WOW Stocks Soar on Lighter Than Expected Video Losses

Shares rise nearly 32% in early trading
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WideOpenWest shares skyrocketed Friday morning, up nearly 32% ($2.14 per share) to $8.89 each in early trading, as lighter than expected video subscriber declines apparently outweighed continued financial losses for the overbuilder.

WOW shares traded as high as $8.89 each on Friday, up 31.7% or $2.14 each. The stock was trading at $8.44 per share, 25% or $1.69 at about 10:33 a.m.

WOW, which has de-emphasized video subscriber gains an instead has concentrated on broadband growth, did just that in the first quarter, shedding 7,700 video subscribers and adding 8,700 high-speed internet customers. The video losses were markedly better than the 12,400 video customers the overbuilder shed in the prior year. Overall, WOW said it added about 3,000 revenue generating units – a mix of video, voice and data subscribers, in the period.

Revenue at the company was down 4.8% to $285.5 million and cash flow dipped 11.5% to $96.3 million in the period. WOW also had a net loss of $202.7 million ($2.40 per share) compared to a profit of $72.4 million ($1.09 per share) in the prior year.

Still, the declines were better than what most analysts expected. In a note to clients, Evercore ISI analyst James Ratcliffe wrote that WOW beat his revenue and cash flow estimates by 1% and 2%, respectively. And he was encouraged by stronger than expected HSI additions – he predicted WOW would add 2,000 broadband customers in the quarter.

WOW also announced it has completed it previous $50 million share repurchase program, and authorized another $25 million in buybacks.

The stock gain was the biggest rise WOW shares have seen since its initial public offering last May, but is still well below its IPO price of $17 per share. 

WOW has gone through a transition since going public on May 26, including hiring a new CEO – former MediaOne chief Teresa Elder – in December and making other executive changes. 

“We are encouraged by the progress we’ve made,” Elder said in a statement. “WOW! returned to positive organic HSD RGU growth, and we have begun investing in our strategic initiatives in Sales and Marketing, Customer Care, and Digital Transformation. We’re still early in the process, but we are executing on our vision of connecting people to their world through the WOW! experience by being reliable, easy, and pleasantly surprising, every time.”

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