Stock Price Movements: A Case Study of T-Mobile

Boben, Brittany

Stock Price Movements: A Case Study of T-Mobile

Persistent URL

http://hdl.handle.net/10456/41451

Author(s)

Boben, Brittany

Date Issued

April 6, 2016

Abstract

The wireless telecommunications market is extremely competitive in the United States, with the largest providers being Verizon, AT&T, Sprint, and T-Mobile. Despite T-Mobile’s long-standing image as the poorer quality, less expensive carrier, T-Mobile has recently seen a dramatic turnaround. Over the past four years, T-Mobile’s common stock has quadrupled in value from $9.39 on January 3, 2012 to $38.95 on January 4, 2016. One might assume that T-Mobile simply reduced the number of shares in order to boost their share price; however, T-Mobile’s number of shares outstanding has increased from 535.00 million to 816.04 million from January 2012 to January 2016. This value creation of over $26.7 billion raises the question, what factors led to the increase in T-Mobile’s stock price from January 2012 to January 2016? This study is centered on the theory of shareholder wealth maximization and is undertaken as a regression analysis using panel data on the four wireless carriers. The results suggest that the following variables contributed to this stock price movement; market share, debt to equity ratio, and previous operating revenue. Though the results helped to identify variables associated with an increase in stock price, further research must be conducted in order to investigate some unexpected results.

Major

Economics

Honors

Economics, 2016

First Reader(s)

Martin, Stephanie M.