Verizon Shares Fall Despite Third Straight Guidance Raise

what happened

Verizon Communications posted third-quarter adjusted earnings of $1.31 per share, topping the $1.27 analyst consensus, according to gurufocus.com. Revenue came in at $34.31 billion, short of the $34.77 billion forecast, as equipment sales dropped 9%. In trading at 9:30 a.m. Eastern, the stock was down 3.78%.

The company added 406,000 postpaid phone subscribers, its best third quarter in five years, and churn eased to 0.94% from 0.98%. Verizon blamed the equipment decline on fewer upgrades, as customers keep their devices longer, and on a deliberate reduction in device subsidies. Free cash flow climbed 12.1% to $7.8 billion.

The outlook was lifted for a third consecutive quarter, with postpaid phone net additions now expected at 1.1 to 1.2 million and adjusted EPS at $5.04 to $5.06. Mobility and broadband service revenue should grow about 4% in the fourth quarter. CEO Dan Schulman said, "One year into our transformation, Verizon is fundamentally stronger." Verizon also signed an AI infrastructure deal with Amazon Web Services worth more than $2 billion.

why it matters

The key question for investors is whether subscriber growth and cash generation can offset shrinking device revenue. The share drop despite the higher guidance suggests the revenue miss weighed more heavily on sentiment. The AWS agreement also ties the carrier to demand for AI infrastructure.

market impact

VZ and US telecoms: the revenue miss weighs on the stock, while subscriber growth and raised guidance support the sector.

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