Verizon falls 8.75% after SpaceX buys spectrum

Verizon shares closed down 8.75% on Friday, marking the company's worst trading day since July 2002. The selloff followed an announcement from Elon Musk's SpaceX, which agreed to purchase a nationwide spectrum portfolio to expand its Starlink internet service into mobile communications.

Telecommunications stocks broadly declined on the news. T-Mobile shares dropped 13.27%, representing its worst performance since 2013, while AT&T fell 9.81%, its steepest drop since 2000. In contrast, SpaceX stock climbed approximately 1% for the day.

The acquisition involves purchasing spectrum from Grain Management. In a statement released Thursday, SpaceX described the asset as a license portfolio of up to 14 megahertz of paired spectrum in the 800 MHz band.

Brendan Carr, the FCC Chair, said his agency will oversee the approval of the deal. Speaking in a CNBC interview, Carr characterized the increased competition in the spectrum market as good news for American consumers. He noted that the FCC expects to bring over $100 billion of spectrum into the market over the next two years, creating significant competitive pressure.

Carr stated that market participants will likely attempt to out-compete and out-innovate one another. He added that it is not the role of the FCC to pick winners or losers in these transactions.

Analysts at Evercore ISI wrote that SpaceX now has the outline of a real network alongside its existing satellite capabilities. JPMorgan analysts stated that the acquisition makes Starlink Mobile's long-term opportunity more credible. However, they cautioned that they continue to see limited near-term risk to U.S. wireless incumbents, citing the time, infrastructure, and capital required to build a competitive terrestrial network.