AT&T’s Warner Media (Ticker Symbol: T) announced that they would be releasing a new streaming service on Tuesday. The new streaming service will be called HBO Max and will include HBO content as well as additional content from Warner Media. HBO Max will stream shows and movies from TNT, TBS, truTV, Turner Classic Movies, Cartoon Network, Adult Swim, Warner Bros., and many more content providers. The new streaming service also secured the rights to the very popular sitcom “Friends,” streaming all 236 episodes.
AT&T has not released what the pricing of the streaming service will be yet, but they are set to launch in the spring of next year. When HBO Max is released next year, it is set to have up to 10,000 hours of content for subscribers. The new streaming service will also include other popular shows like, “The Fresh Prince of Bel-Air,” and “Pretty Little Liars.” HBO Max will also produce its own original content in addition to shows that are produced and launched on HBO.
The announcement came after a disappointing earnings report last quarter. AT&T released earnings per share of .86 cents, right in line with Wall Street analysts’ expectations. Revenue came in at $44.83 billion which was short of Wall Street analysts’ expectations of $45.11 billion. AT&T also announced that it lost 540,000 DirecTV subscribers vs. the 322,000 that Wall Street analysts were projecting.
AT&T’s stock price had a rough year in 2018. After failing to make new highs in the first quarter, the stock proceeded to form a Double Top reversal pattern. Double Tops occurs when the price of a stock reaches a high price, has a small sell-off, then retests that high failing to break above it. The pattern is confirmed once it breaks below the high between the two prior lows. Unfortunately AT&T shareholders, the stock continued to sell off lower, trading below its 50 and 200-Day Moving Averages. The downtrend persisted through the next three quarters led by weak earnings and revenue releases.
In the fourth quarter of 2018, AT&T found a temporary bottom while forming a bullish divergence, which is a lower low in price, and a higher high in the Relative Strength Index, indicated by the yellow arrows on the chart. AT&T’s stock started off 2019 to a good start, trading above both its 50 and 200-day Moving Averages in the first two quarters. The stock is currently up just over 18% for the year.
(Chart above courtesy of www.tipranks.com)
Based on a survey of 9 analysts offering 12-month price targets, the average price target for AT&T’s stock is $36.13. According to that number, the stock is priced at a discount relative to Wall Street’s analysts and could be considered undervalued around current levels near $33.69.
Streaming services have been all the rage in 2019. Disney, NBC, and Apple (just to name a few) are all releasing new subscription services later in the year. HBO Max will be one of the additional streaming services and most likely consumers won’t be able to subscribe to all of them. Have the streaming service wars begun? Investors should look to AT&T’s earnings release on July 24th for fresh news on the streaming service.