Verizon Communications (NYSE:VZ) suffered a nationwide outage in the United States on Wednesday that upset customers, led to some unwanted emergency alerts being sent out, and prevented people from calling or texting. While the outage is over, the impact on Verizon stock is still to come with the company promising account credits.
Verizon Outage Could Hurt VZ Stock
Verizon customers were unable to use text, voice or data services for hours on Wednesday, leading to complaints across the country.
While outages can have big consequences for users who rely on their phones for work, need them for emergencies, or for digital purchases throughout the day, for most customers, the outage will go down as an inconvenience.
Outages and inconveniences often have repercussions for companies. Sometimes this means customers leave, and other times it means providing credits to keep customers happy.
"The outage has been resolved," Verizon said Wednesday night.
The tweet also included a comment on what could come next and why Verizon investors should take note.
"For those affected, we will provide account credits. Details will be shared directly with customers."
The company clarified on Thursday morning that this will mean a $20 account credit for customers.
"On average, this covers multiple days of service."
The company said the credit "isn't meant to make up for what happened," but acknowledges customers' time and that they matter to Verizon.
"We sincerely apologize for the disruption," Verizon also added.
What's Next For Verizon Stock?
Verizon's apology and promise of account credits could help retain customers. The question now turns to whether the financials will get hurt and the potential impact on the stock.
Verizon is one of the largest global telecommunication companies with over 140 million customers in the United States alone. If all customers qualify, this would result in credits totaling more than $2.8 billion, and the number could increase, with the company saying it will contact business customers directly about credits.
The impact of the outage will come in Verizon's first quarter. The company will likely provide guidance for the next fiscal year and for the first quarter. The question is whether the company will break out the financial impact of the outage or simply provide guidance figures.
The company is set to report fourth-quarter financial results on Jan. 30 and could see the outage become a key topic for analysts.
Analysts expect the company to report fourth-quarter revenue of $36.06 billion, up from $35.70 billion, according to data from Benzinga Pro. The company has beaten analyst revenue estimates in three of the last four quarters.
Analysts expect the company to report fourth-quarter earnings per share of $1.06, down from $1.10 in last year’s fourth quarter. The company has beaten analyst estimates for earnings per share in three straight quarters.
Verizon shares closed higher Wednesday, with investors appearing to be unfazed by the outage or the potential financial ramifications. With shares down on Thursday, investors may be considering what the Verizon outage could mean for earnings and customer retention.
Investors and analysts will be closely following the stock heading into earnings and hoping that guidance provides a clear picture of the financial impact of the outage.
VZ Stock Price
Verizon stock is down 1.3% to $39.30 on Thursday versus a 52-week trading range of $10.60 to $47.36.
Photo: Shutterstock
