Telecom & Wireless

Short Interest in Sprint Surges

Sprint_shop
Wikimedia Commons
As Sprint Corp. (NYSE: S) has fallen into fourth place behind T-Mobile US Inc. (NYSE: TMUS) in the third place position in the wireless wars — and as its viability as a competitor has been questioned — short interest in the stock soared by 25.9 million to 159.7 million for the period that ended September 30.

Pessimism has also shown up in Sprint’s stock price. Shares had lost 22% since late August, before coming back to down about 7% at last Friday’s close. But for the past 12 months the stock price is down 23%.

So now the company’s new chief financial officer, Tarek Robbiati, said he plans to reduce operating costs by 10% for a savings of $2 billion, and he has identified another $500 million in cuts to spending on equipment. The cuts are expected to occur over the next six months.

Sprint’s problem is that it is being out-competed by T-Mobile for new subscribers, and cutting spending on equipment will do nothing to help Sprint improve its wireless service. The first indication of the drive to cut costs was the company’s recent announcement that it would not participate in the next spectrum auction.

As for customers, Sprint’s attacks on T-Mobile have come in the form of low prices. Recall the $1-a-month iPhone leasing plan.

Investors look at the cost-cutting and see a company that may lose its capacity to compete even faster than it already has. Sprint is playing for time, and why? Likely in hopes of a merger or buyout. And until an offer comes knocking, the company will continue to tread water, and the shorts will continue to pile in, expecting nothing but more bad news.

Sprint’s shares closed at $4.47 on Friday in a 52-week range of $3.10 to $6.30. The consensus price target on the stock is $7.28.

ALSO READ: The 6 Most Shorted NYSE Stocks

The #1 Thing to Do Before You Claim Social Security (Sponsor)

Choosing the right (or wrong) time to claim Social Security can dramatically change your retirement. So, before making one of the biggest decisions of your financial life, it’s a smart idea to get an extra set of eyes on your complete financial situation.

A financial advisor can help you decide the right Social Security option for you and your family. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you.

Click here to match with up to 3 financial pros who would be excited to help you optimize your Social Security outcomes.

 

Have questions about retirement or personal finance? Email us at [email protected]!

By emailing your questions to 24/7 Wall St., you agree to have them published anonymously on a673b.bigscoots-temp.com.

By submitting your story, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.