WideOpenWest, Inc. Shares Plunge Post Q3 Earnings Miss and Analyst Downgrade

Shares of WideOpenWest, Inc. WOW, a leading provider of high-speed data, cable television, and digital phone services, have plummeted over 55% following the announcement of its third-quarter financial results for fiscal year 2023. The Englewood, Colorado-based company disclosed earnings that fell short of market expectations, triggering a sharp decline in its stock value.

Quarterly Financial Performance

For Q3 FY23, WideOpenWest reported a revenue of $173.1 million, which was marginally below the anticipated consensus of $173.4 million. Even more concerning for investors was the reported earnings per share (EPS) loss of $(1.29), starkly contrasting with the expected consensus EPS of $0.01. These unsatisfactory figures have significantly impacted WOW's market standing.

Market Analyst's Reaction

In reaction to the earnings report, Keybanc Capital Markets' analyst Brandon Nispel downgraded WOW from 'Overweight' to 'Sector Weight'. Nispel's assessment highlighted a range of challenges for the company, including pronounced declines in legacy high-speed data (HSD) customers and a slowdown in new additions, attributed in part to the timing of Expansion deliveries. This alteration in rating by a prominent analyst has served to exacerbate the company's stock performance concerns.

Projections and Adjustments

Nispel has readjusted his forecasts for the company's future quarters, citing an expected continuation in HSD customer losses and a potential reduction in overall subscriber growth. Similarly, projections for EBITDA growth in 2024 have been revised. For the fourth quarter of FY23, revenue estimates are now set at $171.4 million, with adjustments also made for the full years of FY23 and FY25. This is accompanied by a lowering of the Adjusted EBITDA estimate for the same periods.

Investor Sentiment and Stock Movement

Investors have responded to the disappointing earnings and analyst downgrade with a sell-off, resulting in a significant drop in WOW's stock price. The last check on Thursday showed a 57.7% decrease to $3.13, reflecting a steep decline in investor confidence.

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