PreMarket Prep Stock Of The Day: AT&T Spins Out

If you are surprised by the announcement of a dividend cut and the spinoff of WarnerMedia by AT&T T, you shouldn't be. It was announced on May 17, 2021, and the Street did not take a liking to it.

The investor reaction to the “old news” makes AT&T Tuesday's PreMarket Prep Stock of the Day.

AT&T Punished: Not taking a liking to the transactions is an understatement. The issue's price the day prior to the May announcement ($32.24) to its 12-year low ($22.02) in December represents a decline of 32%.

The S&P 500 index has added 8.5% over that same period of time.

Recent AT&T Price Action: AT&T was able to post a solid rebound off the multiyear low. On Jan. 19, it peaked at $27.48 and posted its highest close for the rebound the day prior at $27.31.

It was attempting to remain near the $27 area when it was slammed off its mixed fourth-quarter report. The day following the report it bottomed at $23.56, and AT&T ended Monday’s session at $25.50.

PreMarket Prep's Take On AT&T: When the issue was being covered on the show it was trading at the $24 area. Co-host Dennis Dick was amazed that investors were dumping the issue off the news when it had been previously known for several months.

“This market remembers absolutely nothing,” he said. “There are many issues that I would like to buy on a dip and this is not one of them.”

The author of this article, who is long shares of the issue, alerted investors to the recent low at ($23.56), but cautioned that with the way AT&T was trading in the premarket, buyers would have to step to a higher price to get long or cover a short in the issue in Tuesday’s session.

Also, if the issue attempted to rally, there may be resistance at the bottom of Monday’s range ($24.69).

The full discussion on the issue from Tuesday’s show can be found here:

T Price Action: After a much lower open, ($24.19 vs. $25.50), AT&T immediately bottomed at $24.12 and began to rally. The rally has stalled at $24.60 and is now trading actively in the $24.45 area ahead of the close.