Cable One Plunges 10.3% on Earnings Concerns

Cable One's stock price plummeted 10.3% in pre-market trading on May 2, 2025, reflecting significant concerns and uncertainties surrounding the company's financial health and strategic direction.

Cable One's first quarter 2025 earnings report revealed a series of challenges that have raised alarms among investors and analysts. The company's net income plummeted by 93%, largely due to a $28 million non-cash impairment related to its investment in Mega Broadband Investments (MBI). However, the full equity-method loss was nearly $57 million, suggesting significant operating losses at MBI that were not fully disclosed. This lack of transparency has heightened concerns about Cable One's cash flow and financial stability.

Another major issue highlighted in the earnings report was the sudden increase in the current portion of long-term debt, which jumped from $18.7 million in Q4 2024 to $593.6 million in Q1 2025. This significant debt maturity within the next twelve months poses a substantial risk, especially in a credit environment where borrowing costs have normalized at around 8% for single-B-rated issuers. The absence of a clear refinancing plan has left lenders and investors uncertain about the company's ability to manage this debt burden.

Capital expenditures also saw a notable increase, rising 8% to $71.1 million. While this could be seen as an investment in growth, the significant spike in customer-premise equipment spending, which jumped 357% quarter-over-quarter, has raised questions about the rationale behind these expenditures. The lack of commentary from management on this issue has further undermined investor confidence.

Cable One's strategic pivot to focus on broadband services has also faced external challenges. The expiration of the Affordable Connectivity Program and the upcoming Broadband Equity Access and Deployment program could squeeze margins and fuel customer churn, complicating the company's efforts to stabilize revenue and manage debt.