Cable One Plunges 12.59% on Earnings Woes

On May 2, 2025, Cable One's stock experienced a significant drop of 12.59% in pre-market trading, reflecting a tumultuous period for the company.

Cable One's first quarter 2025 earnings report revealed a series of challenges that have raised concerns among investors and analysts. The company's net income plummeted by 93% to $2.6 million, 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 health.

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 poses a substantial risk, as Cable One must either refinance or repay over half a billion dollars within the next year. The absence of a clear refinancing plan has left investors uncertain about the company's ability to manage this financial burden.

Capital expenditures also saw a notable increase, rising by 8% to $71.1 million. While this could be seen as an investment in growth, the specifics of these expenditures, particularly the 357% quarter-over-quarter increase in customer-premise equipment spending, remain unclear. This lack of clarity has further eroded investor confidence in Cable One's management and strategic direction.

In response to these challenges, Cable One suspended its dividend to preserve liquidity, freeing up approximately $67 million annually. However, this move has stripped income-focused investors of a key reason to hold the stock, potentially leading to further sell-offs. The company's strategic pivot to focus on broadband services, while necessary, faces external threats such as the expiration of the Affordable Connectivity Program and the upcoming Broadband Equity Access and Deployment program, which could squeeze margins and fuel customer churn.