It failed to turn the two struggling companies around or integrate them into its broader ecosystem and eventually sold them both for just $5 billion in 2021. Verizon's ill-fated expansion into the digital media market - through its acquisitions of AOL for $4.4 billion in 2015 and Yahoo for $4.5 billion in 2017 - exacerbated that pressure. Lastly, the telecom industry faced persistent macro challenges - including the pandemic, inflation, and soaring interest rates - over the past eight years. T-Mobile, which merged with Sprint in 2020, built a larger 5G network than both Verizon and AT&T by using lower-band spectrums covering wider areas. Second, Verizon faced intense competition from T-Mobile (NASDAQ: TMUS) and AT&T (NYSE: T) in the wireless market. First, the smartphone market matured and consumers upgraded their devices less frequently. Verizon's top-line growth slowed to a crawl for three main reasons.
Its adjusted earnings per share (EPS) increased at a CAGR of 6.4%. A decade of anemic growthīetween 20, Verizon's annual revenue only rose from $127.1 billion to $136.8 billion, representing an anemic compound annual growth rate (CAGR) of 0.9%. Let's see why Verizon underperformed the market by such a wide margin - and whether it will ever recover. To put that into perspective, a $1,000 investment in an S&P 500 index fund with reinvested dividends would have blossomed to $2,730 today.
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