Why Millennial Investors Don’t Like Verizon Stock: Jeff Kagan

Image: CEO Hans Vestberg, CES, Jan. 11, 2021. Source: Verizon

Millennials — those between 25 and 40 years of age — have overtaken baby boomers as the largest group of adults. As such, they are now the target market for most consumer companies. This group has a very different vision and takes a very different approach to investing. So, what changes can we expect to come in the wireless investment world?

We are already seeing changes in stock market trends. One example is the recent incidents with Robinhood investors and stocks like GameStop. This may be the some of the very early signs of how these new trends will reshape the world of investing going forward.

That’s exactly the reason many Wall Street analysts are keeping an eye on which stocks are popular and which are not. They follow sites like Robinhood to stay on top of changing investing habits and trends.

Why millennial investors like AT&T, T-Mobile, but not Verizon

In this changing world some very interesting things are happening. I have read news stories saying that millennial investors are just not interested in Verizon. They are, however, interested in AT&T and T-Mobile.

Asking why, is the interesting question.

There are only three major wireless networks in the United States… Verizon, AT&T and T-Mobile.

There are so many wireless service providers, but they resell these networks as an MVNO. You would think then that all wireless networks would have the same advantages and disadvantages… but this isn't the case.

Why the millennial investor likes AT&T and T-Mobile

Verizon Wireless is a strong company. That being said, the millennial investor is looking for something that isn't Verizon's strength. Growth. Verizon is stable, but it is not a fast growing and rapidly changing company.

That’s why millennial investors prefer AT&T and T-Mobile.

These two companies are growth oriented. They are both reinventing themselves, over and over, year after year. These two companies are the leaders driving the change and transformation of the entire wireless industry.

These companies are focused on growth, both short-term and long-term.

AT&T and T-Mobile are change agents. They successfully transform a tired industry and prepare it for the next generation of growth.

For example, remember when AT&T was the first to offer the iPhone for the initial two or three years of its introduction? Or when T-Mobile, on the verge of death, remade itself and became an industry powerhouse?

On the other side of the spectrum, Verizon has more stable returns. It is a slower growth company. While there is nothing wrong with this, there is nevertheless nothing that captures the imagination or the investment dollars of the millennial investor community.

Millennials think of Verizon like their grandfather’s stock. It’s stable, but nothing exciting. No real growth or transformation.

AT&T, T-Mobile, Comcast lead the way in a changing industry

Today, both AT&T and T-Mobile are in the middle of a generational shift in the wireless industry. And AT&T and Comcast Xfinity are driving changes in the entertainment and news industry. Think AT&T WarnerMedia and Comcast NBC Universal.

There is a real sense of yesterday and tomorrow in the news, entertainment and wireless industry.

Verizon has a solid grasp on yesterday. It is more stable, which is good for today, but there is little expectation for rapid growth.

Wireless growth goes to AT&T and T-Mobile

AT&T and T-Mobile, on the other hand, are transforming themselves and their industries.

Think back about fifteen years ago when SBC acquired AT&T, BellSouth and Cingular. Back then, it took several years for the new and larger AT&T to gain traction, but once it did, it built momentum and it is much larger and more successful today.

Once again, that’s what we are seeing happen today with AT&T and its WarnerMedia, Warner Brother Studio, CNN, HBO Max acquisition. It is expanding far beyond traditional wireless and telecom.

Investors know it will take some time, but the current path makes enormous sense. It has been slowed by COVID-19, but the company is still on the right track for the long term.

T-Mobile is finally a rapid growth company. Several years ago, it was crashing, burning and dying on the vine. It missed the leap from 2G to 3G. It just didn’t see the need. That took the company down several notches.

It eventually woke up, however, jumping into 4G and now to 5G. Moreover, it has not only remade itself with the acquisition of Sprint, but we expect that performance to continue for at least a few years going forward.

How will Verizon become attractive to millennial investors?

Bottom line: AT&T and T-Mobile are growth-oriented companies with strategies which attract the millennial investor.

The next question is, does Verizon want to join AT&T and T-Mobile as a rapidly growing company attractive to the millennial investor?

Verizon needs a youthful shot of excitement. So, what will Verizon do in order to juice up its image as a leader in tomorrow’s world? That’s the real question.

Jeff Kagan is an Equities News columnist. Kagan is a Wireless Analyst, Technology Analyst and Commentator who follows Telecom, Pay TV, Cloud, AI, IoT, Tele Health, Healthcare, Automotive, Self-Driving cars and more. Email him at [email protected]. His web site is www.jeffKAGAN.com. Follow him on Twitter @jeffkagan and LinkedIn www.linkedin.com/in/jeff-kagan/

_____

Equities Columnist: Jeff Kagan

Source: Equities News