The Sunday Brief

Connecting technology, telecommunications, and the internet

Value Creation – Long-term charts, Fab Five vs. Telco Top Five (Dec 22)

by | Dec 23, 2023 | TSB

Happy Holidays from The Sunday Brief Colorado office. The markets as a whole continued to chug along this week, and, as surmised, the Fab Five are beginning to plateau (no gain this week).

Fortunately, last week’s performance is not indicative of the Fab Five’s fabulous year. We will do more retrospective in next week’s full Brief, but let’s digest the Fab Five’s performance for 2023:

  1. Microsoft and Apple each added ~$1 trillion in market capitalization in 2023 (and both companies have reduced the number of shares through buybacks). Hard to remember after all of the AI hoopla, but UBS downgraded Microsoft at the beginning of 2023 with a $250 price target
  2. The group added ~$4 trillion of market capitalization, more than overcoming 2022’s $3.8 trillion loss
  3. The total Fab Five market capitalization has now topped $10 trillion

The Telco Top Five also had a decent week and year, with July’s lead cable-induced trough largely erased for AT&T and Verizon. Assuming that year-to-date gains do not fall apart in the last week of trading, this will be the best year for the Telco Top Five since 2020.

Two news items in the telecom industry of note. Crown Castle announced that it has begun a strategic review of their fiber business per this Light Reading report. For those of you who are unfamiliar with Crown’s purchases, the company provides a history of their fiber acquisitions here. As the article indicates, the amount of value to be unlocked is not much more than the total amount paid for the assets originally (Raymond James estimates a $15.2 billion value for $15 billion in total purchases). As we will discuss in detail next week, the best solution is likely an investment in the fiber unit (spinoff/ tracking stock) as opposed to an outright sale.

The second item that many are watching is the volume-adjusted weighted average of TMUS stock. With its recent rise into the mid-$150s range, it’s a question of whether it’ll be a 2023 or a 2024 event. With our calculations showing the current 45-day average of $149.06 (and the target no longer $150 but $149.35 adjusted for the dividend), it’s likely to be a 2023 event. Calculations available upon request (and if there are enough requests, I’ll update this post with the spreadsheet).

Happy Holidays to the Sunday Brief faithful readers! Enjoy the rest of this year because 2024 is shaping up to be crazy. More in next week’s Brief. File is below.


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