TLDR
- Charter Communications fell after news broke of executive-level talks with SpaceX over a consumer mobile phone partnership
- SpaceX could route phone traffic through Charter’s ground-based internet infrastructure, similar to how Spectrum Mobile currently operates
- Charter reported Q1 EPS of $9.17, missing the $10.01 consensus estimate, though revenue of $13.60 billion edged past expectations
- Analysts hold a consensus “Reduce” rating on CHTR with an average price target of $278.50
- Institutional ownership stands at 81.76%, with Dodge & Cox and Vanguard among those adding to positions recently
Charter Communications (CHTR) stock slipped Monday after reports surfaced that the company has been in executive-level talks with SpaceX about a potential consumer mobile phone partnership. The stock opened at $133.64, down sharply from its 52-week high of $422.29, and carries a year-to-date loss of roughly 36%.
Charter Communications, Inc., CHTR
The talks, reported by Bloomberg, center on Charter potentially running some of SpaceX’s phone traffic through its existing ground-based internet infrastructure. It would mirror how Charter currently operates its Spectrum Mobile service through infrastructure deals with T-Mobile and Verizon.
Neither company has confirmed the discussions. Charter declined to comment and SpaceX did not respond to a request for comment.
SpaceX recently told investors it plans to offer mobile service directly to consumers. To do that, it needs substantial mobile spectrum and ground infrastructure beyond its satellite holdings. The company recently won spectrum rights in an FCC AWS-3 band auction and previously acquired mobile spectrum from EchoStar.
SpaceX President Gwynne Shotwell has said Starlink Mobile could eventually surpass Starlink home broadband in user numbers.
“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, a deal could open a new revenue stream at a time when the company is losing internet subscribers and posting declining revenue. Q1 revenue dropped 1.0% year-over-year to $13.60 billion.
Q1 Earnings Miss Weighs on Sentiment
Charter’s Q1 EPS came in at $9.17, falling short of the $10.01 analyst consensus by $0.84. The miss added to existing pressure on the stock, which has been in a prolonged downtrend.
The company carries a debt-to-equity ratio of 4.56 and a current ratio of just 0.40, leaving limited financial flexibility. Its 50-day moving average sits at $155.75, well above the current price, and the 200-day average is $194.41.
Despite the weak price action, insiders have been buying. Director Mauricio Ramos picked up 9,929 shares at $140.93 in May, a 105% increase in his position. Director Balan Nair added 1,000 shares in late April at $175.46. Total insider purchases over the last 90 days amount to roughly $3.17 million.
Institutional Buyers Still Active
On the institutional side, Louisiana State Employees Retirement System opened a new position worth approximately $2.74 million in Q1. Dodge & Cox raised its stake by 23.7% in Q4, while Vanguard lifted its position by 9.5%. Capital Research Global Investors grew its holding by 304.9% in the same period.
Overall, 81.76% of CHTR is held by institutions and hedge funds.
Analyst sentiment remains cautious. Deutsche Bank trimmed its price target to $215 with a “hold” rating. Royal Bank of Canada cut its target to $220, also rated “sector perform.” The consensus across 20 analysts sits at “Reduce” with an average target of $278.50.
CHTR’s current market cap stands at $18.51 billion, with a PE ratio of 3.61 and a PEG ratio of 0.23.
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