Charter Communications Slumps 3.6%—Is the Sell-Off a Signal of Wider Sector Weakness?

• CHTR shares plummet to $385.22, down 3.6% from yesterday’s close of $399.61
• Intraday range spans $384.40 (low) to $399.52 (high), erasing gains from recent 5G and fiber expansion bets
• Sector peer Verizon (VZ) trades down 0.6%, but remains a Zacks #3-ranked 'Hold' alongside CHTR

Today’s selloff punctuates a volatile week for telecom giants, with Charter’s valuation under pressure as investors weigh execution risks against $7B in fiber investments and Nexar partnerships. The stock’s 52-week range ($304.76–$437.06) highlights its rollercoaster trajectory amid shifting regulatory and competitive dynamics.

Zacks Estimates Divergence Sparks Profit-Taking
The sharp decline reflects growing investor skepticism toward Charter’s ability to sustain growth amid margin pressures and elevated debt. Zacks’ analysis shows CHTR’s 2025 EPS estimates have trended downward over 60 days, contrasting with Verizon’s stabilization. While Charter’s 5G rollout and Nexar collaboration were once growth catalysts, the $93.6B debt load and leveraged balance sheet (82.6% debt-to-capital) have made investors skittish. Additionally, Verizon’s Thames Freeport 5G win and $20B Frontier acquisition signal stronger execution in fiber densification—a headwind for CHTR’s valuation multiples. The market is pricing in heightened risk as Zacks’ forward P/E of 9.48 remains above VZ’s 8.67, despite CHTR’s lower growth trajectory.

Telecom Sector Mixed, but Verizon Maintains Momentum
While Charter slumps, Verizon’s -0.6% dip underscores a sector-wide pause rather than systemic weakness. VZ’s 5G and fiber initiatives—like its C-band spectrum dominance and Fios expansion—position it as the safer play in a capital-intensive industry. Charter’s 11.9% YTD gain versus VZ’s 7.3% hints at rotation into proven infrastructure winners. Investors are prioritizing firms with stronger cash flows and lower leverage, amplifying CHTR’s valuation concerns.

Bollinger Bands Bearish, Focus on Puts at $370-$375 Levels
Bollinger Bands: Current price ($385.22) hugs the lower band (371.85), signaling oversold conditions
RSI: 53.73—neutral, but dipping below the 50 midpoint suggests near-term caution
MACD: Negative histogram (-0.917) confirms short-term bearish momentum vs. the 30-day moving average ($397.36)

A breakdown below $371.85 (lower Bollinger) could trigger a test of 200-day support ($368.01). Aggressive traders should focus on out-of-the-money puts:

1. CHTR20250808P370 (Strike: $370, Exp: Aug 8):
- IV: 32.7% (moderate volatility premium)
- Delta: -0.305 (30.5% downside exposure)
- Theta: -0.011 (time decay accelerates)
- Leverage: 57.3%
Best for betting on a near-term test of $368 support; payoff hits $10/contract if CHTR drops to $360.

2. CHTR20250801P375 (Strike: $375, Exp: Aug 1):
- IV: 44.6% (higher volatility premium)
- Delta: -0.379 (37.9% downside exposure)
- Gamma: 0.010 (sensitive to price swings)
- Leverage: 36.2%
Suitable for traders anticipating a sharper selloff; payoff exceeds $8/contract at $370.

Action Alert: Sell-side traders should layer in CHTR20250808P370 puts as resistance at $390 fails. Avoid calls—the 387.5 strike option’s 76,784% leverage ratio flags data anomalies suggesting illiquidity.

Backtest Charter Stock Performance
The backtest of CHTR's performance after an intraday plunge of -4% shows mixed results. While the 3-day win rate is 53%, the 10-day win rate is slightly lower at 50.83%, and the 30-day win rate is 49.33%. The average returns over these periods are relatively low, with a 3-day return of 0.12%, a 10-day return of -0.02%, and a 30-day return of -0.03%. The maximum return during the backtest period was 0.13%, which occurred on day 57, indicating that while there is some potential for recovery, the overall performance is lackluster.

Watch $368 Support—Verizon’s Lead Signals a New Reality
Charter’s slide underscores a sector-wide reckoning on execution risk. While short-term support at $368 offers a floor, the broader narrative favors Verizon’s balance-sheet discipline and 5G traction. Investors should prioritize cash-rich peers like VZ while using CHTR puts to hedge downside. The key alert: if $368 breaks, the 200-day average ($368.01) becomes a critical test—failure here could reignite bearish momentum. For now, the telecom sector’s future hinges on who delivers fiber dominance without straining leverage: Verizon’s lead is widening.