AT&T (NYSE:T) saw its shares drop by 8% on Friday, largely due to a report that raised concerns among investors about potential competition from SpaceX (NASDAQ:SPCX) in the U.S. wireless market.
A worrisome new threat
According to a Bloomberg report, SpaceX is reportedly negotiating access to at least 80,000 cell sites throughout the U.S. This move is part of CEO Elon Musk’s strategy to establish a strong competitor to AT&T, Verizon, and T-Mobile.
During their earnings call for the third quarter on October 20, SpaceX’s COO, Gwynne Shotwell, announced that Starlink Mobile’s user base had surged by 37% to exceed 22 million. This service connects regular smartphones to SpaceX’s low-Earth orbit satellite network.
The company has also recently secured a comprehensive set of low-band spectrum licenses, claiming it will lay the foundation for Starlink Mobile to emerge as a significant mobile operator in the U.S.
Musk articulated their ambitions, stating, “We will be building out our terrestrial network such that there is broad-based connectivity anywhere that SpaceX and Starlink are allowed to operate.”
AT&T won’t go down without a fight
Clearly, SpaceX is a formidable contender. But launching a new nationwide wireless carrier is a massive undertaking, likely costing tens of billions and requiring more time than the immediate market reaction to AT&T’s stock price suggests.
In the interim, AT&T is still attracting new clientele, gaining 379,000 postpaid phone subscribers in the third quarter, alongside 442,000 fiber and 327,000 fixed wireless customers.
This growth helped boost AT&T’s revenue by 5%, reaching $32.3 billion, and led management to increase its adjusted earnings forecast for the year to $2.40 per share. Even after the recent dip, AT&T’s stock is trading for less than nine times its expected profits for 2026.
Furthermore, AT&T anticipates an uptick in cash profits, projecting their free cash flow will rise to over $21 billion by 2028, up from $18 billion this year.
Should you buy stock in AT&T right now?
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