Hello from Canandaigua Lake in upstate New York. The Fab Five market capitalization slide continued last week, with Apple the only gainer out of the group (and +$51 billion isn’t a material move to the Cupertino giant’s value). Over the last two weeks, however, Apple’s value has risen $183 billion or just slightly more than one T-Mobile USA). In our view, this speaks to two things: 1) Apple is big and broad enough to control the supply chain to a greater extent than their competitors, and 2) Apple’s is slowly but surely winning the regulatory argument that their software platforms are intricately weaved into their hardware and cannot be separated.
All of the other stocks in the Fab Five are rather static, which is to be expected prior to earnings reports. What we would note is that a significant value decline occurred between April 15 and May 13 – just over a trillion dollar loss in the four week period. If there are continued concerns that increased interest rates (or the strong dollar, or both) have not been priced in, the next four weeks are probably the period where we will see some movement.
The Telco Top Five have been remarkably stable, with minimal movement over the last five weeks both individually and as a group. As we mentioned in last week’s Brief, we will hear more about 2Q at the end of this when AT&T (Thursday 7/21) and Verizon (7/22) announce earnings. As a pre-read, I would like to direct you to AT&T’s appearance at the Bank of America Conference on June 23rd. Rather than include a lengthy quote (and he has an especially good one on fixed wireless), take a quick read of the transcript as a prep for Thursday’s call (here).
If AT&T is correct, and they see the impact of their cost reduction moves that they describe, they will have a long runway. We think that T-Mobile makes an equally compelling argument, however (which is, in many respects, the other side of the coin). What we can say is that T-Mobile’s synergy realization and outlook for both 2Q and 2H 2022 is going to be significant (and, in our opinion based on limited samples driving throughout Missouri and Nebraska, they overshot their Sprint network “weeding out” in a lot of rural and secondary market coverage).
More in next week’s Brief. Have a terrific weekend!