Comcast Corporation Reports Q2 Beat, But Weak Subscriber Growth, Shares Down 13%

Comcast Corporation (NASDAQ:CMCSA) shares dropped more than 13% since the company’s reported Q2 results last week. While EPS of $1.01 and revenue of $30.02 billion came in better than the Street estimates of $0.92 and $29.89 billion, respectively, subscriber growth was weak with a shocking flat broadband-subscriber number.

Subscriber losses across the board were effectively offset by unsustainable growth in video and broadband ARPU of 7.5% year-over-year and 3.7% year-over-year, respectively.

According to the analyst at Oppenheimer, the company is stuck in a negative feedback loop of raising prices to combat subscriber churn while underinvesting in its networks. The analysts believe that the strategy of raising prices and free cash flow while losing subscribers is long-term value-destructive but short-term attractive.