Dan Schulman needs to avoid a “downward spiral” in competitive behavior across the wireless market, Evercore ISI said.
Verizon stock climbed over 0.6% in early premarket trading on Tuesday, after shares fell 5.1% to a nearly three-month low the previous day, when the company named independent director and former PayPal chief executive Dan Schulman as its new CEO.
The sudden move from America’s largest wireless carrier sent ripples across the telecom industry. Shares of peers AT&T and T-Mobile dropped 4.4% and 2.3%, respectively, on Monday.
In an investor note, Evercore ISI analysts stated that the development creates uncertainty in the space, particularly regarding how Schulman will reimagine the price-quantity balance for Verizon, while maintaining financial integrity and avoiding a “downward spiral” in competitive behavior across the wireless market.
Telecom operators have long walked a fine line, balancing subscription fees, value-added services, and heavy investment in technologies like 5G In the highly price-sensitive market, even small shifts in pricing or service value can drive customer churn in the highly competitive landscape.
Earlier this year, Verizon froze rates for a large number of its customers for three years, in an effort to retain cellphone users who had been irked by years of price increases. Those moves bolstered the company’s revenue by raising monthly rates and fees, but frustrated some customers.
Following the CEO appointment, the Stocktwits sentiment for the company’s stock shifted to ‘extremely bullish’ as of early Tuesday, from ‘bearish’ a day ago, and 24-hour message volume rose 8,300%.
“$VZ new CEO new strategies,” said one user, summing up the sentiment.
“It says under Schulman’s leadership PayPal tripled revenue from $8 billion to $30 billion. They also added millions of customers. He has a fintech background and can advance Verizon digitally into the future. Sounds great to me.”
As of the last close, Verizon stock is up 3.6% year-to-date.
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