Verizon ended Friday at $45.90, near the low end of a week-long trading range that wiped out all gains from its strongest quarter in years. The stock now stands 5% below its pre-earnings level, even after beating profit forecasts, adding more subscribers than expected, and raising full-year guidance across three metrics.
The SpaceX Effect
The decline has no connection to Verizon’s operations. A report that SpaceX intends to launch a direct-to-consumer mobile service sparked the latest drop, pushing the stock down 4% in a single session. This marked the fourth time since late June that SpaceX-related news has pulled Verizon shares lower.
Since June 29, the company has lost over 11% of its value—$21.44 billion in market capitalization—amid a broader $46 billion decline across the three major U.S. carriers. The broader market provided little support. The S&P 500 edged lower, while the 10-year Treasury yield rose nearly 7 basis points to 4.731%. The 30-year yield reached 5.263%, its highest level in 19 years. For a low-volatility stock like Verizon, which offers a 6.17% dividend yield, long-term rates dominate its valuation.
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Subscriber Growth Defies Expectations
Verizon added 184,000 postpaid phone subscribers in the second quarter, exceeding the 106,000 estimate by 74%. The result was particularly notable compared to prior periods: the company lost 9,000 subscribers in the same quarter a year earlier and added only 55,000 in the first quarter of 2026.
Gross additions surpassed internal forecasts by 16%, while churn improved at the same time—a rare combination. Postpaid phone churn fell to 0.92%, down 5 basis points year over year, with consumer churn dropping to 0.84%. The improvement has now continued for three straight quarters.
CEO Dan Schulman credited the results to lower acquisition costs and reduced churn. He described it as a shift toward earning subscribers through value rather than promotions. The company kept its full-year target for postpaid phone net additions in the upper half of its 750,000 to 1 million range, positioning it to deliver two to three times last year’s total.
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Margin Expansion
Adjusted EBITDA rose to $13.72 billion, with margins expanding to 40.06%—the highest the company has ever reported. Free cash flow jumped 24% to $6.4 billion, one of the strongest quarters in the company’s history. Full-year guidance was raised to 9% to 10% growth, up from a prior target of at least 7%. Capital expenditures remained steady at $16.0 billion to $16.5 billion, meaning the cash flow improvement came entirely from operations.
Buybacks and Dividends
Verizon increased its share repurchase target to $4.5 billion for the year, up from an earlier plan. It completed $1 billion in buybacks in the second quarter, bringing the year-to-date total to $3.5 billion. At a $192 billion market capitalization, the program will retire roughly 2.3% of the float, pushing total shareholder yield higher when combined with the dividend.
The dividend currently yields 144 basis points more than the risk-free rate, a gap that has widened as Treasury yields rise. The balance sheet remains the limiting factor. Net unsecured debt stands at $130.1 billion, with leverage at 2.6 times adjusted EBITDA. The 30-year Treasury yield at 5.263% sets the refinancing environment, and debt repricing at current levels would add significant interest expense over time.
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Management’s plan to reduce leverage depends on growing EBITDA while keeping capital expenditures flat. The Altman Z-Score of 1.19 reflects the debt load, though the metric often reads poorly for capital-heavy, utility-like businesses.
The market is pricing in a competitor that hasn’t launched a product against a business that just posted its best quarter in five years. Verizon now trades at 9.68 times normalized earnings, with a forward P/E of 8.7 times 2027 estimates. The multiple compresses further when considering the raised guidance: at $45.90, the stock sits at 9.16 times current-year earnings.
If the SpaceX threat doesn’t materialize, the gap between performance and valuation could close quickly. The company has beaten earnings estimates for six straight quarters and raised guidance twice in the past six months. For now, the disconnect remains. The second quarter delivered record margins, subscriber growth, and cash flow. Investors, however, continue to focus on a satellite-based rival that has yet to offer a single retail mobile plan.
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