Cable Operator WideOpenWest Shares Tumble: What's Going On?

WideOpenWest Inc WOW shares are trading lower by over 55% after the company reported worse-than-expected third-quarter (Q3) FY23 results. 

Following earnings, Keybanc Capital Markets analyst Brandon Nispel downgraded the stock to Sector Weight from Overweight.

The Denver-based company reported revenue of $173.1 million, missing the consensus of $173.4 million, and EPS loss stood at $(1.29) vs. consensus of EPS of 1 cent.

The company pulled FY24 guidance, citing "significant" declines in legacy high-speed data (HSD) customers due to several factors and a slowdown in gross additions from the timing of Expansion delivery, writes the analyst.

Nispel now expects HSD losses of -11.1K (from +10K) in Q4 FY23 and expects legacy losses to offset Expansion subscriber growth going forward.

Also, the analyst sees FY24 HSD net additions of -1K, down from +19K, and a cash burn with declining liquidity.

The analyst projects the combination of no subscriber growth and now anticipates EBITDA growth in 2024.

Nispel lowered estimates for revenue to $171.4 million (from $176.7 million, vs. $175.6 million estimate) for Q4, $689.3 million (from $694.7 million vs. $693.8 million est.) for FY23, and $655 million (from $703.4 million vs. $688.9 million cons.) for FY25. 

Adjusted EBITDA estimate is lowered to $71.1 million (from $79.9 million) for Q4, $275.3 million (from $286 million) for FY23 and $273.7 million (from $324.4 million) for FY24.

Price Action: WOW shares are down 57.7% at $3.13 on the last check Thursday.