AT&T Inc. (T) experienced contrasting market reactions this week, with its stock edging lower following a cautious investor response to a refreshed co-branded credit card program with Citigroup, before rising after reporting better-than-expected first-quarter earnings for 2026.
The initial dip came as AT&T and Citigroup unveiled updates to the AT&T Points Plus World Mastercard. The revamp introduced a revised rewards framework, eliminated foreign transaction fees, and maintained a no-annual-fee structure. A central feature continues to be monthly bill reductions, allowing eligible users to unlock up to $240 annually in statement credits. Despite these enhancements aimed at improving customer retention and spending, analysts noted the core rewards structure remained largely unchanged, leading to a muted market response. AT&T shares traded around $26.14, reflecting mild downside pressure and mixed investor sentiment on whether the incremental changes would boost long-term growth.
The update also highlights intensifying competition in the telecom credit card space, particularly against Verizon’s more aggressive Synchrony-backed rewards card, which offers higher cashback rates on everyday spending. This divergence underscores differing telecom loyalty strategies: AT&T's focus on ecosystem lock-in versus Verizon's appeal to broader lifestyle spending.
The narrative shifted positively with AT&T's Q1 2026 earnings release. The company posted adjusted earnings per share (EPS) of $0.57, beating the consensus estimate of $0.55. Revenue reached $31.5 billion, a 2.9% year-over-year increase and above the $31.25 billion estimate. A key driver was subscriber growth, with postpaid phone net additions of 294,000 topping analyst expectations of around 270,000. The stock responded with a 0.8% gain.
AT&T's bundling strategy showed strength, with 42% to 45% of home internet customers also subscribing to a wireless plan. The company added 584,000 total internet subscribers, split evenly between fiber and fixed wireless. The newly reported Advanced Connectivity segment, covering domestic 5G and fiber, saw service revenue grow 3.6% year-over-year to $22.9 billion, with operating income jumping 14.8% to $6.9 billion.
CEO John Stankey called it the "best first quarter ever for Advanced Connectivity internet customer net additions." The company reaffirmed its full-year 2026 guidance, including adjusted EPS of $2.25 to $2.35 and free cash flow of at least $18 billion, while maintaining a plan to repurchase approximately $8 billion in stock.
