AT&T Inc. shares declined sharply on Thursday, dropping 3.7% to $22.69 by midday trading, as fresh concerns over broadband competition from SpaceX's Starlink network weighed on investor sentiment. The telecom giant's stock traded near its session low, with the company's market capitalization hovering around $159 billion.
The selloff was triggered by a downgrade from Oppenheimer, which warned that SpaceX's satellite-based internet service could upend the $1.6 trillion U.S. communications market. Analyst Timothy Horan lowered his rating on AT&T to Perform from Outperform and withdrew his $32 price target, according to Barron's. Horan highlighted that low-Earth-orbit satellite networks like Starlink pose a growing threat to both broadband subscriber growth and, eventually, mobile subscriber growth for legacy carriers such as AT&T, Verizon, and T-Mobile.
Adding to the pressure, the U.S. Supreme Court ruled 8-1 on Thursday to uphold the Federal Communications Commission's internal fine system, rejecting a challenge from AT&T and Verizon. The case stemmed from $57 million in fines levied against AT&T and $47 million against Verizon over location-data disclosure violations. The decision represents a regulatory win for the FCC and adds to the headwinds facing the telecom sector.
SpaceX is reportedly moving toward a public listing later this month, which would provide investors with a clearer valuation of Starlink and intensify focus on its competitive positioning against traditional fiber and wireless networks. Oppenheimer's Horan noted that Starlink's lower latency and expanding coverage could accelerate subscriber losses and revenue declines for incumbent providers if the service gains widespread adoption.
In response to the competitive landscape, AT&T announced plans to simplify its home internet plans starting June 7. The new offerings will feature four speed tiers and potential savings of up to $420 per year for customers who bundle wireless and home internet services. "These plans are straightforward and packed with value," said Jenifer Robertson, executive vice president and general manager of AT&T Consumer, in a company news release.
Despite the broader market gains—the Dow Jones Industrial Average closed at a record high and the S&P 500 edged up—AT&T shares bucked the trend. The decline came as investors rotated into non-tech sectors, but telecom stocks failed to benefit. The Nasdaq Composite dipped amid weakness in chip stocks.
AT&T's first-quarter results showed revenue of $31.5 billion, up 2.9% year-over-year, with fiber net additions of 292,000 and fixed wireless additions of 292,000. The company maintained its 2026 free cash flow forecast of more than $18 billion. CEO John Stankey, speaking at a J.P. Morgan conference in May, reiterated that the company's guidance is sound and pointed to opportunities from EchoStar's spectrum sale and wireless network upgrades to drive converged service bundles.
The FCC recently approved EchoStar's approximately $40 billion spectrum sale, with AT&T acquiring 50 MHz for about $23 billion to boost its 5G network, while SpaceX purchased 65 MHz for Starlink services. This deal gives AT&T additional network capacity but also deepens SpaceX's involvement in the connectivity space, further intensifying competitive dynamics.
Looking ahead, AT&T's CFO Pascal Desroches is scheduled to speak at the Mizuho Technology Conference on June 9, with second-quarter earnings due on July 22. The stock's near-term direction may hinge on whether Wall Street views satellite broadband as a complementary service or a disruptive alternative to traditional telecom networks.
