AT&T Beat Earnings and Raised Guidance — So Why Did the Stock Sink 5% and Lose $8 Billion?

AT&T beat third-quarter earnings and revenue forecasts and raised its full-year profit outlook on Wednesday, October 21 — and investors sold the stock anyway, knocking about 5% off the shares and erasing roughly $8 billion in market value. The sell-off is blowing up across finance coverage because the headline numbers looked strong, while the one number wireless investors watch most closely — new phone subscribers — came in soft.

What happened, in short

AT&T reported adjusted earnings of $0.65 per share, up from $0.54 a year earlier and ahead of the $0.60 Wall Street expected. Revenue rose about 5% to $32.3 billion, beating estimates of about $31.7 billion. The company also raised its full-year adjusted earnings outlook to about $2.40 per share, up from a previous range of $2.25 to $2.35, and reported $5 billion in free cash flow, ahead of estimates of $4.6 billion. Despite all of that, AT&T shares fell more than 4% in early trading to around $22.12, with several reports putting the intraday drop between 5% and 5.9%.

Why is AT&T stock falling after a beat?

The short answer is subscriber growth. AT&T added 379,000 postpaid phone customers in the quarter. Depending on the estimate used, that was roughly in line with expectations or slightly below them — reports cite forecasts around 379,300 to 387,410 — but it was clearly slower than the 432,000 added in the second quarter and the 405,000 added a year earlier. Postpaid phone customers are the industry's most valuable subscribers because they pay monthly bills on contract-style plans, so even a small miss or slowdown tends to dominate the reaction to a telecom earnings report.

Investor's Business Daily framed the result as wireless growth that "underwhelms," noting that the soft phone number raised questions about whether competition will heat up in the December quarter, when carriers fight over holiday promotions tied to Apple's iPhone 18 models. Postpaid phone churn — the share of customers leaving — was 0.92%, a figure investors watch for signs of a price war.

The SpaceX factor hanging over the stock

There is a second worry in the background. SpaceX, which reported its own earnings late Tuesday, reaffirmed plans to enter the U.S. wireless market. Schaeffer's Research noted that SpaceX's purchase of 800 MHz spectrum has raised concerns that Starlink Mobile could become a direct-to-cell competitor to the established carriers. That does not change AT&T's business today, but it gives investors a new long-term competitive threat to price in — and it weighed on the wider group, with Verizon shares dipping more than 1% and T-Mobile falling about 1.5% in Wednesday trading.

The parts of the quarter that were genuinely strong

Lost in the sell-off was a record quarter for internet sign-ups. AT&T added 769,000 high-speed internet customers — 442,000 on fiber and 327,000 on fixed wireless — for a second straight quarter of more than 1 million combined wireless and internet additions. About 42.8% of households with AT&T's advanced home internet also use its wireless plans, which supports the company's "convergence" strategy of selling bundled fiber and mobile service. Revenue in its largest business, Advanced Connectivity, grew 7.2%.

The headline GAAP profit figure looked weak for a different reason. Diluted earnings per share were $0.13, down from $1.29 a year earlier, but both periods included one-off items: this year carried a $2.6 billion non-cash impairment on AT&T's Mexico wireless business, while last year included a gain on the sale of its DIRECTV stake. AT&T agreed on October 13 to sell the Mexico business to Grupo Televisa and Fintech Holdings, and the unit is now classified as held for sale. The company returned about $4.8 billion to shareholders in the quarter, including $2.8 billion in buybacks, and still expects free cash flow of $18 billion or more for 2026.

Why this story is blowing up

Beat-and-raise quarters that end in a 5% drop are catnip for market coverage because they expose what investors actually care about. Several outlets led with the same paradox — TIKR calculated that the drop erased roughly $8 billion of market value, close to the $10 billion AT&T plans to spend on buybacks this year — while others stressed how unusual the reaction is: Schaeffer's noted AT&T had finished higher after nine of its previous ten earnings reports. In other words, this was not a bad quarter being punished; it was a good quarter being judged on one slowing growth line and one emerging competitor.

What happens next

The focus now shifts to AT&T's rivals and to the holiday quarter. Verizon reports third-quarter results on Monday, October 26, followed by T-Mobile on October 28, and their subscriber numbers will show whether AT&T's slowdown is company-specific or industry-wide. For AT&T itself, investors will watch whether phone additions recover during the iPhone-driven December quarter, whether churn stays near 0.92%, and whether the Mexico sale closes cleanly. This post reports what happened and why markets reacted; it is not a recommendation to buy, sell, or hold any stock.

Sources

FAQ

Why did AT&T stock fall if earnings beat estimates?

Because postpaid phone additions slowed to 379,000, roughly in line with or slightly below forecasts and down from 432,000 in the prior quarter, while investors also weighed new wireless competition from SpaceX.

What did AT&T earn in Q3 2026?

AT&T earned $0.65 per share on an adjusted basis, up from $0.54 a year earlier, on revenue of $32.3 billion, up about 5% — both ahead of Wall Street estimates.

What is AT&T's new full-year outlook?

AT&T raised its full-year adjusted earnings outlook to about $2.40 per share, from $2.25 to $2.35 previously, and still expects free cash flow of $18 billion or more in 2026.

When do Verizon and T-Mobile report?

Verizon reports third-quarter results on Monday, October 26, 2026, and T-Mobile follows on October 28, 2026, according to Investor's Business Daily.