Analyst Report: CHTR
1. EXECUTIVE SUMMARY
Charter Communications (CHTR) surged 7.62% to close at $206.12 on January 30, 2026, driven by a "relief rally" following its Q4 2025 earnings report. While the company missed top-line revenue estimates, it delivered a surprising beat on profitability (EPS) and, most critically, reported an unexpected gain in video subscribers—defying a decade-long industry trend of cord-cutting. This operational resilience, combined with forward guidance projecting significantly reduced capital expenditures (Capex) by 2028, sparked a short squeeze in a stock that had been heavily bet against. The move signals a potential bottoming process as the market reprices Charter from a "declining asset" to a high-cash-flow utility with stabilizing subscriber metrics.
2. THE CATALYST (CRITICAL)
- Event: Q4 2025 Earnings Release & Conference Call
- Date/Time: January 30, 2026 (Pre-market)
- Key Metrics:
- EPS: $10.34 (Beat consensus estimates of ~$10.01 - $10.09)
- Revenue: $13.60B (Missed consensus of ~$13.73B; down 2.3% YoY)
- The "Surprise" Factor:
- Video Subscribers: +44,000 net adds (vs. a loss of 123,000 in Q4 2024). This reversed a long-term negative trend and outperformed peers like Comcast.
- Mobile Growth: +428,000 mobile lines added, confirming the success of its converged connectivity strategy.
- Capex Guidance: Management guided for Capex to fall below $8B/year by 2028 (normalized), which implies a massive future tailwind for Free Cash Flow (FCF) generation.
3. COMPANY PROFILE
- Official Name: Charter Communications, Inc.
- Ticker: CHTR (NASDAQ)
- Core Business: A leading broadband connectivity company and cable operator serving over 32 million customers in 41 states through its Spectrum brand. Services include residential and business internet, TV, mobile, and voice.
- Sector: Communication Services (Cable & Satellite)
- Market Cap: ~$29.7 Billion
- Key Competitors: Comcast (CMCSA), AT&T (T), Verizon (VZ), T-Mobile (TMUS).
- Context: The stock has been a significant underperformer over the last 12 months due to fears of broadband competition from Fixed Wireless Access (FWA) and fiber overbuilders.
4. DEEP DIVE ANALYSIS
Fundamental Drivers: Not Just a Dead Cat Bounce
The 7% surge is structurally justified by three factors that challenge the "terminal decline" bear thesis:
- The "Invincible" MOAT: Charter announced the launch of "Invincible Wi-Fi" (Wi-Fi 7 routers with 5G cellular battery backup) in Feb 2026. This product directly addresses reliability concerns and differentiates Spectrum from FWA competitors who suffer from congestion.
- Cash Flow Inflection: The street loves certainty. By outlining a clear path to sub-$8B annual Capex (down from ~$11-12B peak levels), management essentially promised a future FCF yield that could exceed 15-20% at current valuations.
- Video Stabilization: Gaining video subs in 2026 is an anomaly. It suggests that Charter's bundling strategy (Xumo + included streaming apps like Disney+) is effectively reducing churn.
Sector & Competitor Context
- Comcast (CMCSA): Reported Q4 results one day earlier (Jan 29), showing a loss of domestic broadband subscribers and a frozen dividend. Charter's ability to show stability where its largest rival showed weakness made CHTR the preferred "value play" in the sector for the day.
- Short Squeeze Dynamics: With short interest estimated between 13.5% and 26% of float (approx. 9-10 days to cover), the earnings beat forced short sellers to cover positions aggressively, exacerbating the upward move.
Bull vs. Bear Case
| Bull Case | Bear Case |
|---|---|
| Cash Flow Machine: Lower Capex + stable subs = massive buyback potential. | Debt Load: ~$95B net debt is high; rates staying higher for longer hurts. |
| Mobile Growth: Spectrum Mobile is growing fast (19% YoY), offsetting wireline weakness. | Broadband Bleed: Core internet subs still declined (-119k), though better than feared. |
| Valuation: Trading at a forward P/E of ~4.5x, implying an overly pessimistic outlook. | ACP Headwinds: The end of federal subsidies (ACP) is still working through the system. |
5. TECHNICAL SNAPSHOT
- Price Action: Gap up from $191.52 close to open at ~$204, closing near highs at $206.12.
- Volume: Heavy volume (approx. 2.9M shares traded vs. 1.7M avg), confirming institutional participation.
- Support/Resistance:
- Immediate Support: $190-$192 (The gap fill level).
- Key Resistance: $220 (Psychological level and declining 200-day moving average).
- Pattern: The chart shows a potential "Double Bottom" formation around the $182 level, with this earnings gap serving as the breakout confirmation.
6. RISK FACTORS
- Leverage Ratio: Net debt is ~4.2x EBITDA. While manageable, it leaves little room for error if EBITDA contracts.
- Fixed Wireless Pressure: T-Mobile and Verizon FWA continue to take market share at the lower end of the market.
- Interest Rates: As a capital-intensive business with high debt, any uptick in yields directly impacts Charter's bottom line and refinancing costs.
- Broadband Saturation: With 58M passings, finding new organic growth is difficult; growth must come from stealing share or price hikes (ARPU expansion).
7. ACTIONABLE OUTLOOK
- Short-Term (1-2 Weeks): Expect Volatility. The "squeeze" may have another leg up toward $215-$220, but profit-taking is likely after such a sharp move. Watch for a retest of the $195 level to hold as support.
- Tactical: Buy on dips near $195 with a tight stop at $182.
- Medium-Term (1-3 Months): Neutral/Bullish. The "Invincible Wi-Fi" launch in February could provide a secondary catalyst. Investors will watch if the Capex reduction narrative holds. If the stock can consolidate above $200, it may re-rate to a 6x-7x multiple.
- Long-Term Thesis: Turnaround Play. The thesis has shifted from "terminal decline" to "cash cow." If Charter executes on its "convergence" strategy (Internet + Mobile + Video), the current ~4.5x P/E is far too cheap. The stock is a buy for patient value investors willing to weather the competitive storm.