T- Mobile US Inc. has emerged as a surprise winner for investors looking to make money in technology-related stocks. This is in sharp contrast to the high-flying software stocks and giants like Alphabet Inc. that suffered losses this year.
The mobile Carrier is now trading at an all-time high after jumping 26%. It is the only stock in the media, telecom, or tech companies in Nasdaq 100 to perform well apart from Activision Blizzard, a video game stock.
Overcoming odds
High-interest costs have impacted high-valuation tech companies. In contrast, a slow economy has weighed on businesses that heavily depended on internet advertising. However, T-Mobile surpassed the new subscriber’s estimates after it cut the mobile phone plan rates.
CFRA Research senior equity analyst Keith Snyder said cellular connectivity is essential in the modern world, as evident during the pandemic. This service is the last thing to be cut by consumers, who may switch to a lower plan but will not cancel it. Snyder has put a strong buy rating on T-Mobile stock.
With its aggressive pricing plans, T-Mobile has surpassed the performance of Verizon Communications and AT&T Inc. The lower tariffs have attracted customers who are hit by rising inflation. Verizon Communications slumped 13%, while AT&T Inc. fell 1.6 %.
In 2020, T-Mobile acquired Sprint Corp. to make inroads in setting up a 5G network. This was when rivals were scaling down their media forays and focusing on the telecom business.
According to Ric Prentiss, an analyst with Raymond James, the Sprint merger with T-Mobile benefited the company on the revenue and cost side. He also has given a buy call on the stock.
T-Mobile is trading at 30 times its future earnings, which is not cheap, and it overshadows 8.6 times and AT&T at 7.3 times the earnings. T-Mobile does not pay a dividend, unlike its rivals. This has made the investors look for steady dividends.
Wealth Management firm Bunsen Group’s Chief Investment Officer David Bahnsen said though the business growth was great for T-Mobile this year, the stock is still expensive. Bahnsen has $3.7 billion worth of assets under management and a stake in Verizon.
The Nasdaq 100 has recorded its fourth consecutive week of gains, the longest since November 2021. Since June lows, the tech-heavy index has gained around $3 trillion market value. The last few weeks saw technology stocks rebounding on the strength of resilient quarter reports and softening inflation.
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