That media misadventure likely distracted Verizon from countering the competitive headwinds in the wireless market. 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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