Cable One Shares Tumble After Dividend Suspension, Revenue Miss

Cable One (CABO) entered a turbulent phase in May 2025 after announcing a sudden dividend suspension and reporting a steep revenue decline, triggering a 41% single-day stock plunge. The moves underscored a deteriorating financial position, operational missteps, and mounting investor skepticism about its ability to navigate a competitive broadband landscape.

Revenue Collapse and Subscriber Exodus

Cable One’s Q1 2025 revenue dropped 5.9% year-over-year to $380.6 million, missing expectations as residential data revenues fell 4.5% to $245.2 million. The slide was fueled by a loss of 121,400 residential data subscribers over two years and a 3.1% average revenue per user (ARPU) decline due to pricing adjustments. Residential video revenue plummeted 15.8% as the company phased out legacy services, incurring $9.6 million in related costs. Even the traditionally stable business data segment grew only 1.2%, highlighting broader market pressures.

Net income collapsed 93% to $2.6 million, with adjusted EBITDA down 6.6% to $202.7 million. A $35 million rise in equity method investment losses—including a $28 million non-cash impairment charge—exacerbated the pain. Cash flow from operations fell 29.4% to $116.3 million, while capital expenditures rose 8%, leaving EBITDA less capex down a staggering $131.6 million from prior-year levels.

The Dividend Cut and Investor Backlash

The abrupt suspension of Cable One’s dividend—a 14-year streak—eliminated $67 million in annual payments but lacked clear justification. Analysts questioned the timing, noting the move saved cash but eroded trust. Raymond James downgraded the stock to “Market Perform,” citing the end of dividend consistency and a “shareholder base turnover” risk. KeyBanc called results “extremely disappointing,” highlighting a 10,000-subscriber shortfall in net additions and rising churn from billing system issues and weather disruptions.

Analysts Sound the Alarm

Analysts emphasized execution failures:
- Brandon Nispel (KeyBanc): Blamed recurring operational missteps, including the ARPU decline and missed EBITDA targets, signaling deeper management flaws.
- Frank Louthan (Raymond James): Warned of a “prolonged credibility rebuild” and doubted the feasibility of Cable One’s “multi-year growth plan,” which relies on infrastructure investments and retention programs like FlexConnect.

Liquidity Buffers and Lingering Risks

While Cable One retains $149.1 million in cash and $977 million in unused credit capacity, its $3.57 billion debt load looms large. Gross profit margins remain healthy at 73.6%, but competitive threats from fiber networks (e.g., Charter Communications, AT&T) and rising churn—driven by third-party fiber disruptions and billing errors—threaten further subscriber losses.

The Path Forward

Rebuilding investor confidence hinges on stabilizing high-speed data (HSD) net additions, reducing churn, and reversing the ARPU decline. Cable One’s Internet Lift initiative aims to boost speeds and retention, but execution risks remain.

Conclusion: A Crossroads for Cable One

Cable One’s Q1 results expose a company at a critical juncture. Its stock now trades at $262, far below KeyBanc’s $424.67 average target and GuruFocus’s $580.48 fair value estimate, reflecting skepticism about its turnaround. While liquidity buffers provide breathing room, the company must demonstrate consistent improvements in subscriber retention, EBITDA margins, and capital discipline. Without these, the $3.57 billion debt burden and competition from fiber networks could perpetuate downward pressure.

Investors should weigh Cable One’s 73.6% gross margins and $977 million in credit capacity against its 93% net income collapse and execution risks. For now, the dividend suspension and revenue miss mark a turning point—one that demands tangible progress to justify any recovery in the stock.