AT&T Shares Sink 6% Despite Q3 Beat and Raised Guidance as Wireless Subscriber Miss and SpaceX Fears Weigh

AT&T reported third-quarter revenue of $32.3 billion, up 5.3% year over year and ahead of the $31.69 billion Wall Street consensus, while adjusted EPS of $0.65 beat estimates of $0.60 by more than 8%. Adjusted EBITDA came in at $12.5 billion against a $12.34 billion estimate, and free cash flow reached $5.0 billion. The company raised its full-year 2026 adjusted EPS guidance to approximately $2.40, above both its prior range of $2.25 to $2.35 and the $2.35 analyst consensus, and reiterated full-year free cash flow of at least $18 billion. AT&T also plans capital investment of $22 billion to $23 billion annually in 2027 and 2028, down from the current $23 billion to $24 billion range, and outlined approximately $10 billion in share repurchases.

Despite the headline beats, shares fell roughly 6%, wiping out approximately $8 billion in market value, with AT&T trading around $22. The primary drag was wireless postpaid phone net additions of 379,000, which came in below analyst estimates near 387,000, and a postpaid phone-only churn rate of 0.92%. The selloff pulled Verizon and T-Mobile shares down roughly 3% as well.

The standout performer within the results was broadband. AT&T added a record 769,000 internet subscribers in the quarter, comprising 442,000 fiber net adds and 327,000 fixed wireless net adds, pushing fiber locations past 39 million. Advanced connectivity service revenue rose 6.1% to $23.9 billion, with segment operating income up 18.9% to $7.6 billion. The company said nearly 43% of households using its advanced internet services also subscribe to its wireless plans. AT&T reiterated a target of more than 60 million fiber locations by the end of the decade.

Investors also focused on competitive risk from SpaceX's Starlink satellite service after Elon Musk argued that LEO constellations were rewriting telecom with new technology that legacy carriers did not fully understand. AT&T CEO pushed back on the concern during the earnings call, calling LEO constellations useful for rural bandwidth delivery but not a reason to "over-rotate" strategy. Looking ahead, management flagged that Q4 adjusted EBITDA would face pressure from roughly $100 million in unfavorable vendor dispute settlements affecting the legacy segment, as well as higher marketing and customer acquisition costs tied to an extended device launch cycle. A non-cash impairment charge of $2.6 billion related to the held-for-sale Mexico wireless business weighed on GAAP EPS, which fell to $0.13 from $1.29 a year earlier. Raymond James reiterated a Strong Buy rating and a $33 price target following the results.