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Why AT&T Stock Dropped Today | The Motley Fool

What happened 

Shares of AT&T (NYSE:T) fell 4.4% on Tuesday after comments by one of the telecom’s key executives sparked concerns of slowing growth among investors.

So what 

Speaking during the Wells Fargo Technology Media and Telecom Summit, AT&T Communications CEO Jeff McElfresh indicated that the strong customer growth the company experienced over the past year was likely to decelerate.

“We suspect the activity level for postpaid in 2022 is probably going to subside,” McElfresh said. “We’re not forecasting it to be as strong as it was this year.” 

AT&T’s stock price sank on Tuesday. Image source: Getty Images.

Postpaid subscribers are some of the most sought-after customers in the communications industry. They pay monthly bills and are typically among the most profitable customers for wireless carriers.

McElfresh hinted that with pandemic-related stimulus measures unlikely to persist, more cash-strapped consumers may be less likely to upgrade their wireless plans.

“The stimulus programs have put some extra cash in household budgets,” McElfresh said. “We’re not expecting that level of activity to continue into 2022 and beyond.” 

Now what

After the market close, AT&T provided investors with an update. The company noted the “healthy” increase in its wireless service revenue and earnings before interest, taxes, depreciation, and amortization (EBITDA) in recent quarters. AT&T also said that its simplified pricing plans and improved network performance should help it continue to attract and retain wireless subscribers. In turn, AT&T believes it can “profitably increase its wireless market share.”

However, judging by the sharp decline in its stock price, investors aren’t so sure the telecom giant can deliver on its growth targets.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.


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