What’s Behind T-Mobile U.S. Stock’s Recent Rally?

by Trefis Team
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T-Mobile U.S. stock (NASDAQ: TMUS) has increased 13% in the last three months and currently trades at $149. The rally in the stock was driven due to strong Q1 2021 performance. The company reported revenues of $19.8 billion in Q1 2021. TMUS added 260,000 net new postpaid accounts and 773,000 postpaid lines during the quarter. The new account adds were twice as much as the previous quarter. T-Mobile’s customer base now stands at more than 103 million, which puts it ahead of AT&T and makes it the second largest telecom player, just behind Verizon. The deal with Sprint is helping T-Mobile register healthy subscriber growth, while also providing the company access to Sprint’s key radio frequency assets which, when combined with T-Mobile’s, will give it industry-leading 5G technology. T-Mobile’s 5G network already covers 1.6 million square miles of the U.S., more than double its next closest competitor, AT&T. T-Mobile plans to extend that network to smaller markets and rural areas, thus aiming to raise that share close to 20% in the next five years, from its level of share which is in the low teens currently.  But will TMUS’ stock continue its upward trajectory over the coming weeks, or is a correction in the stock more likely?

According to the Trefis Machine Learning Engine, which identifies trends in a company’s historical stock price data, returns for TMUS stock average more than 6% in the next three-month (63 trading days) period after experiencing a 13% rise over the previous three-month (63 trading days) period. The stock has a 79% probability of giving a positive return in the next three months. But how would these numbers change if you are interested in holding TMUS stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning to test TMUS stock chances of a rise after a fall and vice versa. You can test the chance of recovery over different time intervals of a quarter, month, or even just 1 day!

MACHINE LEARNING ENGINE – try it yourself:

IF TMUS stock moved by -5% over 5 trading days, THEN over the next 21 trading days, TMUS stock moves an average of almost 5.4 percent, with a 73% probability of a positive return.

Some Fun Scenarios, FAQs & Making Sense of TMUS Stock Movements:

Question 1: Is the average return for T-Mobile US stock higher after a drop?

Answer:

Consider two situations,

Case 1: T-Mobile US stock drops by -5% or more in a week

Case 2: T-Mobile US stock rises by 5% or more in a week

Is the average return for T-Mobile US stock higher over the subsequent month after Case 1 or Case 2?

TMUS stock fares better after Case 1, with an average return of 5.4% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 1.8% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how T-Mobile US stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer:

If you buy and hold T-Mobile US stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For TMUS stock, the returns over the next N days after a -5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:

Question 3: What about the average return after a rise if you wait for a while?

Answer:

The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks – although TMUS stock appears to be an exception to this general observation.

TMUS’s returns over the next N days after a 5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:

It’s pretty powerful to test the trend for yourself for T-Mobile US stock by changing the inputs in the charts above.

5G wireless technology is a hot trend. Which stocks should you pick? Check out our theme on 5G Stocks for details.

 

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