How to Buy Sprint (S) Stock

T-Mobile (NASDAQ: TMUS), the third-largest U.S. wireless provider, was approved by the U.S. Justice Department to proceed with their $26.5 billion bid to buy Sprint (NYSE: S), the fourth largest U.S. wireless company on July 26, 2019. You should be familiar with telecommunication stocks and know some of the terms of that deal before you decide to buy Sprint stock. 

Main Takeaways: Buying Sprint Stock

• Step 1: Pick a broker. We recommend Webull, TD Ameritrade and Interactive Brokers.
• Step 2: Open a demo account. Trading with virtual money will get you ready to using your real brokerage account with real money.
• Step 3: Fund your account. You'll need to deposit money via check, wire transfer or another acceptable deposit method.
• Step 4: Buy Sprint (NYSE: S) stock.

Sprint's Company History and Stock Performance

Unlike other telephone and wireless providers that were originally part of AT&T stock before its breakup in the 1980s, Kansas-based Sprint’s history begins in 1899 with Brown Telephone and the Southern Pacific Railroad. Together, the two companies installed an extensive, private microwave communications system for the railroad and formed United Telephone and Electric in 1925. 

That network proved extremely efficient, and the railroad began offering its service to private customers in the mid-1970s. Sprint stands for Southern Pacific Railroad Internal Networking Telephony, and the company was one of AT&T’s first competitors in the long distance telephony market.

GTE acquired the company in 1983 and renamed to GTE Sprint Communications. It reorganized in 1992 and was renamed Sprint Corp. A deal with MCI Worldcom fell through after regulators ruled against the merger in January 2002. In 2005, Sprint merged with Nextel Communications, which began a spate of acquisitions including Virgin Mobile, Northern PCS and iPCS. 

In 2012, Japanese telecommunications firm Softbank bought a 70% stake in Sprint and increased it  to 80% by 2013. After canceling merger talks in April 2018, T-Mobile and Sprint resumed negotiations, and the U.S. Department of Justice approved the merger just over a year later.

Sprint stock 5-year price chart with volume and earnings releases below. Source: TradingView.

This deal would create a viable third-place competitor to industry leaders Verizon and AT&T. Approval from the FCC and the California Public Utilities Commission is still pending. Adding to the merger resistance, Texas recently joined the over dozen states named in the lawsuit.   

Sprint stock reached its all-time high price of $65.49 in 1999, which was long before Worldcom’s generous bid was denied by regulators in 2002. More recently, Sprint stock traded under $2.00 per share in December 2008 during the financial crisis, and it has traded in a range between $2.12 - $11.40 per share over the last 5 years. 

When T-Mobile merger was first proposed over a year ago in April, it valued Sprint at $6.62 per share. Sprint stock is currently trading at $6.71 after trading up to its yearly high of $8.06 per share on July 26, 2019. 

The company reported 2019 fiscal first quarter earnings on August 2, 2019. Adjusted earnings per share (EPS) came to a loss of -0.03 per share versus a +0.04 profit in 2018’s first quarter. Nevertheless, revenues increased +0.2% year on year to $8.1 billion. 

According to the merger deal worked out by the Justice Department, both companies agreed to divest Sprint’s prepaid businesses, including Boost Mobile, to Dish Network (NASDAQ: DISH), a satellite television firm. Sprint would also provide Dish with access to over 20,000 cell sites, as well as hundreds of retail locations. That deal with Dish is worth approximately $5 billion. 

The 14 states who filed (California, Colorado, Connecticut, District of Columbia, Hawaii, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Nevada, Texas, Virginia, and Wisconsin) alleges the merger will hurt wireless consumers by decreasing competition. Those states have asked the court to postpone the October trial date to December 2019. The states claim that Sprint and T-Mobile failed to disclose the details of their settlement with the Justice Department due in June. 

Analysts think that the merger won’t happen until the first quarter of 2020. Critics of the deal say the horizontal merger offers no additional benefits to existing clients, and it only serves to concentrate power into fewer hands that ultimately gives consumers less choices and forces them to pay higher prices. 

If the states prevail and the merger deal falls through next year, Sprint stock could sell off initially. On the other hand, if the states lose and the merger proceeds, then holding Sprint stock would make sense as you would then receive T-Mobile stock at a discount given current pricing.

Sprint 14-year graph of quarterly and trailing twelve month net income and year-on-year quarterly net income growth. Source: Macrotrends.

Why You Might Want to Buy Spring Stock

As a near- or medium-term range trade: Stocks tend to trade around the bid price when they are the subjects of a merger or takeover offer. Since Sprint stock will probably trade around the price of T-Mobile stock divided by 9.75 at least the end of the year, this means you could take a short term position in the stock, preferably buying near a support level and then aiming to sell it for a profit ahead of a resistance level.   

To obtain TMUS stock through the merger: At current prices, you would receive TMUS stock at a 17% discount if the deal went through immediately, although this doesn’t mean stock prices won’t change before the merger. Given current price levels in both stocks, Sprint stock looks like the stock to be long if you think the merger will go through. 

As a long-term investment if the merger fails: If T-Mobile fails to buy Sprint, then Sprint has a chance to attract another suitor and new merger speculation could drive the price of Sprint stock even higher. While this scenario is a possibility, many analysts expect Sprint stock to sell off sharply if the merger fails. 

Considerations Before You Buy

Economic, stock market downturn - Despite its defensive qualities as a telecommunications stock that should find support in declining market, Sprint stock has traded under $2.00 per share in recent memory during the 2008 global financial crisis. A decent chance then exists that Sprint stock could sell off significantly during a broader stock market drop and an accompanying economic downturn.

Merger falls through: Due to the T-Mobile offer, Sprint stock has retained most of its value since last year when the merger offer was made. If the deal fails, then Sprint stock could sell off. 

Lost money in the last quarter: After several quarters of positive earnings, the latest earnings report showed Sprint lost -$0.03 per share. The company also began losing subscribers, with a net loss of 128,000 subscribers during the first quarter of 2019. If the latest numbers signal a future trend toward lower earnings, then Sprint’s outlook may not support its current stock price.  

How You Can Buy Sprint Stock Right Now

You can buy Sprint stock right now if you’ve already opened a brokerage account with a broker that has access to New York Stock Exchange (NYSE) traded stocks. If you don’t already have an account with a stockbroker, then you can choose a reputable online broker that will let you access NYSE stocks so you can buy Sprint stock. Remember, how you buy Sprint stock is just as important as where you trade, so make sure you pick the right broker.

Best Online Stock Brokers

Does Sprint Have a Place in Your Portfolio?

With Sprint stock trading at its current level and T-Mobile stock 10 points higher than when the deal was struck, you probably have a good chance of making a profit if the merger takes place. You would probably have to wait until at least the end of the year to see a profit on your shares though. 

For short term traders, Sprint stock presents an opportunity since it has increasingly well-defined levels of support and resistance that offers an advantageous range. 

If you don’t think that the merger will take place, then you might want to sell the stock short now or wait until after the results of the trial or a ruling from a judge blocking the merger. You’ll see lower levels at which to buy Sprint stock than its current level of roughly $6 per share. 

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