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Charter Communications · CHTR · NASDAQ

Charter operates the second-largest US cable network — 58 million broadband-passing homes under the Spectrum brand — earning roughly 89% of its $54.8B revenue from monthly subscription fees across 32 million internet, mobile, video and voice customer relationships.

$140
Price (May 15, 2026)
$17.7B
Market cap
$54.8B
Revenue (FY2025)
31.8M
Customer relationships
Re-listed December 2009 after Chapter 11 at ~$36; ran to $821 by August 2021; round-tripped through $409 in mid-2025 to $140 today.
2 · The tension

A 25% FCF yield meets the first negative residential ARPU print in twenty-plus years

  • The cash is real. At $140 the stock trades at ~4× FCF on FY2025's $32.07 per share, 5.3× EV/EBITDA, a 25% FCF yield. The 39.5% EBITDA margin leads the peer set.
  • The franchise just got tested. Q1 2026 residential ARPU printed −1.4% YoY — the first negative reading in 20+ years — alongside the eighth straight quarter of Internet sub losses (−120K). The bull case rests on installed-base pricing power; this is the data point that puts it in question.
  • The leverage offers no buffer. $96B of debt against $17.7B of equity; net debt 4.4× EBITDA before Cox adds $12.6B of assumed debt. A 15-20% EBITDA decline pushes leverage past 5×, which historically triggers a buyback pause and disables the per-share compounding the equity is being asked to wait for.
Bear says Cable One; bull says cyclical print at the trough. The 25% FCF yield is meaningful if the franchise holds price — and a value trap if it doesn't.
3 · The ARPU break — regime or reallocation?

$171M of the Q1 ARPU drag was a disclosed accounting reclass, not a price cut

  • The headline. Q1 residential ARPU went −1.4% YoY despite a 4-5% spring rate-card lift. Bears call it the Cable One signature — both legs of cable rent (volume and price) negative at once. JPMorgan cut its target from $400 to $215 the next day; stock closed down 25.5% on ~7.7× normal volume — the largest single-day decline since CHTR's 2009 relisting.
  • The fine print. Per the Q1 release, $218M of Q1 2026 video revenue was reallocated to programmer streaming apps versus $47M Q1 2025 — a $171M optical drag worth roughly 80-100 bps of residential ARPU. The regime change headline absorbs an accounting reclass before it touches base pricing.
  • The insider read. CEO Winfrey bought 10,445 shares for ~$1.8M at $172-174 on April 28 and 30; Director Wade Davis bought $995K at $173.72 on April 28. First open-market insider purchases through a 50%+ drawdown, at prices 25% above today's close.
Q2 2026 ARPU on July 24 is the resolving print. If it backs out the reclass and prints flat-to-modestly-negative, the bear's single most-quoted data point loses its weight inside 60 days.
4 · The arithmetic that doesn't need ARPU

A 33% mechanical share retirement and a finite capex hump do most of the bull-case work

53%
Diluted share count retired 2016 → FY2025 (269M → 127M)
41.5M
More shares retiring on Cox close Liberty all-stock deal, no cash out
14%
Post-2027 capex/revenue target 21.3% today; $11.7B FY2025 capex
$50+
FY2028 FCF/share target $32 in FY2025; $50 peak FY2021

Charter retired 53% of its diluted share count between 2016 and FY2025 while operating margin expanded from 8.5% to 23.6%. The Liberty Broadband all-stock combination retires another 41.5M shares — roughly a third of the float — on Cox close, with no cash leaving the company, while capex steps down as DOCSIS 4.0 and rural buildouts finish by end-2027. The arithmetic gets to $50+ FCF per share by FY2028 without any subscriber or ARPU recovery, provided the deals close and the network-evolution timeline holds (it has slipped twice).

5 · The 90-day calendar

Three dated events stack into a 60-day window that addresses the underwriting question

  • July 16 (target) / Aug 13 (fallback) — California PUC ruling on Cox. California is the last regulatory gate. The DOJ HSR clearance expires September 15; a slip past August 13 forces a refile and pushes Cox plus the Liberty 41.5M-share retirement into 2027.
  • July 24 — Q2 2026 earnings. The single biggest near-term print. Consensus is implicitly looking for ARPU at roughly −0.5% and Internet net losses narrower than −100K. The options-implied move is 8-10% on the day.
  • By September 15 — Cox close window. Trigger event for the Liberty 41.5M-share retirement, the buyback restart, and the pro-forma diluted share count moving toward ~95M before Cox dilution.
Three resolutions in 60 days. The underwriting case does not have to wait 18 months for evidence to accumulate.
6 · Bull & Bear

Watchlist — the 25% FCF yield is real, but wait for one more ARPU print

  • For. At 4× P/FCF on a 39.5%-EBITDA-margin franchise, a 33% mechanical share retirement on Cox close, and a capex bridge whose post-cycle endpoint is visible at Comcast (9.5% capex/rev, 17.7% FCF margin), the bull math does not require subscriber or ARPU recovery — only that the two deals close.
  • For. Credit prices BBB- normal credit (bonds 6.87-7.15% on 10-30y maturities); equity prices distress at 25% FCF yield. CEO and a director put $2.8M of personal cash to work at $172-174 in the days after the Q1 sell-off.
  • Against. The first negative residential ARPU in 20+ years arrived alongside the eighth straight quarter of Internet sub losses. The Cable One playbook is exactly that signature — both legs of cable rent turning at once — and Cable One's EBITDA margin collapsed from the high-30s to 8.7% inside three years.
  • Against. With $96B of debt at 4.4× leverage and Cox set to push pro-forma above the stated 4.5× ceiling, a 15-20% EBITDA decline triggers a buyback pause. The per-share compounding mechanic the bull case rests on disables exactly when it would be most needed; the FY25 FCF beat already leaned $669M on OBBBA tax timing plus $398M on mobile-device working capital.
View — the cost of waiting one quarter is low because the FCF yield does not evaporate overnight. Lean long on a Q2 ARPU print at −0.5% or better plus FY26 capex tracking under $11.4B; lean short on a second print at −1% or worse with sub losses widening past −150K.

Watchlist to re-rate: Q2 2026 residential ARPU YoY and Internet net adds (July 24). California PUC ruling on Cox (July 16 / August 13 backstop). Cox and Liberty Broadband close before the September 15 DOJ deadline. FY2026 capex tracking versus the $11.4B guide.