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đŸ§” Verizon To Acquire Frontier

+ All Eyes on Friday's Jobs Report

September 05, 2024

Good afternoon! CNBC just dropped its 2024 list of the NFL’s most valuable franchises, and no surprises here—the Dallas Cowboys are still on top, valued at a staggering $11 billion. That’s a full $3 billion more than the next closest team, the Los Angeles Rams ($8 billion). The New England Patriots aren’t far behind, holding strong at $7.9 billion.

What’s driving these eye-popping valuations? Aside from shared league revenue, teams that excel at pulling in extra cash through sponsorships, luxury suites, and stadium deals are leading the pack. It’s a game of big numbers, and CNBC's list highlights just how much money is in play across the NFL.

MARKETS

*Stock data as of market close*

  • Stocks stumbled on Thursday as investors played a game of wait-and-see ahead of Friday's all-important jobs report. The S&P 500 slipped 0.3%, the Dow dropped 219 points (0.54%), and the Nasdaq managed a modest 0.25% gain after a rollercoaster of a day. All eyes are on the labor market, with fresh data showing private payrolls posted their smallest growth since January 2021. Not exactly the boost of confidence Wall Street was hoping for.

  • Now, the spotlight shifts to Friday’s Labor Department report, which could set the stage for the Fed's next move. With inflation cooling, there's chatter of interest rate cuts, but how deep they’ll go depends on what tomorrow’s numbers reveal. As markets bounced around, tech stocks lifted the Nasdaq while bond yields slipped. All bets are on Jerome Powell to guide the Fed’s hand — will it be a 25 or 50 basis point rate cut? Stay tuned.

STOCKS
Winners & Losers

What’s up 📈

  • Nio ($NIO) surged 14.39% after reporting a narrower-than-expected second-quarter loss on Thursday.

  • Shoe Carnival ($SCVL) gained 8.20% after beating second-quarter earnings estimates and raising the lower end of its third-quarter and full-year financial guidance.

  • JetBlue Airways ($JBLU) rose 7.16% after hiking its forward guidance for third-quarter revenue.

  • Tesla ($TSLA) climbed 4.90% after announcing plans to roll out its advanced driver assistance system in Europe and China in Q1 2025, “pending regulatory approval.”

  • DraftKings ($DKNG) was up 4.23% as sports betting platforms anticipate record levels of wagers.

  • Deutsche Bank ($DB) rose 4.01% after reaching a settlement with the long-standing plaintiff Effecten-Spiegel AG.

  • Dollar Tree ($DLTR) increased 7.72%.

What’s down 📉

  • ChargePoint Holdings ($CHPT) plunged 17.75% after its second-quarter revenue missed expectations.

  • AST SpaceMobile ($ASTS) dropped 14.00% after the company filed a prospectus for the offer and sale of up to $400 million Class A common stock.

  • Toro ($TTC) fell 10.09% after missing earnings and revenue expectations.

  • Frontier Communications ($FYBR) tumbled 9.51% after Verizon announced it will acquire the company in an all-cash deal worth $20 billion.

  • C3. ai ($AI) decreased 8.21% after posting weaker-than-expected subscription revenue.

  • Hewlett Packard($HPE) fell 6.02% as gross margins declined from a year ago.

  • Icahn Enterprises ($IEP) slid 8.68%.

    Mobileye ($MBLY) dropped 7.34%.
    MicroStrategy ($MSTR) declined 4.23%.
    Eli Lilly ($LLY) was down 3.55%.

ACQUISITION
Verizon To Acquire Frontier

Verizon is making some serious moves in the broadband game, dropping $9.6 billion to acquire Frontier Communications. Toss in Frontier’s debt, and the total deal hits $20 billion, giving Verizon access to Frontier’s 2.2 million fiber subscribers across 25 states. Why does this matter? Verizon is locking down its spot in the fiber race, going head-to-head with AT&T and cable companies that are nibbling away at its market share.

A Strategic Fiber Expansion

Frontier’s investors are walking away with a nice 37% premium at $38.50 per share. For Verizon, it’s a big pivot as it looks to bulk up its fiber footprint in key markets. By scooping up Frontier’s assets, Verizon merges those with its 7.4 million Fios subscribers in nine states and Washington, D.C. Fun fact: some of these assets were actually Verizon’s before they sold them to Frontier in 2016 for $10.54 billion. CEO Hans Vestberg said this is all about “future-proofing” as data demand keeps exploding, thanks to AI and other data-hungry technologies.

The Fiber Race Heats Up

Everyone wants in on the fiber game these days. AT&T is going all out with its own fiber network expansion, while T-Mobile just threw down $4.9 billion on a joint venture to boost its fiber capabilities. Verizon’s acquisition of Frontier, though, gives it a big leg up in the race to deliver faster and more reliable internet to customers. With wireless growth slowing, telecoms are betting that home internet is the next cash cow.

But it’s not all smooth sailing. Frontier’s stock dipped 9.3% after the news, as investors brace for what could be a lengthy regulatory review. There’s also doubt about whether any other bidders will emerge. The deal is expected to take around 18 months to close, pending shareholder and regulatory approvals. Verizon, already carrying over $120 billion in debt, is banking on $500 million in annual cost savings by year three to make this deal worth it.

What’s Next for Verizon?

This acquisition signals Verizon’s commitment to going fiber-first. With Frontier’s assets in key areas like California, Texas, and Florida, Verizon will now serve a total of 10 million fiber-optic customers. It’s still playing catch-up to AT&T’s 28 million, but this is a step in the right direction. Even though Verizon’s fiber network will cover less than 10% of the U.S., the company sees this deal as a building block for bigger broadband dominance.

In a nutshell, Verizon is doubling down on fiber to keep up with our increasingly data-hungry world. It’s a high-stakes play, but if the company can execute, this move could give it a major leg up as the demand for faster, more reliable internet continues to surge. And don’t be surprised if the fiber race gets even more competitive from here.

NEWS
Market Movements

ECONOMY
All Eyes on Friday's Jobs Report

Friday’s jobs report could be the mic drop moment for the U.S. economy, with Wall Street bracing for impact. Economists are expecting a moderate gain of 161,000 jobs in August, a slight improvement from July’s underwhelming 114,000, and a dip in unemployment to 4.2%. But don’t be fooled by the numbers; a recent wave of grim data suggests the labor market might be cooling faster than a pumpkin spice latte in December.

The Fed Factor

The Fed is teetering on the edge of a rate cut, with markets betting that a quarter-point reduction is a done deal, and a half-point cut could be on the table if Friday's report looks dicey. With rates currently at their highest in 23 years, the central bank may need to act fast to avoid the “R” word—recession. (We hate to say it, too.)

Giacomo Santangelo, economist at Monster, sums it up: "The labor market is cooling, but the Fed’s next move depends on how chilly things get on Friday."

Jobs Data Drama

July was a wake-up call, with payroll growth dragging and the private sector adding just 99,000 jobs in August—its weakest performance since 2021, according to ADP. Companies are cutting back on hiring faster than a Hollywood script rewrite, but layoffs haven’t surged
 yet.

The big question: How long can businesses play defense with hiring freezes before they hit the layoff button? Tech firms are already feeling the squeeze, accounting for over half of August’s 75,891 job cuts, according to Challenger, Gray & Christmas. AI isn’t helping either—it’s cutting into nearly 6,000 of those tech jobs.

What to Watch

Alongside job gains and unemployment, economists will be eyeing several indicators in Friday’s report:

  • Hours worked: Average workweek hours fell slightly in July, and a further dip could signal reduced demand.

  • Labor force participation: More people jumping back into the job market could mean optimism—or a higher unemployment rate.

  • Temporary layoffs: July saw a jump in temp layoffs, largely due to auto industry retooling. If those turn permanent, buckle up.

Calendar
On The Horizon

Tomorrow

Tomorrow’s the moment of truth: the US jobs report is dropping, giving us a pulse check on the labor market. This data-packed report pulls info from all over and delivers the clearest view of employment in the country.

Last month, it didn’t go so well. July’s report showed only 114,000 jobs added, far below expectations, which sent the stock market into a nosedive. The concern? That the Fed might not have enough ammo to fend off a downturn.

For August, the forecast is looking a bit brighter—economists expect 161,000 new jobs and a dip in the unemployment rate to 4.2%. If the numbers fall short again, brace for another market slide. The silver lining? Bad news could nudge the Fed to go bigger with rate cuts next month.

Before Market Open:

  • Big Lots ($BIG) has had a brutal 2024, with shares cratering by over 90%. The issue? It’s not just consumers tightening their wallets—it’s liquidity. The company is flirting with bankruptcy, and given its ongoing unprofitability, paying off debt looks like a distant dream. Despite the idea that budget retailers should thrive in economic slumps, Big Lots is proving that theory wrong. With analysts predicting a -$3.46 EPS and revenue around $1.04 billion, it seems like a comeback isn’t on the horizon anytime soon.

NEWS
The Daily Rundown

RESOURCES
The Federal Reserve Resource

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