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Verizon Communications Inc. is one of the world’s leading telecommunications companies that provides technology, communications, information, and entertainment products and services. The company adopted its current brand name in 2000, following the mega-merger of Bell Atlantic Corp. and GTE Corp. But Bell Atlantic itself traces its roots to 1984 when AT&T was forced to break up the Bell System by the US Department of Justice. Thus, Verizon is a descendant of one of the 1984 ‘Baby Bells’. The company is headquartered in New York City, US, and is one of the largest wireless carriers in the world as of September 2021.
A product of mergers and demergers over the years, Verizon has naturally become an active player in the M&A pool. In recent years, the company has made strategic acquisitions that have ensured Verizon achieves maximum market share and leadership position in its industry.
Its most notable acquisitions include MCI, Blue Jeans, Alltel, and TracFone Wireless. Verizon has also pursued organic growth by introducing innovative products in the market. The company is credited with playing pioneering roles in fibre-optic networks, 3G, 4G LTE, and 5G wireless networks. Verizon is also known for its impressive and emotional marketing campaign slogans such as ‘Can you hear me now?’, ‘Better Matters’, and ‘#NeverSettle’.
Verizon is the only telecommunication network listed on two US exchanges: the New York Stock Exchange and NASDAQ. Verizon started trading on the NYSE in June 2000, and on the NASDAQ in March 2010. The company’s stock trades under the ticker symbol VZ on both exchanges.
Verizon Stock History
Verizon has never implemented any stock split since 2000. The VZ stock is generally considered a defensive stock owing to the stability and predictability of Verizon’s business. This means that most Verizon investors choose the stock for capital protection, and not necessarily for exponential growth potential.
VZ stock traded at circa $50 in 2000, but it started drifting lower in mid-2001, hitting a trough at circa $25 in September 2002. It then only managed to cross above $40 in late 2007, before tumbling again to the $25-area by October 2008 following the Great Recession-inspired market downfall. The stock then picked up momentum around mid-2010, and it managed to reclaim the psychological $40-mark in December 2011. Since then, it has traded above that level and has even managed to hit a notable high of circa $62 in December 2019. Since 2020, the stock has settled firmly above $50.
Despite its not-so-impressive price performance, Verizon has been a generous and consistent dividend payer. The company has famously increased its payouts every year since 2007, maintaining a dividend yield of over 4%, which is one of the highest on Wall Street.
How to Trade Verizon Stock
Here are some of the factors to consider when trading VZ stock:
- Regulatory and Legislative issues
Verizon was birthed following regulatory pressures, and the company is still vulnerable to changes in the regulatory and legislative space. The telecoms industry is changing hard and fast, and regulation is getting tighter on issues such as data privacy and security as well as net neutrality. Regulation and legislation in the telecommunications industry can stifle innovation in the best scenario or even completely eliminate the competitive advantages of companies such as Verizon.
- New Product Rollout
Verizon operates in an industry where new product rollouts can be the difference between success and failure. The company must ensure it stays ahead in emerging technologies and trends such as video conferencing, AI, 5G, and the Internet of Things. In recent years, Verizon has particularly suffered by being late in trends, such as Unlimited Packages, that were adopted by its rivals.
Verizon faces massive competition from major rivals such as AT&T, T-Mobile, and Sprint. Competition in the industry revolves around pricing, new product rollout, speeds, nature of contracts, phone subsidies, as well as network reliability. The industry is also known for mergers and joint ventures due to its capital-intensive nature, which means that Verizon must make successful and strategic mergers to stay ahead as well as to advance further.
- Negative PR and Lawsuit
Verizon has come under criticism, such as selling confidential user information to government agencies, misleading marketing, lobbying against net neutrality, as well as the vulnerability of its security protocols. The company also attracted class action lawsuits for some of its controversial actions such as sneaking extra charges to customer bills, which have eventually cost the company a lot of money in the form of settlements. Negative headlines can particularly be a massive headwind for the VZ stock.
- Periodic Earnings Reports
Verizon releases periodic earnings reports (quarterly, semi-annual, and annual) to update shareholders on its business health and performance. Strong numbers will usually inspire higher prices, whereas weak figures can trigger lower stock prices. Some of the metrics to watch out for in Verizon earnings include revenues of key segments such as 5G, wireless and enterprise solutions.
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