Key Highlights

  • Optimum Communications closed at $0.99 after announcing network upgrades offering speeds up to 2 Gbps in Lake Charles.
  • The company, formerly known as Altice USA, did not report any broader financial news alongside the announcement.
  • Stocks trading below $1 a share can see large percentage moves on relatively small dollar changes and limited news.
  • Rival Cable One fell the same day after extending a deadline on a separate pending acquisition.

Optimum Communications shares jumped on Monday, Oct. 5, after the cable and broadband provider highlighted network upgrades and community investments in Lake Charles, Louisiana.

The Announcement

Optimum Communications (NYSE:OPTU) jumped on Monday, Oct. 5, closing at $0.99 and landing among the gainers on the Russell 2000. The move followed the company's announcement of network upgrades in Lake Charles, Louisiana, offering internet speeds of up to 2 Gbps, along with community investments in the area.

The company, formerly known as Altice USA, did not report any broader financial news alongside the announcement.

What Optimum Does

Optimum Communications provides broadband internet, video, mobile and phone services to homes and businesses in parts of the US, under the Optimum brand. Like other cable operators, it has been investing to upgrade its networks so it can offer faster speeds and compete with fiber providers and fixed wireless services from mobile carriers.

Network upgrades such as the one in Lake Charles are part of that push. Faster speeds can help cable companies hold on to customers and attract new ones in markets where competition is rising.

At $0.99, Optimum trades below $1 a share. Stocks at that level can post large moves on relatively small dollar changes, which makes them prone to sharp swings in both directions. A local network announcement would not usually move a large company's stock much, but at this share price, even modest buying can stand out. No other company filing or announcement was found to explain the size of Monday's move, and thinly traded, low-priced stocks can swing sharply on limited news.

A Tough Backdrop for Cable

The wider cable group had its own news on Monday. Cable One (NYSE:CABO) fell after it extended its deadline to buy the remaining stake in Mega Broadband Investments Holdings to Oct. 9 while financing talks continue. Cable One said no definitive agreements had been reached, and that financing discussions and confidentiality arrangements with certain other potential investors had ended.

Interest rates are a major Factor for cable operators, which typically carry significant Debt to fund their networks. Friday's weak September jobs report, which showed payrolls rising by just 29,000, cut bets on another Fed rate hike in October. But long-term borrowing costs kept rising, with the 10-year Treasury Yield climbing to its highest level since 2002.

The Market Backdrop

Communication services was the top sector at midday, led by Meta Platforms (NASDAQ:META). The Russell 2000 rose 14.24 points to 2,847.14. The Nasdaq Composite climbed 286.45 points to a record 27,477.31, the S&P 500 rose 51.23 points to 7,773.95, just shy of its summer record, and the Dow added 90.94 points to 51,267.90.

The ISM services survey showed prices paid at their highest since July 2022, a reminder that Inflation pressure remains a concern for policymakers. Oil slipped, with Brent settling at $100.32.

What to Watch Next

For Optimum, the next Quarterly Report will show whether network upgrades are helping it hold or add broadband customers, the key measure for cable operators. Updates on where else the company is rolling out faster speeds will also be in focus.

On the macro calendar, the Fed releases minutes of its September meeting on Wednesday, Oct. 7, at 2 p.m. ET, and the Fed meets Oct. 27-28. For Optimum, Cable One's Oct. 9 deadline for its Mega Broadband purchase may be the more relevant date to watch across the cable group.