Last week, Comcast (CMCSA) posted strong first-quarter results. The stock rallied from the $28 level in mid-April to nearly $32. Last Friday, shares fell by 12.9% to close at $27.56.
In Q1, Comcast posted revenue growth of 5.3% Y/Y to $31.46 billion. Its business provided net cash of $6.9 billion and free cash flow of $3.9 billion. Shareholders examined results more closely. They did not see the EBITDA decline of 9% in the Content and Experiences unit. The new NBA contract diluted the results.
Connectivity and Platforms faced a pivot. To compete more effectively in the broadband market, Comcast simplified its pricing. It also increased investments. Those costs will weigh on future results.
The Broadband business subscriber loss improved by 117,000 to 65,000. Consumers liked its gig-plus speeds, along with the five-year guarantee. ARPU, however, fell by 3.1%.
Charter Communications (CHTR) plunged by 25.5% last Friday. Trading at a forward P/E of 4.37x, the stock is cheap. Still, revenue of -1.1% Y/Y to $13.59 billion is worrisome. Residential video revenue weighed on results, while the 0.9% Y/Y growth in residential connectivity revenue was not enough.
Charter’s debt levels remain a concern. Investors are shunning heavily indebted telecom stocks. They also dumped T-Mobile (TMUS) shares, while Verizon Communications (VZ) gave back some of its gains. AT&T (T) also gave back half of this year’s stock gains.
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