wore on they did return. It has certainly helped.

Deer Off Receipe: from letters from readers in Backyard Magazine. This has proven very helpful with squirrels. Beat together 1 eqq, 1/2 cup of milk,and 1 Tablespoonful of cooking oil. Add 1 tablespoonful of dish soap. then add enough water to make a gallon of liquid. NEVER SPRAY "DRY" PLANTS. Spray plants every two weeks or after rain. DO NOT SPRAY ON EDIBLES. Store any left over material in a closed jar.
NOW MY SUGGESTIONS: To the above mixture, add 3 teaspoons of garlic, and 3 teaspoons of cayenne pepper. I have tried this, and am having excellent results deterring squirrels. WARNING: THIS LIQUID CONCOCTION HAS A VERY STRONG ODOR. MIX WITH THE WINDOWS OPEN.
I have heard of adding mint to the mixture, and, I have also heard of adding mint plants in and arround your flowers but have not tried either. Another person suggested adding crushed Red Pepper in and around the plants. I will try this shortly.
I wish you every success!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
If you try it, I'd like to hear how you made out. In your return message to me, in the subject area, kindly add the word "GardenWebber". This will keep your e-mail to me out of my junk pile. THANK YOU.

Love that squirrely photo of yours Jroot. We feed our squirrels all year, so perhaps that keeps them out of the dahlia beds.

I wonder if you would encourage re-emergence of the eye/s by gently digging up the broken dahlia and cutting off the broken hollow stem just above the tuber. I've done that and the plant went on to grow just fine. I just don't like the idea of a hollow stem hanging out there for anything to crawl or drip into.

Let us know how it turns out.