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Why Comcast Stock Plummeted on Wednesday
Key Points
He implied broadband subscriber loss would continue, at least in the near future.
He also didn't make positive pronouncements about the company's theme park business.
Entertainment giant Comcast (NASDAQ: CMCSA) wasn't looking so big on the stock exchange during Wednesday's trading session. Investors sold out of the company after digesting remarks from its CFO indicating weakness in certain aspects of its business. By the end of the trading day, Comcast's stock had lost almost 7% of its value.
Tough times?
Comcast, whose major asset is the sprawling NBCUniversal division (and within it, the Universal Studios theme parks), presented at the annual Goldman Sachs Communacopia + Technology conference. CFO Jason Armstrong updated attendees and other interested parties on the company's operations.
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Comcast bears seemed to zero in on Armstrong's remarks about its broadband internet operation, which has been losing subscribers. While he said that the company will narrow those losses this year, he implied it will still shed customers. He also admitted to softness with the Universal Studios business.
Broadband has become increasingly important for Comcast. Earlier this year it hived off a large set of traditional cable TV networks, including CNBC and USA Network into a new company, Versant Media Group. That left its legacy cable and telecom operations and NBCUniversal.
Narrow prospects for broadband
And soon, those two businesses will be separated in yet another spinoff, when Comcast grants NBCUniversal its independence in a move that should be complete by the middle of next year.
Of the two current company divisions, NBCUniversal is the more compelling, not least because it managed to make its Peacock streaming video service profitable for the first time ever (well, adjusted EBITDA "related" to the business was in the black, at any rate).
As Armstrong said in his remarks, broadband is a competitive business, and it'll be a major one for what's going to be left of Comcast. That doesn't excite me, and it clearly didn't excite investors on Wednesday.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Comcast and Versant Media Group. The Motley Fool has a disclosure policy.