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AT&T’s free cash flow dropped significantly as a result of which the stock price took a severe beating on Wall Street in Thursday’s early trading hours.
During the early trading hours on Thursday, April 20, the stock price of telecom giant AT&T (NYSE: T) came crashing down by more than 7%. As of press time, the AT&T stock is trading 7.26% down at a price of $18.28. Today’s price crash in AT&T pushes the stock into negative territory on the year-to-date chart.
Factors That Affected AT&T Stock
The recent action in AT&T’s stock came as the telecommunications giant reported free cash flow for the first quarter of the year 2023, falling severely short of analysts’ expectations. Also, the March quarter’s adjusted earnings for AT&T from its continuing operations were 60 cents, down by 5% from a year before.
Interestingly, the telecommunications giant reported better-than-expected revenue which jumped by 1.4% to $30.1 billion. Analysts at FactSet predicted AT&T earnings of 58 cents a share on revenue of $30.2 billion. A year before, AT&T had reported earnings of 63 cents a 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 at $1 billion, while missing the estimates of $3.2 billion. Also, during the March quarter, the company reported 424,000 postpaid phone net additions and 72,000 net additions within its fiber broadband business. Commenting on the developments, Chief Executive John Stankey said:
“We’re winning thanks to a proven and sustainable playbook that centers 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, the growth was relatively slow during the first quarter. In the year-earlier period, AT&T had added 691,000 postpaid phone subscribers.
Previously, AT&T said that the first quarter tends to be seasonally slow on the metric due to the timing of the device payments, incentive compensation, and other factors.
Along with AT&T, subscriber growth is also likely to slow for other players such as T-Mobile US and Verizon Communications. Both these companies shall report their numbers ahead of this month.
The AT&T shares owned a Relative Strength Rating of 78 out of a best-possible 99. It will be interesting to see as to how long will it take for the fall in the share price to cool down.