Key Takeaways
- Charter Communications declined following reports of high-level discussions with SpaceX regarding a potential consumer mobile service collaboration
- The proposed arrangement would involve SpaceX directing mobile traffic through Charter’s terrestrial internet network, replicating Spectrum Mobile’s current operational model
- First-quarter earnings per share reached $9.17, falling short of the $10.01 Wall Street consensus, while revenue of $13.60 billion slightly exceeded projections
- Wall Street analysts maintain a consensus “Reduce” recommendation on the stock with a mean price objective of $278.50
- Institutional investors control 81.76% of outstanding shares, with notable firms like Dodge & Cox and Vanguard recently expanding their holdings
Shares of Charter Communications (CHTR) declined Monday following reports indicating the cable giant has engaged in high-level discussions with SpaceX regarding a potential consumer-facing mobile phone collaboration. The stock commenced trading at $133.64, significantly below its 52-week peak of $422.29, accumulating approximately 36% in losses year-to-date.
Charter Communications, Inc., CHTR
According to a Bloomberg report, the potential partnership discussions focus on Charter potentially channeling portions of SpaceX’s mobile phone traffic through its established terrestrial internet network. This arrangement would essentially replicate Charter’s existing Spectrum Mobile service model, which leverages infrastructure agreements with T-Mobile and Verizon.
Both organizations have remained tight-lipped about the alleged discussions. Charter has declined to provide commentary, while SpaceX has not responded to inquiries seeking confirmation.
SpaceX recently informed investors of its intentions to launch direct-to-consumer mobile services. Achieving this objective requires significant mobile spectrum assets and terrestrial infrastructure beyond its existing satellite capabilities. The aerospace company recently secured spectrum rights through an FCC AWS-3 band auction and previously obtained mobile spectrum assets from EchoStar.
SpaceX President Gwynne Shotwell has indicated that Starlink Mobile could ultimately exceed Starlink residential broadband in total subscriber count.
“Not everybody is going to need broadband, a Starlink broadband, in their homes,” Shotwell told CNBC. “But I think the numbers of users of Starlink Mobile will far exceed our Starlink broadband.”
For Charter, such a partnership could provide a much-needed revenue source during a challenging period marked by internet subscriber losses and contracting revenue. First-quarter revenue declined 1.0% year-over-year to $13.60 billion.
First Quarter Results Disappoint Investors
Charter’s first-quarter earnings per share registered at $9.17, missing the Street’s $10.01 expectation by $0.84. This earnings shortfall intensified existing downward momentum on shares, which have experienced an extended bearish trend.
The telecommunications provider maintains a debt-to-equity ratio of 4.56 and a current ratio of merely 0.40, indicating constrained financial maneuverability. The 50-day moving average stands at $155.75, considerably above current trading levels, while the 200-day moving average rests at $194.41.
Despite deteriorating share performance, company insiders have demonstrated confidence through purchases. Director Mauricio Ramos acquired 9,929 shares at $140.93 during May, representing a 105% expansion of his stake. Director Balan Nair purchased 1,000 shares in late April at $175.46. Aggregate insider acquisitions over the preceding 90 days total approximately $3.17 million.
Institutional Investors Maintain Presence
Among institutional investors, Louisiana State Employees Retirement System established a fresh position valued at approximately $2.74 million during the first quarter. Dodge & Cox expanded its stake by 23.7% in the fourth quarter, while Vanguard increased its position by 9.5%. Capital Research Global Investors dramatically grew its holding by 304.9% during the same timeframe.
Collectively, institutional investors and hedge funds control 81.76% of CHTR shares.
Analyst perspectives remain subdued. Deutsche Bank reduced its price objective to $215 while maintaining a “hold” recommendation. Royal Bank of Canada lowered its target to $220, also assigning a “sector perform” rating. The consensus among 20 covering analysts stands at “Reduce” with an average price target of $278.50.
CHTR’s current market capitalization stands at $18.51 billion, trading at a PE ratio of 3.61 and a PEG ratio of 0.23.
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