D.C. Memo: Charter's Stock Rockets Higher On Worst Broadband Quarter Ever

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Charter:  Charter Communications on Friday said it lost 149,000 broadband subscribers in the second quarter -- a big drop from its prior quarter loss of 72,000 subscribers  -- to make it the worst quarter in company history. Nevertheless, Wall Street reacted by feasting on Charter’s stock, pushing the price up $52 a share, or 16%, to close at $367.62. The surge, according to MarketWatch, was the largest "single-day percentage gain on record, based on data going back to 2009." According to Citi Research analyst Michael Rollins, it was a case of the bad news not being as bad as some expected. “Although not out of the woods, Charter is managing through the ex-growth broadband operating environment and initial [Affordable Connectivity Program] risks better than we expected," he said. Charter had 5 million customers in the ACP, which ran out of funding on May 31. Charter attributed the loss of 100,000 broadband subs to the demise of the ACP. "We've retained the vast majority of ACP customers so far. The real question is customers' ability to pay not just now, but over time. I expect we will have a better view of the total ACP impact once we're inside the fourth quarter," Charter CEO Christopher Winfrey said. MoffettNathanson Senior Managing Director Craig Moffett issued a client note Friday suggesting he found the reaction to Charter's results a puzzle. "Today, Charter reported a loss of 'just' 149,000 broadband subscribers. Yes, as was the case with Comcast, that’s the worst quarter ever for broadband. But the loss was roughly half of what had been feared by consensus. So… yippee? Huh?," Moffett said. At the end of the second quarter, Charter served a total of 30.4 million residential and business (SMB) Internet customers. Charter ended the quarter with $96.5 billion in debt.