Shares of Comcast (CMCSA) took a significant hit, dropping as much as 9% on Monday, following an announcement by Dave Watson, the president and CEO of Comcast Cable, that the company anticipates losing over 100,000 broadband subscribers in the fourth quarter. Yahoo Finance reports that this forecast far exceeds Wall Street’s expectations, which had predicted a loss of approximately 63,300 subscribers, according to Bloomberg’s consensus estimates.
This was the largest single-day decline for Comcast stock since April 25, reflecting investor concerns over the company’s performance in a highly competitive broadband market. Watson, speaking at a UBS media conference in New York City, explained that the subscriber loss expected in Q4 aligns more closely with the company’s performance in the first half of the year, where it lost nearly 100,000 subscribers per quarter. He noted that despite positive factors like the Olympic marketing surge and students returning to school boosting numbers in Q3, the competitive landscape remains “intensely competitive.”
Mobile providers like Verizon (VZ), T-Mobile (TMUS), and AT&T (T) have been gaining ground by offering more flexible and often cheaper alternatives to traditional broadband, targeting lower-income consumers. Their gains in the third quarter underscore the shifting dynamics in the market. Additionally, natural disasters such as the two Southeast hurricanes earlier this fall have likely exacerbated Comcast’s subscriber losses by about 10,000 and slightly impacted average revenue per user (ARPU). Watson indicated that ARPU growth would be at the lower end of the 3% to 4% range for the current quarter.
Comcast’s challenges aren’t confined to broadband; the company also reported a significant drop in TV subscribers, losing 365,000 in Q3 as cord-cutting continues to favor streaming services. In response to these pressures, Comcast announced plans to spin off most of its cable properties into a new company, temporarily named “SpinCo.” This strategic move aims to “play offense” against an industry increasingly moving away from traditional cable TV, with SpinCo set to include major networks like USA Network, CNBC, MSNBC, Oxygen, E!, SYFY, and the Golf Channel, but excluding Bravo.
The announcement and the subsequent stock reaction highlight the pressures facing Comcast in a market where competition is intensifying, and consumer behavior is rapidly evolving. The company’s decision to restructure its business by spinning off its cable assets reflects an acknowledgment of these challenges and an attempt to reposition itself for future growth beyond traditional cable services. The report from Yahoo Finance underscores the immediate investor reaction to these developments, signaling a period of uncertainty and strategic reevaluation for Comcast.
Price Action: CMCSA shares are currently trading at $38.98, reflecting a significant drop of $4.18, or 9.68%, in midday trading. As of the last print, the stock is down 11.40% year to date, significantly trailing behind the Nasdaq Composite (COMP), which has posted a 31.67% gain over the same period.
Leave a Reply