Verizon's Asymmetric Bet: Can a New CEO Rewrite the Network Story?

Verizon's new leadership presents a classic asymmetric bet. The setup is simple: a powerful new CEO, Dan Schulman, has been given a front-loaded equity package that turns his mandate into a financial imperative. This isn't just a change in management; it's a catalyst for a potential paradigm shift, with the stock acting as a low-cost call option on his success.

Schulman's appointment in October 2025 came with a clear, aggressive mandate. He immediately declared a need for a rapid shift to a customer-first culture, framing it as a non-negotiable transformation of Verizon's cost structure and financial profile. The board's response was to align his incentives directly with that vision. His compensation package, detailed in mid-October, is front-loaded to the extreme. It includes $9.5 million in RSUs vesting in 2026 and a massive $20 million in RSUs vesting in 2027. This structure creates a powerful short-term pressure to deliver results and demonstrate progress, as a significant portion of his wealth is tied to the stock's performance in the next two years.

The company's stated platform for that success is the "fully networked economy." Verizon's own materials frame this as the next major economic phase, where 5G is a once-in-a-generation breakthrough platform enabling massive IoT, AR/VR, and remote healthcare. Schulman's mission is to execute a "rapid shift" to unlock this potential. The thesis is that his PayPal-era operational rigor and focus on customer experience can reinvigorate a legacy telecom, transforming its culture and financial trajectory to capture value in this new networked world.

For investors, this creates a compelling asymmetry. The downside risk appears constrained by the company's strong cash flow and dividend, while the upside is capped only by the scale of the "fully networked economy" vision. Schulman's front-loaded equity acts like a spring-loaded incentive, making the stock a bet on his ability to rewrite Verizon's story. If he succeeds, the hidden value in its network assets and customer base could be unlocked. If he doesn't, the financial penalty for the CEO is severe, but the stock's fundamental cash flow and yield provide a floor. It's a call option on a transformative CEO, priced at a low multiple.

Testing the Narrative: Fiber Expansion and the Enterprise Dream

The grand vision for the "fully networked economy" requires a physical backbone. Verizon's new CEO is now testing the narrative by aggressively building that foundation, with fiber expansion at the center. The moves are concrete, aiming to validate the story of a transformed, growth-oriented company. The question is whether these steps can attract the new capital and customer loyalty needed to justify the stock's call-option premium.

The first major push is a strategic partnership with Eaton Fiber. This arrangement allows Eaton to fund and build high-capacity networks in areas beyond Verizon's current Fios footprint. Verizon will handle sales and service, effectively expanding its reach without shouldering the full upfront construction cost. The company is targeting 650,000 new fiber connections in 2025 through this model, a significant ramp-up from its recent performance. This is a classic growth play: leveraging external capital to accelerate market penetration and customer acquisition, directly feeding the "fully networked economy" thesis.

Simultaneously, Verizon is targeting the high-margin enterprise market, a critical component of its long-term story. Its partnership with Amazon Web Services (AWS) is designed to build the specialized infrastructure that cloud and AI workloads demand. The goal is to create high-capacity, low-latency links between data centers, positioning Verizon as a key player in the physical layer of the digital economy. This isn't just about selling broadband; it's about selling connectivity as a strategic enterprise service, which could unlock higher revenue per connection and improve customer stickiness.

The scale of the ambition is clear. After integrating Frontier's network, Verizon aims to grow its combined fiber footprint to 35-40 million passings. That target, if achieved, would solidify its position as a national broadband leader and provide the dense, high-performance network required to support future technologies like Edge computing and massive IoT deployments. The recent surge in Fios broadband growth, with 61,000 net additions in Q3 2025, shows the model can work, even if it's still a fraction of the total target.

The bottom line is that these moves are the essential first chapters in the new story. They demonstrate Schulman's operational focus on building a tangible growth engine. The partnership model with Eaton reduces financial risk, while the AWS tie-up targets premium enterprise revenue. If executed well, this fiber expansion could validate the narrative of a company moving beyond a legacy wireline business into a platform for the next digital era. The market will be watching to see if these concrete steps translate into sustained subscriber growth and, ultimately, a re-rating of the stock's valuation.

The Financial Reality Check: Momentum vs. Skepticism

The new narrative demands new financial proof. While the story of a transformed Verizon is being written in fiber trenches and enterprise deals, the market's verdict is etched in the numbers. The financials show clear momentum in execution, but they also reveal a deep-seated skepticism that the stock's valuation refuses to ignore.

On the operational side, the signs of a "rapid shift" are material. The company's third-quarter results demonstrated tangible cost discipline, with the consolidated segment EBITDA margin expanding to 23.4% from 21.8% a year ago. This improvement, alongside a 15% year-over-year jump in free cash flow, suggests Schulman's focus on the cost structure is starting to bear fruit. The company is also delivering on its promise to shareholders, having raised the dividend for the 19th consecutive year. With a recent quarterly payout of $0.69 per share, the stock offers a yield near 7%, providing a tangible floor of income while investors wait for the growth story to accelerate.

Yet, this operational strength exists in a valley of skepticism. The market's forward-looking price tag is telling. With a forward P/E ratio of approximately 8.4, investors are pricing Verizon as a mature, cash-generating utility, not a high-growth platform. This multiple reflects a profound doubt about the credibility of the "fully networked economy" thesis. It says the market sees the fiber expansion and enterprise deals as incremental, not transformative, and is unwilling to pay for the narrative until it is proven.

The tension here is the core of the asymmetric bet. The dividend and margin improvement provide a powerful cushion, validating the company's financial health and the board's confidence. But the low P/E is a narrative violation, a vote of no confidence in the CEO's ability to rewrite the story. For the stock to move, the operational momentum must not only continue but visibly accelerate, translating into a clear, scalable growth trajectory that justifies a higher multiple. Until then, the financial reality is a story of solid execution meeting deep skepticism-a setup where the narrative must win the day.

Catalysts, Risks, and the Path to a Paradigm Shift

The new narrative now faces its first real test. The path from a visionary CEO and a compelling story to a re-rated stock is paved with specific, measurable milestones. The coming quarters will reveal whether this is a catalyst for a paradigm shift or a narrative that fails to gain traction.

The near-term catalysts are clear and tied directly to execution. First is the fiber expansion target. The company is aiming for 650,000 new fiber connections in 2025. This isn't just a number; it's the proof point for the growth engine. Early signs are positive, with 61,000 Fios Internet net additions in Q3 2025 marking the strongest quarterly growth in about two years. The success of the Eaton Fiber partnership model will be critical here, as it must deliver on its promise to accelerate reach without overextending capital. Second, the enterprise dream hinges on the AWS partnership. The goal is to build high-capacity, low-latency links that support cloud and AI workloads. Investors must watch for early evidence of this translating into new, high-margin revenue streams and customer wins, moving beyond broadband sales into strategic connectivity services.

A key watchpoint will be any update to the company's full-year financial guidance. The Q3 report showed the company is on track to deliver full-year financial guidance, but that guidance was set before Schulman's full mandate was known. The market will be looking for any signal that the CEO's aggressive transformation plan is being reflected in forward-looking targets. A raised outlook for fiber growth or enterprise revenue would be a bullish validation of the new narrative. Conversely, any hesitation or conservatism would fuel skepticism.

The primary risk is a narrative violation. If Schulman fails to deliver on the promised transformation-whether through slower-than-expected fiber rollout, tepid enterprise adoption, or a lack of visible cultural change-the stock may remain trapped in its depressed valuation. The low forward P/E of 8.4 is a direct vote of no confidence in the growth story. It suggests the market sees the fiber build and partnerships as incremental, not transformative. For the asymmetric bet to pay off, the operational momentum must visibly accelerate and be priced into the stock. Until then, the risk is that the powerful front-loaded incentives for the CEO simply fail to move the needle on the story, leaving investors with a high-yield utility stock and a broken promise. The path to a paradigm shift is narrow, and the coming quarters will determine if Verizon can walk it.