Gone are the days when telecom stocks were the quiet corner of Wall Street with steady bills, steady dividends and few surprises. Over the past two weeks, they have become the market's most reliable losers.
The iShares U.S. Telecommunications ETF (IYZ) has underperformed the SPDR S&P 500 ETF Trust (SPY) for 12 straight sessions through Thursday.
That is the longest such run since the fund launched in May 2000.
From Oct. 7 to Oct. 22, IYZ fell 12.9%. Meanwhile, SPY slipped 1.9%.
The company standing over the streak is Space Exploration Technologies Corp. (SPCX), better known as SpaceX.
SpaceX: America's New Carrier?
SpaceX reported third-quarter results on Tuesday, with revenue up 161% from a year earlier to $14.58 billion.
On the earnings call, CEO Elon Musk reaffirmed the plan to build a U.S. wireless business.
SpaceX "will be building out our terrestrial networks" wherever Starlink is allowed to operate, he said.
The company also said S-band airwaves should carry most Starlink Mobile traffic, while newly acquired 800 MHz spectrum will bring the signal inside buildings.
Starlink Mobile ended the quarter with 22 million monthly users, up 37% from the prior quarter.
Then, on Thursday evening, Bloomberg reported that SpaceX is in talks with tower owners, including Crown Castle Inc. (CCI), for access to at least 80,000 U.S. cell sites.
That is roughly half of the 158,500 purpose-built towers the Wireless Infrastructure Association counted in the U.S. last year.
Crown Castle CEO Chris Hillabrant was asked about leases with SpaceX on the tower company's earnings call this week. "You can assume that we're talking to all parties," he said.
The Day The Carriers Broke
The streak turned on Oct. 8.
After the close, SpaceX agreed to buy Grain Management's nationwide 800 MHz spectrum portfolio, pending approval from the Federal Communications Commission. The deal would help Starlink Mobile "become a major mobile carrier in the US."
The next day, AT&T Inc. (T) fell 10.8%, Verizon Communications Inc. (VZ) lost 10.1% and T-Mobile US Inc. (TMUS) sank 13.3%.
AT&T traded about 150 million shares that session, nearly four times its average over the prior four days.
The carriers clawed back part of those losses. On Thursday, all three rose between 3.3% and 3.8%.
The relief did not last.
In premarket trading Friday, AT&T fell 4.4% to $21.75, Verizon dropped 3.8% to $43.50 and T-Mobile slid 4.8% to $151.20, according to market data.
Tower owners, by contrast, are being priced as SpaceX's landlords. Crown Castle jumped 10.3% premarket, while American Tower Corp. (AMT) rose 7.3%.
Why IYZ Fell Harder Than The Carriers
IYZ is half a telecom fund and half a networking-hardware fund. Cisco Systems Inc. (CSCO) and Arista Networks Inc. (ANET) made up about a third of its assets at the end of June, according to the fund's latest SEC holdings filing.
Since Oct. 6, Arista has dropped 20.6% and Cisco has lost 11.1%. Over the same stretch, AT&T fell 6.9%, T-Mobile 4.3% and Verizon 1.7%.
Thursday showed the split clearly. While the carriers bounced, IYZ fell 2.5% as AI networking stocks sold off with the broader tech sector.
Arista lost 7.2%, Ciena Corp. (CIEN) 10.7% and Lumentum Holdings Inc. (LITE) 11.5%.
In addition, AST SpaceMobile Inc. (ASTS), an IYZ holding that is building its own satellite-to-phone network, has lost 37% over the past month.
As a result, the fund was hit from two sides at once: a new competitor for its carriers and an unwind in AI networking hardware.
| Name | Oct. 9 move | Since Oct. 6 | Friday premarket |
|---|
| iShares U.S. Telecommunications ETF (IYZ) | -0.7% | -12.9% | n/a |
| SPDR S&P 500 ETF Trust (SPY) | +0.6% | -1.9% | -0.3% |
| AT&T Inc. (T) | -10.8% | -6.9% | -4.4% |
| Verizon Communications Inc. (VZ) | -10.1% | -1.7% | -3.8% |
| T-Mobile US Inc. (TMUS) | -13.3% | -4.3% | -4.8% |
| Cisco Systems Inc. (CSCO) | +3.0% | -11.1% | Flat |
| Arista Networks Inc. (ANET) | +2.7% | -20.6% | +0.4% |
Updated by 8:07 a.m. ET on Oct. 23. Source: TradingView, market data
