CHTR: What just happened?
Nothing we saw in Friday’s results warranted Charter’s 25%+ stock price decline. Charter lost $8BN+ in equity value. Comcast lost nearly $15BN in equity value. Other Cable companies’ stock prices were also meaningfully down. Results alone cannot explain these moves in our view. We think investors are concerned about the long-term pricing power of these businesses after Charter pulled back on their goal to grow broadband ARPU this year. We think some of these concerns are valid, but this certainly felt like an overreaction. In this note, we dissect the factors that led to ‘Bloody Friday’. We try to answer some of the many investor questions we received here and share a few of our own for management.Charter Communications is a holding company. Through its subsidiaries, the company is a cable operator and a broadband communications company providing video, Internet and voice services. The company also provides its mobile service to residential customers. In addition, the company sells video and online advertising inventory to local, regional and national advertising customers and communications and managed solutions to enterprise customers. The company also owns and operates regional sports networks and local sports, news and community channels. The company owns and operates a two-way telecommunications network which passes various households and small and medium businesses across United States.
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