Blustery is a good way to describe the past week. The Fab Five continue their descent (-$578 billion 1-wk; $839 billion 2-wk; -$1.249 trillion since the start of the year) as investors rotate into other sectors. Apple has taken it especially hard on the chin, down $555 billion so far in 2025. The stock price is still up 24% over the last twelve months, however.
This is the same story for four of the Fab Five stocks: dismal starts to 2025, but over the last twelve months, great returns. The sole exception to this trend is Microsoft, who is down over the last twelve months (re: they were hot out of the gates with Chat GPT developments in early 2024). Facebook continues to be the only stock in this group with positive returns for 2025.
The Telco Top Five are having a decent start to 2025, with four of the five stocks in the group up in 2025. As we noted in last week’s Brief, the relative market capitalization vs. the Fab Five, while still significant, is beginning to narrow (currently at 13.85, roughly at levels not seen since mid-2023).
The big news for the Telco Top Five occurred at the Deutsche Bank conference last week where Verizon presented and made the following statement (transcript here):
“this Q1 is a bit unusual. We used to say that the holiday season starts earlier every year, Christmas comes early. This year, Christmas is lasting longer. At the beginning of quarter when we drop out of our holiday promotions, our peers did not. So we’ve seen an elevated level of competitive intensity in the quarter. We continue and have a disciplined approach. When we see less demand, we pull out of promotions. When we see demand picking up, like in March, we come back with the new promotion. So it’s been a challenging quarter from a competitive intensity standpoint.”
AT&T also indicated a rocky start to the first quarter, but quickly indicated that they had rebounded. The recovered nearly all of their losses by Friday’s close, and ended with an $8 billion market capitalization over Big Red.
As we said in our LinkedIn post on the topic, the softness in iPhone sales is the most likely cause of Q1’s kerfuffle. Great device, no doubt, but not the second coming of smartphones. Inventories began to build, and Magenta had some extra cash and saw a great opportunity to buy share. Verizon got caught footed.
In other news, Crown Castle finally sold their fiber assets to Zayo, a DigitalBridge Group company, for $4.25 billion (announcement here). We will have more to say on the closing of Crown’s fiber chapter in next week’s Brief, but think that Zayo got a good deal.
Speaking of M&A, there was a particularly interesting CNBC interview of new FTC Commissioner Andrew Ferguson this week (YouTube link to full interview here). His directness is refreshing, but we are from Missouri, also known as the “Show Me” state. There’s a lot of M&A activity coming in the telecommunications sector, and Chair Ferguson’s statements definitely indicated that approvals could be faster and more straightforward. Verizon’s acquisition of Frontier and DigitalBridge’s acquisition of Crown Castle’s assets are two proof points.
That’s it for this week. Full file is below. Hope your team gets a good seed in March Madness!
