TLDR
- T-Mobile stock fell 7.96% to $241.30 on Friday, Open post-earnings, despite beating Q1 2025 estimates.
- Net income rose to $2.95 billion, or $2.58 per share, topping the $2.45 analyst forecast.
- Total revenue increased to $20.89 billion, led by postpaid service gains and subscriber growth.
- Adjusted EBITDA rose 8% year-over-year to $8.26 billion.
- The CEO warned tariffs could raise phone prices, potentially slowing upgrades and sales.
T-Mobile US (NASDAQ: TMUS) reported robust Q1 2025 earnings on Thursday, yet the stock dropped sharply by 7.96% to $241.30 in early trading Friday. This came despite a solid earnings beat, as the company posted net income of $2.95 billion or $2.58 per share—above the consensus estimate of $2.45.
Revenue also beat expectations, reaching $20.89 billion compared to the $20.58 billion estimate. Year-over-year, revenue rose from $19.59 billion, reflecting growth in both total and service segments.
Subscriber Growth and Profitability Push EBITDA Higher
T-Mobile’s customer momentum remained strong. Postpaid service revenue rose to $13.59 billion from $12.63 billion, indicating solid customer additions and retention. Total service revenue reached $16.93 billion, up from $16.10 billion last year.
The company’s adjusted EBITDA rose to $8.26 billion, compared to $7.65 billion a year ago, demonstrating effective cost control and margin expansion. Core adjusted EBITDA also showed similar growth, reinforcing the company’s stable operating structure.
Stock Performance and Long-Term Strength
Despite the post-earnings drop, T-Mobile remains one of the top performers in the telecom sector. The stock is up 19.18% year-to-date and has returned 61.94% over the past year. Over three and five years, TMUS has gained 108.43% and 195.27%, respectively, far outperforming the S&P 500.
The sharp drop after earnings may be tied to profit-taking, lack of forward guidance, or concerns about upcoming tariffs. CEO Mike Sievert noted that if new smartphone tariffs are imposed, the cost burden will fall on consumers, likely slowing upgrade rates and potentially impacting future revenue streams.
Tariff Risk Clouds Forward Outlook
While T-Mobile has yet to issue a full-year 2025 forecast, concerns about possible U.S. tariffs on imported smartphones linger. CEO Sievert emphasized that price increases would be passed to consumers, which could dampen smartphone replacement cycles. This uncertainty may explain the sharp stock pullback despite strong Q1 metrics.
Outlook
T-Mobile’s strong Q1, driven by service revenue growth and customer retention, affirms its leadership in U.S. telecom. However, the lack of guidance and geopolitical uncertainty may keep the stock volatile in the near term. Analysts and investors will watch closely for any signals regarding tariff impacts and future subscriber trends in upcoming quarters.
