Comcast Stock Plunges After Quarterly Losses and Peacock Stagnation

Comcast's (CMCSA) stock plummeted over 10% on Thursday after the company's fourth-quarter report revealed a larger-than-expected drop in broadband customers and stagnant growth in its Peacock streaming service.

Broadband Losses and Competition

Comcast lost 131,000 broadband subscribers, surpassing CEO Dave Watson's previous estimate of 100,000. This decline highlights the intensifying competition from mobile providers like Verizon, T-Mobile, and AT&T, which offer more flexible services targeting lower-income consumers.

Focus on Connectivity and Strategic Changes

Despite the broadband struggles, Comcast remains committed to its connectivity business. The company announced strategic shifts to leverage its strengths amid increasing internet traffic from the streaming boom. President Michael Cavanagh emphasized the value of wireless offerings in providing savings for consumers.

TV Subscriber Decline and Peacock Stagnation

Comcast also lost 311,000 TV subscribers as consumers continue to cancel traditional cable subscriptions in favor of streaming services. While the company launched a new sports and news package with Peacock for $70 per month (less than YouTube TV), Peacock's subscriber growth remained stagnant at 36 million.

Profitability Improvement and Analyst Views

Comcast's profitability improved, with an adjusted EBITDA loss of $372 million compared to a loss of $825 million in Q4 2021. Management expects further improvement throughout the year. Analyst Craig Moffett noted the absence of subscriber decline after the Summer Olympics, deeming it a positive sign.

However, Wall Street analysts remain cautious about Peacock's growth prospects compared to other streaming giants. Ross Benes of Emarketer believes that competing in the streaming wars is costly and that as cord-cutting continues, the sale of TV networks may become more challenging due to limited buyer interest.

Spin-Off of Cable Properties

Last year, Comcast announced plans to spin off its cable properties (excluding Bravo) to confront the industry's cord-cutting trend. The new company, SpinCo, will include NBCUniversal cable channels such as USA Network, CNBC, and MSNBC. The company expressed optimism about the venture's potential in the evolving media landscape.