Houston, Verizon Has a Problem: Verizon Stock Falls as SpaceX Reportedly Seeks 80,000 Cell Sites

Verizon Communications Inc. (NYSE:VZ) shares are trading lower after a Bloomberg report that SpaceX is in talks to access at least 80,000 U.S. cell sites for a fourth nationwide wireless network, with Verizon reporting third-quarter earnings Monday.

• Verizon stock is feeling bearish pressure. What’s weighing on VZ shares?

SpaceX Reportedly Is in Talks to Access 80,000 U.S. Cell Sites for a Fourth Wireless Carrier

According to Bloomberg, which cited people familiar with the matter, SpaceX aims to secure at least 80,000 cell sites across the U.S. and is in talks with at least one major cellular infrastructure company, including Crown Castle. Bloomberg said the agreements would solidify SpaceX’s path toward a fourth nationwide carrier and could be worth billions of dollars. Crown Castle CEO Chris Hillabrant said on his company’s earnings call that “you can assume that we’re talking to all parties,” without naming customers. Verizon, AT&T and T-Mobile shares each fell about 5% on concerns about the new competition, while Crown Castle shares jumped as much as 10% in late trading.

The report follows SpaceX’s recent acquisition of low-band spectrum and its FCC approval to launch 15,000 satellites designed to serve mobile phones directly. “We will be building out our terrestrial networks so there’s broad-based connectivity anywhere that SpaceX and Starlink are allowed to operate,” Musk said on SpaceX’s earnings call this week.

Earnings Preview & History

Verizon is scheduled to report third-quarter earnings on October 26 before the market opens. Analysts estimate earnings per share of $1.27 along with revenue of $34.74 billion. For the prior quarter, Verizon reported earnings per share of $1.30, beating the consensus estimate of $1.27. The company also posted revenue of $34.25 billion, missing the consensus estimate of $35.11 billion.

What to Watch: Postpaid Phone Additions, Churn and FY Guidance

Investors will be closely tracking postpaid phone net additions, which were 184,000 in the second quarter, the best consumer second-quarter result in five years. Verizon expects the full year to land in the upper half of its 750,000 to 1 million range, with 239,000 in the first half, so the pace needed in the second half is high.

Full-year guidance will also be in focus after Verizon raised it for a second straight quarter, now calling for adjusted earnings per share growth of 6% to 7% and free cash flow growth of 9% to 10%. Churn will be watched as well, with consumer postpaid phone churn at 84 basis points in the second quarter. Revenue, which fell 0.7% in the second quarter and missed estimates, will also be watched.

Verizon Shares Edge Lower

VZ Price Action: At the time of publication, Verizon shares are trading 4.71% lower at $43.07, according to data from Benzinga Pro.

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