American Tower Stock Climbs 7% as SpaceX Wireless Ambitions Raise Hopes for a Big New Tenant Ahead of Earnings

NEW YORK — American Tower shares rose nearly 7% in early trading Friday. A report that SpaceX is seeking access to at least 80,000 U.S. cell sites lifted the world's largest independent tower owner ahead of its quarterly results next week.

The Boston-based real estate investment trust gained $12.46 to $194.07, adding several billion dollars to its market value, which now stands at about $93 billion. Before Friday, the stock was down about 5% over the past 12 months.

Bloomberg News reported Thursday that SpaceX is negotiating to lease space on tens of thousands of towers as part of a plan to become a fourth nationwide wireless carrier. The report said the deals could be worth billions of dollars and that SpaceX has started talks with major tower operators.

Big exposure to U.S. carriers

American Tower owns about 149,700 communications sites worldwide, including more than 41,000 in the U.S. and Canada, according to its most recent annual filing. AT&T, Verizon and T-Mobile account for about 85% of its revenue in those two countries.

A new national tenant would come at a useful time. The big carriers have been cautious about network spending, and Verizon has cut its planned investment.

Carriers fell on the report as investors weighed the threat of a well-funded new competitor. Verizon, AT&T and T-Mobile each dropped more than 3% in extended trading Thursday. Rival tower owners Crown Castle and SBA Communications rallied with American Tower.

Second SpaceX boost this month

This is the second time in October that SpaceX has moved tower stocks. On Oct. 9, American Tower rose 7.7% to $179.51 after SpaceX agreed to pay about $8 billion for a nationwide block of 800-megahertz spectrum from private equity firm Grain Management.

Low-band airwaves travel far and pass through walls, making them well suited to a cellular network on the ground. Musk said at the time that the spectrum would complete the company's coverage plans.

"This is the last critical piece of the spectrum puzzle needed for SpaceX to provide complete phone coverage in America," Musk said.

Bernstein analysts said then that the purchase was "keeping the terrestrial network build option very much alive." They noted that buying spectrum is not a commitment to lease more towers.

Analysts mostly positive

Earlier this month, Bernstein lowered its American Tower price target to $212 from $214 and kept an Outperform rating. The firm said higher borrowing costs could slow growth in adjusted funds from operations per share over the next few years, but that SpaceX could become a new nationwide customer.

All 25 analysts covering the stock rate it Buy or Hold, according to Koyfin data, with an average price target of about $216.

Morningstar analyst Michael Hodel said this week that he prefers internationally diversified tower owners such as American Tower and SBA Communications over U.S.-focused Crown Castle, because of their broader growth opportunities.

Earnings next week

American Tower is scheduled to report third-quarter results Oct. 27. Analysts expect revenue of about $2.7 billion.

Investors are likely to press CEO Steven Vondran and his team about any talks with SpaceX. They will also look for updates on U.S. leasing activity, interest costs and the company's CoreSite data center business, which has benefited from demand tied to AI computing.

Crown Castle's CEO, Chris Hillabrant, gave a hint of how tower executives may answer such questions. Asked on his company's earnings call Wednesday about SpaceX and other satellite companies, he said: "You can assume that we're talking to all parties."

What it means

SpaceX has not announced any tower leases or committed to building a full ground network. Some analysts say better satellite technology could reduce how many towers such a network would need.

Still, a customer seeking access to 80,000 sites would be one of the largest new sources of demand the U.S. tower industry has seen in years. American Tower's large U.S. footprint makes it one of the most likely beneficiaries if a deal goes ahead.

Before Friday's move, American Tower shares were up just over 3% this year. Higher interest rates have weighed on the stock, because they raise borrowing costs and make dividend-paying real estate investment trusts less attractive compared with bonds.