AT&T shares climb, revenue misses forecasts but subscriber growth shines

AT&T Inc.’s stock surged after the company’s third-quarter earnings report highlighted robust subscriber growth, offsetting a slight revenue miss. The telecommunications giant, which has been expanding its 5G and broadband services, saw its shares rise by over 3% following the announcement, reaching $22.30—its highest level in months. This came despite the company’s revenue falling short of analysts’ forecasts, reflecting a complex but optimistic outlook for investors.

Subscriber Growth Boosts AT&T’s Stock Despite Revenue Shortfall

AT&T’s Q3 2024 financial report revealed a total revenue of $29.8 billion, falling short of the $30.01 billion expected by market analysts. The company also posted diluted earnings per share (EPS) of $0.49, below the forecasted $0.52 per share. However, the subscriber growth figures overshadowed the revenue miss, driving investor enthusiasm. AT&T added 419,000 new postpaid wireless subscribers, well above the 251,800 projected, which underscored the company’s strength in its core market.

This significant addition of new subscribers marks a crucial achievement for AT&T as it continues to battle fierce competition from other telecom giants like Verizon Communications Inc. and T-Mobile US Inc. Analysts have noted that such growth, particularly in the postpaid segment, suggests AT&T’s strategies around 5G and broadband services are gaining traction among consumers.

Market Sentiment and Stock Movement

The strong subscriber performance led to a positive market response, with AT&T’s shares climbing sharply post-earnings release. Experts indicated that the company’s ability to secure new customers, even amid a revenue miss, was a strong signal for long-term growth. By expanding its 5G and fiber offerings, AT&T has positioned itself as a resilient player in the telecommunications sector, capturing market share in key areas.

Despite the revenue decline, AT&T maintained its full-year guidance, projecting adjusted EPS between $2.15 and $2.25. This consistency in earnings outlook appears to have reassured investors, contributing to the stock’s 3.7% rise in trading. The stock, trading at $22.30, reflects renewed investor confidence in AT&T’s long-term growth potential, driven by its expanding subscriber base.

Broader Trends in the Telecom Industry

AT&T’s positive stock performance is noteworthy given the broader trends in the communications sector. Competitors like Alphabet Inc. and Meta Platforms Inc. have recently seen their stocks decline, contributing to a mixed sentiment across the market. Yet, AT&T’s report indicates that while revenue targets were missed, operational growth metrics such as customer retention and service expansion remained strong.

Industry analysts suggest that AT&T’s stock movement is a testament to the company’s strategic emphasis on expanding 5G networks and broadband services. This focus on infrastructure and service delivery has helped the company outperform other segments of the market, and experts predict continued growth as AT&T solidifies its position in these core areas.

Expert Analysis on AT&T’s Performance

Industry expert John Smyth noted that while revenue figures are critical, subscriber growth remains a primary indicator of future revenue potential in the telecommunications industry. He explained that AT&T’s ability to add over 400,000 new customers reflects a strong market response to its services and suggests a solid growth trajectory. Smyth added that, despite the revenue miss, the company’s proactive investments in network expansion would likely drive future revenues as more customers transition to its 5G and fiber offerings.

Outlook for AT&T’s Stock and Future Growth

Looking ahead, AT&T reaffirmed its guidance for full-year earnings, projecting 3% growth in wireless service revenue and a minimum of 7% growth in broadband services. The company’s continued investment in 5G infrastructure and fiber-optic expansion is expected to be the backbone of its future growth strategy. Investors seem to be responding positively to this outlook, as reflected in the recent stock surge.

Experts caution, however, that AT&T will need to address challenges in its business wireline division, which saw an 8% year-over-year decline in revenue. If the company can balance these headwinds while maintaining its subscriber growth momentum, analysts believe AT&T could see sustained stock price increases into 2025.