AT&T’s free cash flow declined significantly, resulting in a sharp drop in the share price on Wall Street in the early trading hours of Thursday.
Telecom giant’s share price during early trading hours on Thursday, April 20 AT&T (NYSE:T) plunged more than 7%. As of press time, AT&T stock is trading at a price of $18.28, down 7.26%. Today’s price decline in AT&T pushes the stock into negative territory on the year-to-date chart.
Factors Affecting AT&T Stock
The recent action in AT&T’s stock came after the telecommunications giant reported free cash flow for the first quarter of 2023 that fell well short of analysts’ expectations. Furthermore, March quarter adjusted earnings for AT&T were 60 cents from its continuing operations, down 5% from a year earlier.
Interestingly, the telecom giant reported better-than-expected revenue, which rose 1.4% to $30.1 billion. Analysts at FactSet predicted AT&T earnings of 58 cents per share on revenue of $30.2 billion. A year earlier, AT&T reported earnings of 63 cents per share on revenue of $29.7 billion from continuing operations.
During the first quarter of this year 2023, the company’s free cash flow came in at $1 billion, while missing estimates of $3.2 billion. Further, during the March quarter, the company added 424,000 postpaid phones and 72,000 additions to its fiber broadband business. Commenting on the developments, Chief Executive Officer John Stankey Said,
“We’re winning thanks to a proven and sustainable playbook that focuses on simple, customer-centric experiences. As a result, we’re adding high-value customers, and when they choose AT&T, they stay with us.
AT&T’s wireless subscriber growth slows
For the first quarter of the year, the telecom giant’s wireless revenue rose 2.5% to $20.6 billion. Although the company added new wireless postpaid phone customers, growth was relatively slow during the first quarter. In the year-ago period, AT&T added 691,000 postpaid phone customers.
Previously, AT&T said the first quarter slowed seasonally on the metric due to the timing of device payments, incentive compensation and other factors.
Along with AT&T, subscriber growth is also likely to slow for other players like T-Mobile US and Verizon Communications. Both these companies will present their figures earlier this month.
AT&T shares have a Relative Strength Rating of 78 out of 99, the best possible. It will be interesting to see how long it will take for the stock price to cool down.
Bhushan is passionate about Fintech and has a good grasp of understanding the financial markets. His interest in economics and finance drew his attention to the newly emerging blockchain technology and cryptocurrency markets. He is in the process of continuous learning and keeps motivating himself by sharing his acquired knowledge. In his spare time he reads thriller fiction novels and occasionally explores his culinary skills.
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