WideOpenWest Stock Plummets Following Disappointing Q3 Earnings and Downgrade

WideOpenWest Inc WOW, a provider of high-speed data, cable television, and digital phone services, has experienced a significant drop in its stock price, which plummeted over 55% in response to the company's disappointing financial results for the third quarter of fiscal year 2023. The Denver-based company's revenue fell short of market expectations, reporting $173.1 million against the anticipated $173.4 million. Moreover, the company's earnings per share (EPS) showed a loss of $(1.29), starkly contrasting with the consensus estimate of a 1 cent EPS profit.

Keybanc Capital Markets Responds to WOW's Earnings

Analyst Brandon Nispel from Keybanc Capital Markets reacted to WOW's performance by downgrading the stock from 'Overweight' to 'Sector Weight'. This reevaluation followed the release of WOW's earnings, which not only missed analyst expectations but also indicated several challenges for the company. Among the noted adversities were substantial customer losses in the legacy high-speed data (HSD) segment and a slowdown in new customer additions partially due to delays in the company's Expansion delivery.

Future Projections and Adjustments

Nispel adjusted his projections for WOW citing an expected increase in HSD losses to -11.1K in the fourth quarter of FY23, a revision from previously anticipated growth of +10K. The concern is that the legacy segment's losses could potentially overshadow any growth from Expansion subscribers in the forthcoming periods. Similarly, projections for HSD net additions in FY24 have been revised downward to -1K from an earlier expectation of +19K, signaling a potential cash burn and dwindling liquidity for the company.

These pessimistic outlooks led to a review of financial estimates for WOW. The analyst has lowered revenue estimates to $171.4 million (down from $176.7 million) for Q4 FY23, $689.3 million (down from $694.7 million) for the full fiscal year 2023, and a significant cut to $655 million (from an initial $703.4 million) for FY25. Adjusted EBITDA estimations followed suit, now set at $71.1 million for Q4, $275.3 million for FY23, and $273.7 million for FY24—each indicating a decrease from prior estimates.

The market's reaction to these numbers was swift and harsh, as indicated by the precipitous drop in WOW's stock price, which fell by 57.7% to $3.13 at the last check.

WideOpenWest, earnings, downgrade