How Verizon frightened wireless investors with these four words

By Emily Bary

Verizon's new CEO says the company will be focused on 'growing our market share.' Investors seem to think it's better for all if Verizon keeps losing ground.

Verizon has been shedding wireless retail postpaid phone subscribers in its consumer business, and some on Wall Street think that's for the best for the industry as a whole.

It's one thing for a stock to drop after a company makes an unexpected leadership change. But when shares of their biggest rivals fall too, that's notable.

Such was the case when Verizon Communications Inc. (VZ) delivered the surprise announcement on Monday that Hans Vestberg was departing as chief executive, effective immediately, to be replaced by Dan Schulman, a longtime board member and former PayPal Holdings Inc. (PYPL) CEO. The news sent Verizon shares down 5% in Monday trading, while AT&T Inc. shares (T) lost more than 4% and T-Mobile US Inc.'s stock (TMUS) lost 2%.

See more: Verizon names a PayPal veteran as its next CEO. Why telecom stocks are falling.

The major concern can be summed up by one line in Verizon's announcement, or perhaps just four words, as bolded by Wolfe Research analyst Peter Supino.

In the press release, "CEO Schulman stated Verizon will 'redefine our trajectory, by growing our market share across all segments,'" Supino noted.

Visions of growth aren't usually a bad thing, but for wireless investors, they can be a little scary because to some degree the industry hinges on the major companies playing their usual roles.

Schulman's vision "suggests the CEO holds a different view than the consensus of telecom investors - that mobile industry equilibrium is desirable & depends upon Verizon and AT&T's willingness to gently cede market share to T-Mobile, Charter and Comcast," Supino wrote.

In its closely watched consumer business, Verizon posted 51,000 wireless retail postpaid phone net losses in the second quarter, coming off of 356,000 such losses in the first quarter.

The company presumably could try to change that fate by more aggressively luring new customers - and retaining existing ones - with things like device promotions and "free" add-on services. But those would hit the company's profit margins, and likely send rivals scrambling to make aggressive offers of their own. In this sort of situation, the thinking is that consumers win, but investors across the board lose, so Verizon has been limited from doing anything too crazy that would upset the industry balance.

With the new iPhone 17, Evercore ISI analyst Kutgun Maral said Verizon's early promotions looked flat relative to last year's on upper-level plans, though it and T-Mobile have been "relatively more promotional at their flagship entry-level plans."

Further, the company has gotten "more disciplined than last year regarding the age of the devices that are traded in for customers to benefit from the full dollar amount of the new promotions," Maral wrote last month, though Verizon and rivals are now "increasingly promoting trade-ins in 'any condition,'" a move he said was started by Verizon in the past couple of years and then copied by peers.

Promotional intensity for the industry in general has heated up recently, which has worried some investors.

Supino, for his part, said the CEO switch was welcome news as Verizon could benefit from change, "but the script could have been better."

Schulman will have big moves ahead of him, as outgoing CEO Vestberg "left Verizon diminished, not decisively the best network, the convergence leader, the best price, nor the place to get the biggest phone discount," he wrote. "We hope CEO Schulman, Consumer CEO [Sowmyanarayan] Sampath and CMO [Leslie] Berland coalesce around bolder ideas for Verizon."

Don't miss: AT&T's stock trades at a notable premium to Verizon's. Should you still buy?

-Emily Bary

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

10-07-25 0730ET