AT&T Stock Sinks on Subscriber and SpaceX Worries. Is the Stock a Buy on the Dip?

AT&T (NYSE: T) stock had been on a roll, more than doubling from July 2023 to a closing high of $28.10 on March 27, 2026. However, after a strong start to 2026, AT&T stock has since come under pressure from the potential threat of Space Exploration Technologies (NASDAQ: SPCX) entering the U.S. mobile market. While the stock is becoming more attractively valued, I wouldn't be buying it just yet.

Let's dig into AT&T's recent results and prospects to see when might be a good time to buy the stock.

The SpaceX threat

AT&T CEO John Stankey addressed a potential SpaceX threat on the company's earnings call this week, although it wasn't enough to assuage investor fears. He said that low earth orbit (LEO) satellites are a way to expand wireless connectivity in rural areas, but not a means to replace wireless networks. Stankey said that in metropolitan areas, typically 40% to 45% of wireless traffic comes from inside buildings that cannot be efficiently served by traditional outdoor macro cell towers or LEOs. As such, it would take years of heavy investments for SpaceX to get to the performance levels of incumbent players.

In addition to the fears of SpaceX entering the market, investors were also not impressed with the company's wireless postpaid phone subscriber additions, which only met analyst expectations. It still added a robust 379,000 postpaid wireless phone customers in the quarter. Broadband, meanwhile, remained a bright spot. AT&T added 442,000 fiber subscribers and 327,000 fixed wireless users. It said the over 1 million advanced connectivity subscriber additions were its most in more than four years.

Turning to its results, total revenue climbed by 5.3% to $32.3 billion, while adjusted earnings per share (EPS) jumped by 20% to $0.65. The results surpassed Wall Street expectations for adjusted EPS of $0.60 on revenue of $31.7 billion.

Its advanced connectivity segment revenue increased 7.2% to $29.5 billion. Service revenue jumped 6.1% to $23.9 billion, while equipment sales rose 12.2% to $5.6 billion.

Within the segment, wireless revenue climbed 5% to $17.8 billion, while home internet revenue surged 23.4% to nearly $3 billion. Postpaid phone average revenue per subscriber (ARPU) rose 4% to $58.90, while broadband ARPU fell by 5.2% to $68.55.

Fiber remains a big emphasis for the company, with a goal of reaching 60 million locations by the end of the decade. It also has a joint venture with Global Infrastructure Partners and CPP Investments to increase fiber deployments. It noted that more than 90% of U.S. data centers are within 10 miles of its fiber network, and it has partnerships with Amazon and Microsoft to help them with their connectivity needs.

Looking ahead, the company raised its outlook for 2026 adjusted EPS to $2.40 from a prior range of between $2.25 and $2.35. It expects to generate $6 billion in free cash flow in the quarter.

Through 2028, it is projecting low-single-digit annual revenue growth, with mid-single-digit advanced connectivity revenue growth. It expects adjusted earnings to grow by double digits, with free cash flow of over $21 billion in 2028. It plans to maintain its current $ 1.11-per-share dividend.

Image source: The Motley Fool.

Hold off on buying

AT&T turned in overall strong quarterly results, although the narrative for the company has shifted due to SpaceX's potential moves. With Verizon trading at a cheaper valuation and having a higher yield, I think it is the better stock to own over AT&T on this pullback in communication stocks.

That said, I do think the SpaceX worry is overdone, and that the Elon Musk company won't enter the U.S. mobile market in a traditional way, with it more centered on robot and physical AI connectivity. I would be interested in AT&T stock if it falls into the bargain bin and, as such, I would prefer to be a buyer of AT&T around $19, which is 7.5 times forward earnings estimates.

Geoffrey Seiler has positions in Amazon. The Motley Fool has positions in and recommends Amazon and FactSet Research Systems. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.