Charter Communications
stock was tumbling Friday after the parent company of Spectrum Networks reported a surprise loss in internet subscribers.
Charter
shares were sinking 16% to $321.65. The stock was on pace for its largest percentage decrease since December 2022 and lowest close since May 25, 2023, when it finished at $319.66, according to Dow Jones Market Data. The stock also was the worst performer in the
S&P 500
Friday. The index was up 1.1%.
The cable company said Friday that total residential and small- and medium-business internet customers declined by 61,000 in the fourth quarter ended Dec. 31. Analysts surveyed by FactSet were expecting internet customers to increase by 6,000.
“Internet growth in our existing footprint has been challenging driven by admittedly more persistent competition from fixed wireless,” Chief Executive Christopher Winfrey said on the earnings call.
Residential video customers decreased by 248,000 in the quarter, compared with Wall Street estimates for a loss of 200,000, and a decline of 145,000 in the same period a year earlier. The latest quarterly decline partly was driven by video disconnects related to the temporary loss of
Walt Disney
programming in early September, the company said.
Disney and Charter had an 11-day long channel blackout last year after the entertainment companies couldn’t agree on a distribution deal.
MoffettNathanson analyst Craig Moffett wrote in a research note that “until expectations and results for broadband net adds come into better balance, nothing else matters. Nothing.” He rates the stock as a Buy with a $660 price target.
“We’ve long argued that Charter doesn’t need to show ‘broadband reacceleration.’ They merely need to show that broadband unit results are predictable enough, at a level reasonably close to zero or slightly better, to allow for focus on all the other good things that are happening (wireless, ARPU growth, margins),” Moffett said. “Today’s report is a frustrating reminder that they aren’t there yet.”
For the fourth quarter, Charter reported earnings of $7.07 a share on revenue of $13.71 billion. Analysts surveyed by FactSet were expecting earnings of $8.76 a share on revenue of $13.7 billion.
Disney stock was down 0.5% Friday, while
Comcast
was dropping 3.4%.
Write to Angela Palumbo at angela.palumbo@dowjones.com
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