Gravity Grounds DirecTV
Is satellite entertainment giant DirecTV set for new heights, or will the stock stay stuck in low orbit?
Sure, first-quarter results out yesterday were heartening: Subscriber growth helped DirecTV stem losses, prompting the market to push the stock up 5%. All the same, it’s hard to find a good reason to buy into DirecTV right now.
DirecTV added 505,000 net additional subscribers, ending the quarter with 14.45 million. On the surface, that’s great news. But investors expecting subscriber growth to translate into financial turnaround anytime soon may want to think again. The cost of acquiring and holding on to subscriptions remains high for DirectTV, and it’s likely to stay that way as more and more players — including cable operators and telcos — grab for slices of the couch potato marketplace.