SpaceX shares fell back to Earth following their blockbuster initial public offering. But Elon Musk's rocket company is also dragging down T-Mobile and its wireless and broadband rivals due to worries that SpaceX's Starlink will be a formidable foe in the high-speed internet business. Those fears are overdone. And T-Mobile's stock is now looking like a good bargain.
T-Mobile has fallen slightly since SpaceX's IPO in mid-June and is down 8% this year, partly due to worries about competition from Starlink. Shares of Verizon and AT&T, as well as cable companies Comcast and Charter Communications, have all slid since SpaceX went public. But T-Mobile has the best chance of bouncing back.
Morgan Stanley's Sean Diffley said in a report in early July that "the perceived risk of Starlink Mobile disrupting the U.S. wireless industry is greater than the actual risk in the next one to two years." He said the big three wireless carriers have improved their speeds and customer satisfaction rates over the past several years. He added that T-Mobile is his best idea in telecom/cable, arguing that the company "offers the fastest growth" along with the "strongest spectrum position."
Diffley thinks concerns about SpaceX are a classic case of Wall Street overreacting. "The market is increasingly concerned that Starlink is going to make a more aggressive push in mobile," he wrote, adding that "the fear of the unknown has led many to shoot first and ask questions later in telecom."
Bank of America's Michael Funk also dismissed fears about SpaceX, writing in a recent report that "T-Mobile is least exposed to the competitive threat" from Low Earth Orbit $(LEO)$ internet services like Starlink. "T-Mobile wireless has 50% share of households in urban markets such as LA and NYC and only 24% share in rural markets," he wrote, adding that a service like Starlink "seems to work best in rural and underserved environments."
Funk has a $220 price target on T-Mobile while Diffley has a $230 price target. That actually makes them a little less bullish than many of their peers. The average price target according to FactSet is just over $251, 33% higher than T-Mobile's current price.
That seems reasonable given the stock's valuation. T-Mobile is trading for 14 times earnings estimates for 2026, a price-to-earnings ratio that's barely above its five-year low of 13 and well below its five-year average forward multiple of nearly 20.
While that's a premium to the multiples of eight and 8.5 for Verizon and AT&T, T-Mobile is worth it given that its long-term projected earnings growth rate is nearly 16% a year on average compared with long-term growth forecasts of just 7.4% for Verizon and 8.8% for AT&T.
T-Mobile even pays a decent dividend that yields 2.2%. Sure, that's a lot lower than the yields of 5.2% for Ma Bell and 6.7% for Verizon, two income stalwarts. But T-Mobile's dividend, in conjunction with its above average earnings growth and overdone fears about SpaceX, makes the stock, with its signature magenta logo, look pretty in pink.
Write to Paul R. La Monica at paul.lamonica@barrons.com
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(END) Dow Jones Newswires
July 14, 2026 15:38 ET (19:38 GMT)
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