AT&T (T): Bearish Signals Flash Red – Time for Puts?

AT&T is a global telecommunications and technology services provider. The 'Communications' segment offers wireless and wireline telecom and broadband services to consumers in the U.S. and businesses globally. Key services include nationwide wireless service and equipment under the 'Mobility' business unit, advanced ethernet-based fiber services, fixed wireless services, IP Voice, and managed professional services from the 'Business Wireline' unit, and broadband services, including fiber connections and 'AT&T Internet Air' ('AIA') via 5G, from the 'Consumer Wireline' unit. The 'Latin America' segment provides wireless service and equipment in Mexico under the 'AT&T' and 'Unefon' brands. AT&T focuses on 5G and fiber connectivity, integrating product offerings and utilizing shared assets to differentiate itself. The company is decommissioning legacy copper networks, migrating customers to fiber and wireless alternatives, and deploying open radio access network (Open RAN) technology.

T's technical outlook is decidedly bearish. The stock price has experienced a significant downtrend over the past 90 days, declining from approximately $29.00 in late June to the current price of $24.415. The price is now well below the 50-day SMA of $27.48 and the 200-day SMA, which is at 27.08. This confirms the downtrend and suggests further weakness. Momentum indicators also support a bearish view; the MACD is negative and trending further downwards, with the MACD line significantly below the signal line. The RSI is at 31.26, indicating oversold conditions, but in a strong downtrend, oversold readings can persist. The ADX is elevated at 45.24, signaling a strong trend, which in this case is downward. Furthermore, the Stochastic oscillator is at 18.13, also suggesting oversold conditions, but the recent price action indicates continued selling pressure. Given these technical signals, a continued downtrend over the next 1-3 months appears likely.

AT&T's management discussion reveals a generally positive operational trend, though with some nuances. Total operating revenues increased by 1.6% to '$30,709 million' for the third quarter of 2025 compared to '$30,213 million' in 2024. The operating income margin also saw a substantial increase, jumping from 7.0% to 19.9%. Cash provided by operating activities increased to '$28,964 million' for the first nine months of 2025, compared to '$26,875 million' in the same period of 2024. The Mobility segment showed growth, with operating revenues up 3.1% to '$21,713 million', but the Mobility operating income margin decreased slightly from 33.3% to 32.8%. Consumer Wireline also performed well, with operating income increasing 65.8% and Broadband connections up 4.5%. Business Wireline, however, continued to struggle, with operating revenues down 7.8% and an operating loss of '$354 million'. The company is actively investing in strategic initiatives like fiber and network upgrades, which is expected to continue through the remainder of 2025, and has announced several acquisitions, including Lumen's mass markets fiber business for '$5,750 million' and FCC licenses from EchoStar for approximately '$23,000 million', to expand its 5G network.

AT&T's Q2 2025 earnings call struck a moderately bullish tone, highlighting consistent progress and strategic investments paying off. John Stankey emphasized that they've 'delivered growth in service revenues, adjusted EBITDA and free cash flow, and we're positioned to deliver on our full year consolidated financial guidance for 2025.' Mobility saw growth with 'over 400,000 postpaid phone customers, driving service revenue growth of 3.5%,' leading to an increased full-year guidance for Mobility service revenue growth to '3% or better.' Fiber expansion continues, with plans to reach approximately 50 million customer locations by the end of 2030. Pascal Desroches noted Consumer Wireline EBITDA grew 17.8%, leading to an increased outlook for Consumer Wireline EBITDA growth to the 'low- to mid-teens.' The call also addressed the impact of recent tax legislation, expecting between $6.5 billion and $8 billion in cash tax savings from 2025 through 2027 and intending to invest a portion of these savings in their network. They now expect free cash flow in the 'low to mid- $16 billion range' versus prior guidance of '$16 billion plus.' While postpaid phone churn increased, management anticipates seasonal patterns in the back half of the year and remains confident in their overall performance and growth trajectory.

T's financial performance presents a somewhat positive but complex picture. Revenue has fluctuated, starting at $32.022B in Q4 2023 and reaching $30.709B in Q3 2025, indicating some revenue volatility but overall remaining relatively stable. The gross profit ratio has also experienced fluctuations, with a low of 0.394 in Q4 2024 and a high of 0.447 in Q3 2024, before settling at 0.442 in the most recent quarter, suggesting inconsistent profitability. Operating cash flow is consistently positive, with $10.152B generated in the latest quarter (Q3 2025), demonstrating the company's ability to generate cash from its operations. However, total debt has increased from $154.899B in Q4 2023 to $158.493B in Q3 2025, signaling increased leverage. While the company is generating significant operating cash flow and maintaining revenue, the increasing debt and fluctuating gross profit ratio warrant monitoring to ensure long-term financial health.

The company presents a moderately bullish investment profile based on its key metrics and financial ratios. Revenue has shown positive growth, indicating a healthy demand for its products or services. The gross margin has remained relatively stable, suggesting efficient cost management. The Return on Equity (ROE) indicates a solid return for shareholders. The Price-to-Earnings (P/E) ratio suggests the company is appropriately valued by the market. The debt-to-equity ratio has seen a decrease, showcasing the company's improved financial leverage. The current ratio signifies the company's strong ability to meet its short-term obligations. Overall, the company demonstrates a stable and growing business model with a healthy balance sheet, making it a moderately attractive investment for the next 6-12 months.