SBA Communications Stock Surges 9% as SpaceX Cell Site Talks Ignite Fresh Rally Across Wireless Tower Stocks

NEW YORK — SBA Communications shares rose nearly 9% in early trading Friday. Wireless tower stocks rallied after a report that SpaceX is looking to secure access to at least 80,000 U.S. cell sites for a planned nationwide mobile network.

The Boca Raton, Florida-based tower owner gained $15.34 to $193.73, recovering from a sharp drop earlier in the week. The stock fell 4.2% to $173.41 on Wednesday and was still down about 10% over the past 12 months before Friday's move.

Bloomberg News reported Thursday that SpaceX is negotiating leases on tens of thousands of towers as part of its plan to become a fourth U.S. wireless carrier, in deals that could be worth billions of dollars. Crown Castle was named among the operators in direct talks, and American Tower was also involved. SBA was not named, but investors bought its shares on the view that a project of that size would need towers from every major owner.

Sector-wide move

The report lifted tower owners and hit the carriers that rent their space. Crown Castle rose more than 12% early Friday and American Tower gained nearly 7%. Verizon, AT&T and T-Mobile each fell more than 3% in extended trading Thursday on concerns about a new well-funded rival.

Crown Castle's CEO, Chris Hillabrant, said on his company's earnings call Wednesday that talks were under way with all potential customers.

"I don't think I want to get into a customer-specific detail, but you can assume that we're talking to all parties," he said when asked about SpaceX and other satellite companies.

Echo of earlier rally

The move followed an earlier rally this month. On Oct. 9, SBA shares rose 7.3% to $182.49 after SpaceX agreed to buy a nationwide portfolio of 800-megahertz spectrum from private equity firm Grain Management for about $8 billion in cash.

That deal raised the possibility that SpaceX, best known for its Starlink satellite service, could build a land-based network that would need tower space. KeyBanc called the spectrum purchase a positive for tower operators.

Bernstein analysts said the deal was "keeping the terrestrial network build option very much alive," while noting that buying spectrum does not commit SpaceX to leasing more towers.

Bounce from lows

The rally adds to a sharp rebound for SBA. The stock hit a 52-week low of $156.60 on Oct. 5, about 30% below its April high of $224.46. Rising interest rates have pressured tower real estate investment trusts, which borrow heavily to fund their operations and pay dividends.

Analysts have stayed positive. Raymond James raised its price target to $271 from $264 earlier this month. The average analyst target is about $233, well above where the stock traded even after Friday's gain.

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

Diversified footprint

SBA owns and operates wireless infrastructure in the U.S., Canada, Central and South America, and South Africa. Like its peers, it earns most of its revenue by leasing tower space to wireless carriers under long-term contracts.

That business has faced headwinds. Carriers have slowed network spending, and some leases have been lost to industry consolidation. A large new customer could help offset those pressures. However, SpaceX has not announced any tower agreements and has not committed to a full ground network.

Earnings ahead

SBA is expected to report third-quarter results in early November. Analysts surveyed by Zacks expect funds from operations of $3.12 per share, down 5.5% from a year earlier, on revenue of about $727 million.

Investors are likely to focus on whether management discusses SpaceX directly. They will also watch for updates on leasing trends, refinancing costs and the company's dividend. SBA currently pays an annual dividend of $4.86 per share.

Friday's move made SBA one of the stronger gainers in the S&P 500 on a day when broader markets were weighed down by concerns about AI spending and rising oil prices.