AT&T stock on downswing after analyst's low expectations for HBO Max

Does AT&T have what it takes to compete in the streaming subscription field?

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AT&T Inc. shares fell more than $3 this week after KeyBanc Capital Markets analyst Brandon Nispel said the company is facing serious challenges to its subscriber business.

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TAT&T INC.
$38.02
-0.34 (-0.87%)

HBO saw a drop in subscribers after “Game of Thrones” ended, according to Nispel, who analyzed third-party credit card data.

And while there is growing hype around the planned HBO Max streaming service, Nispel said he’s not expecting it to be as popular as some other new streaming services like Disney +. He pointed to HBO Max’s higher price point of $14.99 per month, compared to Disney’s $6.99 and Netflix’s $12.99 and added that HBO “will not have the appeal of a brand new service.”

John Stankey, president and chief operating officer of AT&T and chief executive officer of WarnerMedia speaks at Warner Bros. Studios on Oct. 29, 2019, in Burbank, California. (Presley Ann/Getty Images for WarnerMedia)

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Adding to AT&T’s stock woes, analysts at MoffettNathanson downgraded it to “sell” on Tuesday.

AT&T picked up HBO when it acquired Time Warner in an $85 billion deal last year. AT&T CEO Randall Stephenson said last month that he believes HBO Max could hit 50 million subscribers in its first five years.

Chief Executive Officer of AT&T Randall Stephenson speaks during a moderated discussion before the Economic Club of New York. (REUTERS/Brendan McDermid)

HBO MAX COULD HIT 50 MILLION US SUBSCRIBERS IN FIRST 5 YEARS: AT&T

Since then, AT&T has been selling off some of its other noncore businesses as it looks to pare down its debt. Last month, the company reached a deal to offload its Puerto Rican and U.S. Virgin Islands businesses for $1.95 billion, The Wall Street Journal reported. AT&T has raised more than $11 billion by selling assets this year.

On Monday, Sony announced it was paying about $500 million to buy AT&T’s 42 percent stake in the Game Show Network. The companies said the deal was “consistent with AT&T’s strategy to monetize non-strategic assets as it de-levers its balance sheet and begins to retire shares.”

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