Why AT&T Stock Slumped in October
Why AT&T Stock Slumped in October
Eric Volkman, The Motley FoolSun, November 8, 2026 at 7:46 AM UTC
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Image source: Getty Images.Key Points -
At some point, the current "big three" U.S. telecoms could become the "big four."
This made investors jittery enough to dismiss AT&T's otherwise encouraging third-quarter results.
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A large and very well-capitalized conglomerate was bulking up its telecom assets in October, and investors felt this didn't bode well for the sector's incumbents. One that got dinged by Mr. Market was AT&T (NYSE:T), which saw its share price erode by more than 14% largely due to these fears. Even the company's estimates-beating third-quarter results, published mid-month, couldn't halt this slide.
The threat from outer space
That ambitious conglomerate is none other than the Elon Musk-led space/telecom/artificial intelligence (AI) company Space Exploration Technologies (NASDAQ:SPCX), or SpaceX. Its current revenue powerhouse is its Starlink telecom division, and, sensibly enough, management is aiming to bolster this business.
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On Oct. 8, SpaceX announced it had signed a definitive agreement with investment firm Grain Management to acquire up to 14 megahertz of low-band wireless spectrum. The financial particulars were not disclosed. On top of that, the Federal Communications Commission (FCC) approved the company’s application for its Gen2 satellite constellation. Both position SpaceX to continue expanding into a vertically integrated consumer wireless business, building on its roots as a high-data-transmission broadband purveyor.
Two weeks later, Bloomberg reported that SpaceX was planning to secure at least 80,000 cell sites in the U.S. Citing unidentified "people familiar with the matter," the financial news agency wrote that the company was in discussions with at least one wireless infrastructure business to help it with this goal. A sprawling network of cell sites would be foundational for a company aiming to become a nationwide wireless carrier.
So it's understandable that AT&T investors (and those of fellow incumbents Verizon (NYSE:VZ) and T-Mobile (NASDAQ:TMUS)) were spooked by these developments. Mobile telephony can be a very lucrative business. Still, it isn't an easy one, and the entry of a huge and determined competitor threatens to rock the boat — at least eventually.
Don't forget the double beats
AT&T released those quarterly results on Oct. 21, and these provided some fuel for optimism.
After all, revenue rose by 5% year over year (to $32.3 billion), an impressive growth figure given that the company's business is relatively mature. Per-share net income not under generally accepted accounting principles (non-GAAP, or adjusted) also rose at a healthy rate, climbing to $0.65 from the year-ago profit of $0.54. Both headline metrics beat consensus analyst estimates: slightly under $31.7 billion on the top line and $0.60 per share for adjusted profitability.
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All three telecom incumbents are, in my view, strong companies with cash flow robust enough to fund comparatively high-yield dividends. Meanwhile, SpaceX has the financial strength and solid existing asset base to become a serious contender in the consumer telecom segment. That said, cellular networks are extremely expensive to buy or build, and to operate, so this will surely not happen quickly. I foresee a potential mid- to long-term threat from SpaceX; meanwhile, I think AT&T’s share price can recover, especially given its recent strong performance and the appeal of its high-yield dividend.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Space Exploration Technologies. The Motley Fool recommends T-Mobile US and Verizon Communications. The Motley Fool has a disclosure policy.
Source: “AOL Money”
