AT&T (NYSE:T) shook up investor confidence in May when the company announced it would spin-off HBO. This unwinds the telecom giant’s streaming content holding. Income investors get a lower dividend yield and stock in the new company next year. So, why would the Matrix 4 trailer help AT&T stock?
The Matrix 4 movie release could unlock the value of AT&T’s Warner Bros. The original movies, released decades ago, made the studio billions. When opening in theatres next, investors could pick up T stock at a discount. Markets are dismissing the value of AT&T’s HBO/Discovery spin-off. They prefer to hold the stock for the high dividend yield.
By next year, the value of the HBO segment will rise. The unit offers excellent content quality. It is growing subscribers, too. Netflix stock fell to as low as $480 as investors reacted to the weak subscription growth. Yet NFLX stock rallied recently as investors bet on the permanent growth rates for streaming services.
Investors need to wait almost a year before the AT&T and HBO stock spin-off rise in value. Just as Viacom and CBS merging to create ViacomCBS (NASDAQ:VIAC) sent the stock lower, the same may happen for AT&T. Cautious investors could wait until after the spinoff before investing in AT&T.
