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AT & T (T), the second largest mobile operator, faces a lawsuit filed by a group of investors. According to the lawsuit, the company has misled investors about the growth of its streaming service, DIRECTV NOW.
Why are investors suing AT & T?
According to a report released Monday by Bloomberg, "AT & T Inc. has pressured its employees that they are creating fake accounts for its live TV service DirecTV Now in order to increase the number of people on the Internet. subscribers before its merger with Time Warner Inc. in 2018 ".
The report also stated, "The company has learned and encouraged employees across the country to secretly add the product to existing client accounts without their knowledge."
AT & T said: "We plan to fight these unfounded complaints in court."
DIRECTV NOW customers from AT & T
Last month, the company announced that DIRECTV NOW was renamed AT & T TV NOW. AT & T TV NOW is an over-the-top (OTT) streaming service that delivers content directly to users over the Internet. This service is an alternative to recording a traditional cable or satellite connection. In the second quarter, the company lost 168,000 OTT customers, compared to 342,000 net new customers in the second quarter of 2018.
The significant year-over-year (year-over-year) reduction in the company's OTT customers is due to higher prices and reduced promotional activities. The telecommunications company had 1.3 million OTT customers as of June 30.
Amazon Prime Video, Netflix (NFLX) and YouTube TV are AT & T's other competitors in the video streaming market. In the second quarter, Netflix added 2.7 million customers worldwide. Netflix had 151.6 million customers by June 30th.
While streaming services continue to increase subscribers rapidly, traditional pay-TV operators are losing subscribers. In the second quarter, AT & T lost 778,000 traditional US pay-TV customers in total. In comparison, Charter Communications (CHTR) and Comcast (CMCSA) lost 150,000 and 209,000 residential video customers respectively.
HBO MAX
The company plans to launch a new consumer streaming service called HBO Max early next year. According to a Reuters report, "The service will feature more than a dozen original programs and movies from stars such as Reese Witherspoon and Anna Kendrick, as well as network shows owned by AT & T, such as HBO and TBS, as well as classics from Warner Bros.'s film and TV library. . "
Returns from stock
AT & T action has risen nearly 5.8% since the beginning of September. On Monday, the stock closed at $ 37.31, 1.6% lower than its previous closing price, 3.7% lower than its peak of $ 38.75 in 52 weeks, and 39.2% more than its lowest price of $ 26.80 held in 52 weeks. The company's market capitalization is $ 272.6 billion.
On the basis of AT & T's closing price on Monday, the company announced returns of 1.4% over the last five trading days, 6.7% in the last month and 11.0% in the last 12 months. The company has recorded returns of 30.7% since the beginning of 2019.
Read Stock AT & T: Why is it falling today? to learn more about the drivers of the stock. Read AT & T Stock: What is the disadvantage of analysts? and should AT & T be on your shopping list in September? to learn more.
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