🚨 AT&T just crushed earnings… so why did its stock tank 6.5%?! Is Elon Musk coming for Big Telecom?
AT&T $AT&T Inc(T)$ dropped its Q3 earnings, and honestly, the headline numbers looked solid:
Revenue: $32.3B (+5.3% YoY)
Adjusted EPS: $0.65 (vs. $0.54 last year)
Guidance: Boosted full-year EPS to ~$2.40
Classic beat-and-raise, right? 📈
The Plot Twist: $T stock plummeted 6.5% the very same day. Rivals $Verizon(VZ)$ and $T-Mobile US(TMUS)$ both got dragged down ~3% along with it.
So why did the entire telecom sector get clobbered on good earnings? Here’s what’s actually happening behind the scenes 👇
📌 1. The Fine Print inside AT&T’s Report
On paper, AT&T is still adding users at a healthy clip:
+379k Postpaid Phone Net Adds
+442k Fiber Connections
The Catch? Fiber ARPU (Average Revenue Per User) fell 4% YoY.
Why? Aggressive promos, phone + fiber bundles, and lower-tier accounts from recent acquisitions. AT&T is basically slashing prices to hook customers (nearly ~43% of their high-speed internet households now use AT&T wireless too!).
While bundling boosts customer loyalty, wall street hates one thing: growing users at lower margins. 📉
💰 2. The Elon Factor: SpaceX & Starlink Threat
The elephant in the room isn't just internal promos—it’s $Space Exploration Technologies Corp(SPCX)$ . 🚀
Wall Street is getting spooked about Starlink’s push into direct-to-cell satellite technology. For decades, the Big Three ($T, $VZ,$TMUS) owned the cell tower monopoly. But if satellites start beaming coverage straight to everyday smartphones everywhere, the legacy telecom playbook changes forever.
💡 Reality Check: Starlink isn't replacing ground networks overnight. Satellites still face massive hurdles in network capacity, indoor penetration, and cost per gigabyte. AT&T isn't bleeding millions of users to SpaceX yet—but the market trades on the future, not just today.
⚖️ The Bull vs. Bear Case
🐂 The Bull Case: AT&T’s massive physical infrastructure and sticky bundling strategy could keep customer churn ultra-low, driving solid long-term lifetime value.
🐻 The Bear Case: Endless discounting caps profit growth, while tech advances in satellite coverage threaten to shrink their moat over time.
📊 Tickers on my Watchlist Right Now:
$T: Fiber ARPU trends & subscriber retention
$TMUS: Churn rate amidst heavy mobile promo wars
$VZ: Wireless revenue growth & pricing power
SpaceX ($SPCX): Direct-to-Cell tech milestones and commercial rollout
💬 What do you think?
If Starlink successfully gets direct-to-cell working seamlessly across dead zones and rural areas:
Are legacy giants like AT&T and Verizon in real, existential trouble?
Or will satellite tech simply become a handy backup/add-on for traditional terrestrial networks?
We used to watch telecom companies fight each other... now they’re competing against rocket companies.
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