Why AT&T Stock Rallied Today
Key Points
Concerns that SpaceX and other satellite-based communication providers would upend the telecom market have weighed on AT&T's stock price.
AT&T's second-quarter results helped to calm investors' nerves.
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Shares of AT&T (NYSE: T) rose on Wednesday after the wireless carrier delivered reassuring financial results and reaffirmed its long-term growth forecast.
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AT&T continues to attract new subscribers
AT&T saw solid gains in what it calls "advanced connectivity customers." This includes 432,000 postpaid phone additions, 367,000 fiber accounts, and 279,000 fixed wireless clients.
AT&T is on track to reach over 60 million total fiber locations by the end of 2030, up from 38.6 million at the end of the second quarter. That bodes well for the telecommunications titan's customer growth and retention efforts, as more than 40% of households with AT&T's home internet services also elected to become wireless subscribers.
"With an industry-leading position in fiber -- the best connectivity technology available -- we believe our network performance and operating scale can't be matched," CEO John Stankey said.
All told, AT&T's revenue rose 2.3% year over year to $31.6 billion, while its adjusted earnings jumped 20% to $0.65 per share.
Additionally, the telecom giant's free cash flow increased by 7% to $4.7 billion, enabling AT&T to reward its shareowners with $4.1 billion in dividends and stock buybacks.
SpaceX isn't a threat yet
Better still, AT&T reaffirmed its full-year and long-term growth targets. Management continues to expect adjusted earnings per share of $2.25 to $2.35 in 2026. The company also remains on track to generate annual free cash flow of over $18 billion this year and $21 billion by 2028.
This reiterated guidance helped to lessen investors' fears regarding competition from satellite-based communication services like SpaceX's Starlink and its potential to crimp AT&T's profitability.
The wireless leader's shareholders breathed a sigh of relief, and its stock price rose in turn.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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