For most investors, how much a stock's price changes over time is important. This factor can impact your investment portfolio as well as help you compare investment results across sectors and industries.
Another factor that can influence investors is FOMO, or the fear of missing out, especially with tech giants and popular consumer-facing stocks.
What if you'd invested in T-Mobile (TMUS) ten years ago? It may not have been easy to hold on to TMUS for all that time, but if you did, how much would your investment be worth today?
T-Mobile's Business In-Depth
With that in mind, let's take a look at T-Mobile's main business drivers.
Founded in 1994 and headquartered in Bellevue, WA, T-Mobile US, Inc. is a national wireless service provider. The company offers its services under the T-Mobile, Metro by T-Mobile and Sprint brands. T-Mobile, through its subsidiaries, provides wireless services for branded postpaid and prepaid, and wholesale customers.
The company was formed after the merger of T-Mobile USA Inc. and MetroPCS Communications Inc. Deutsche Telekom AG was the owner of the former T-Mobile USA Inc. Under the terms of the business combination with MetroPCS, Deutsche Telekom received shares of common stock representing a majority ownership interest in T-Mobile in exchange for its transfer of all of T-Mobile USA’s common stock.
The company offers mobile voice, messaging and data services in the postpaid, prepaid and wholesale markets. T-Mobile is extensively deploying 5G and 4G LTE (Long-Term Evolution) networks. It also provides wireless devices, such as smartphones, tablets and other mobile communication devices and accessories manufactured by various suppliers. T-Mobile’s business largely depends on its “Un-carrier Value Proposition”, which aims to enhance customer satisfaction by means of providing latest products at cheaper rates and uncomplicated terms of conditions.
T-Mobile mainly reports under the following two segments.
Service (80.5% of total revenues in 2023): Includes wireless communication services to branded postpaid and branded prepaid customers through a variety of service plan options.
Equipment (18%): Includes sale of devices to dealers and third-party distributors for resale through independent third-party retail outlets; while the balance accounts for Other (1.5%).
T-Mobile recorded 5.7 million postpaid net customer additions and 3.1 million postpaid phone net customer additions in fiscal 2023. Moreover, the postpaid phone churn rate was at a record low level of 0.87% and high-speed Internet net customer additions totaled 2.1 million in fiscal 2023.
Bottom Line
Anyone can invest, but building a successful investment portfolio requires research, patience, and a little bit of risk. So, if you had invested in T-Mobile ten years ago, you're likely feeling pretty good about your investment today.
According to our calculations, a $1000 investment made in November 2014 would be worth $8,612.08, or a gain of 761.21%, as of November 14, 2024, and this return excludes dividends but includes price increases.
In comparison, the S&P 500 gained 193.50% and the price of gold went up 107.59% over the same time frame.
Looking ahead, analysts are expecting more upside for TMUS.
T-Mobile reported impressive third-quarter 2024 results, with the bottom and top lines surpassing the Zacks Consensus Estimate. Solid demand for postpaid services drove the top line. In the third quarter, the company added 1.6 million postpaid net customers while postpaid net account additions were 315,000, both metrics being the best in the industry. Solid growth in free cash flow accentuates efficient capital management and implies that the company is well-positioned to invest in growth initiatives and pay debt and dividends. However, the highly competitive and saturated nature of the U.S. wireless market could adversely affect its financial results. Its strategy of introducing several promotional activities to outperform competition strains margin. Declining prepaid ARPU is a concern. We are reiterating our Neutral recommendation.
Over the past four weeks, shares have rallied 9.61%, and there have been 5 higher earnings estimate revisions in the past two months for fiscal 2024 compared to none lower. The consensus estimate has moved up as well.Free: 5 Stocks to Buy As Infrastructure Spending Soars
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
