What happened
Cell phone operator actions T-Mobile US (NASDAQ: TMUS) fell nearly 5% at the beginning of Friday’s trading session, despite exceeding profit expectations in the company’s report on Friday afternoon. At 11:40 am EST, T-Mobile’s shares had reduced their losses to a drop of just 3%.
Analysts predicted the telecommunications giant would earn $ 0.51 per share on sales of $ 19.9 billion in the fourth quarter of 2020. Ultimately, the gains were $ 0.60 and sales of $ 20.3 billion.
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And
Despite exceeding expectations, however, T-Mobile’s earnings fell significantly year-over-year in the fourth quarter – down 31%, while revenue rose 61%. The dramatic disconnect was the result of higher costs of integrating Sprint into the company, but greater revenue from having acquired Sprint.
For the entire fiscal year 2020, T-Mobile posted revenue of $ 68.4 billion and net income of $ 3.1 billion (and $ 3 billion in free cash flow). At the end of the year, T-Mobile noted that it also had its best year in customer additions – 5.6 million new customers – a factor that prompted CEO Mike Sievert to declare, “2020 was simply our best year.”
What now
Of course, 2020 is not what worries investors. It’s 2021, so the stock is falling. T-Mobile said yesterday that it sees “postpaid customer net adds” this year ranging from just 4 million to 4.7 million – against the 5 million additions Wall Street had predicted. The company is also looking for adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) between $ 26.5 billion and $ 27 billion, placing the entire forecast range below the analyst consensus forecast of $ 27, 1 billion.
It is the fact that T-Mobile has lost its orientation, therefore, that seems to be weighing on the stocks today.