SpaceX Sent Verizon and T-Mobile Stocks Tumbling—Did Wall Street Overreact?

Key Points

• SpaceX's Oct. 8 spectrum deal to expand Starlink Mobile sparked a sharp sell-off in Verizon, AT&T, and T-Mobile shares.
• Verizon's Q3 earnings beat estimates and raised full-year guidance, with executives citing its dominant terrestrial network as a competitive advantage over satellite service.
• T-Mobile also topped earnings expectations and raised guidance, leveraging its existing Starlink partnership while executives argued satellite service complements rather than replaces terrestrial broadband.

On Oct. 8, SpaceX NASDAQ: SPCX announced an agreement to acquire nationwide low-band spectrum licenses that could help Starlink Mobile expand beyond satellite connectivity and compete more directly with major U.S. wireless carriers.

The news reverberated throughout the telecommunications industry, causing major carriers to sell off.

But less than one month later, Q3 earnings reports from Verizon NYSE: VZ and T-Mobile NASDAQ: TMUS suggest that both established wireless carriers remain well-positioned to withstand the emerging competitive threat.

Why SpaceX's Spectrum Deal Spooked Telecom Investors

SpaceX plans to acquire up to 14 megahertz of paired spectrum in the 800 MHz band from investment firm Grain Management, pending regulatory approval.

These low-frequency licenses could improve Starlink Mobile's indoor connectivity by allowing signals to penetrate walls, roofs, and other structures more effectively, addressing a key limitation of its existing satellite-based service.

According to a filing with the U.S. Federal Communications Commission (FCC), SpaceX’s goal is to “supercharge competition in the mobile market by ensuring all Americans have access to high-speed mobile broadband anywhere they go.”

The company plans to combine satellite connectivity with terrestrial wireless infrastructure to offer broader coverage, although building out that network will take time.

Investors responded sharply to the announcement. On Oct. 9, Verizon fell more than 10%, AT&T NYSE: T lost nearly 11%, and T-Mobile slid more than 13%.

The sell-off reflected concerns about future competition rather than an immediate deterioration in the carriers' financial performance. Their subsequent Q3 earnings reports offer a closer look at whether those fears were justified.

Verizon's Earnings and Raised Guidance Demonstrate Resilience

Since the early October sell-off, Verizon shares have rebounded more than 8%, supported in part by its Q3 earnings, which the company reported on Monday, Oct. 26.

Earnings per share (EPS) of $1.31 beat the analyst consensus of $1.27, representing an 8.3% year-over-year (YOY) increase.

Revenue of $34.31 billion fell short of the forecasted $34.77 billion but only increased 1.5% YOY.

The earnings beat was Verizon’s seventh consecutive and eighth in the last nine quarters.

During his earnings call comments, CEO Dan Schulman said that “everything SpaceX says they will do, they will do,” adding that the Elon Musk-led company “will execute flawlessly.”

But he also said the company's move toward terrestrial infrastructure was something Verizon had long anticipated.

Schulman argued that SpaceX's satellite service would struggle to compete with terrestrial networks in suburban and urban markets, where Verizon generates approximately 98% of its revenue. That established network infrastructure gives Verizon an important competitive advantage, although Schulman cautioned against underestimating SpaceX's ability to execute its strategy.

Verizon's operating performance provides additional evidence of its resilience. Management raised its full-year guidance, projecting between 1.1 million and 1.2 million postpaid phone net additions, 7% to 7.5% adjusted EPS growth, and free cash flow growth approaching 12%.

Additionally, customer and financial metrics improved markedly. Postpaid phone net additions increased 820% YOY to 406,000, customer churn declined substantially, and promotional acquisition and retention costs decreased 41% and 30%, respectively. Adjusted EBITDA rose 8% to a record $13.8 billion, while the adjusted EBITDA margin expanded to 40.2%, up from 37.8% a year earlier.

T-Mobile's SpaceX Partnership Changes the Competitive Equation

T-Mobile has already partnered with SpaceX.

As part of a collaboration called T-Satellite, the telecom provider now uses Starlink’s low Earth orbit (LEO) satellites to provide direct-to-cell (D2C) service in the continental United States, Puerto Rico, Hawaii, parts of southern Alaska, and international markets including Canada, Australia, New Zealand, and Japan.

When the company reported Q3 earnings on Wednesday, Oct. 28, the results demonstrated continued growth in its core wireless business.

EPS of $3.22 easily surpassed the analyst consensus of $2.89, while revenue of $23.58 billion beat expectations of $23.15 billion and marked a 7.4% YOY increase. After increasing 5.28% YOY in Q2, EPS growth accelerated to nearly 34% in Q3.

The earnings beat was T-Mobile’s 10th consecutive and 14th in the past 15 quarters.

T-Mobile added 274,000 postpaid net accounts during the quarter, bringing its total to approximately 35 million. Postpaid service revenue grew 9% YOY, while core adjusted EBITDA increased 11%, reflecting the company's ability to translate customer growth into higher profitability.

Importantly, management raised its full-year profitability and cash flow guidance while maintaining its outlook for approximately 1 million postpaid net account additions. The company also projects full-year postpaid average revenue per account growth of approximately 3.5%, $37.35 billion to $37.45 billion in core adjusted EBITDA, and $18.7 billion to $18.8 billion in adjusted free cash flow.

The company also addressed the “shape-shifting nature of SpaceX's strategy” during its earnings call. But CEO Srini Gopalan argued that fixed wireless access (FWA) remains better suited to most markets because satellite broadband faces greater capacity limitations, particularly outside rural areas.

Gopalan noted that approximately two-thirds of T-Mobile's FWA customers come from densely populated urban areas, where the company continues to see significant growth opportunities. He described satellite connectivity as a complementary service rather than a replacement for terrestrial broadband, a distinction that also helps explain the strategic value of T-Satellite.

Unlike Verizon, T-Mobile also has an existing commercial relationship with SpaceX, allowing it to offer satellite connectivity alongside its terrestrial network. For investors, the question is whether that partnership remains an advantage as SpaceX moves toward becoming a more direct competitor.