Earlier this month, Wall Street Journal published a report that looked into the problematic use of led-covered cables by big telecom companies like AT&T and Verizon. The report found that these cables are highly toxic and have been contaminating soil across the United States.
The report had a serious impact on AT&T and Verizon stocks, sending them on a downward trajectory in the past week. The investors seem to be cautious about potential legal actions against the companies as well as lack of clarity about how the issue will be handled.
AT&T shares have dipped 11.51% in the past five days, sinking to $13.53 on Monday. This is the lowest the company’s stock has plunged in almost 30 years.
Verizon’s stock also experienced a similar plunge. It traded at $31.46 on Monday, which is 10.50% lower compared to five days ago. The company’s shares are now the lowest they have been since 2010.
This development poses another challenge for the telecom companies, which have already been tested by the slowing wireless business and the potential entry of new challengers in the industry.
“We view this as a potential new risk factor for wireline telecom operators with legacy network assets and are therefore not surprised that the market reaction has been material,” Goldman Sachs analyst Brett Feldman wrote in his note to clients.