QS Research · Michael Burry's Scion Capital analyst template · 2006
CHARTER COMMUNICATIONS, INC. /MO/ (CHTR)
As of 2026-11-09 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case +37% · downside -77% · upside +85%
The market is pricing Charter as a levered, shrinking broadband utility and it is roughly right: at 9.2x TTM EV/EBITDA (N26) the equity is the thinnest slice of a $140.46B enterprise value sitting on $108.47B of net debt (N24, N22), and every turn of multiple is worth $15.23B of equity, so at the best peer's 7.6x the equity is $7.3B (-77%) and at 5.0x-6.2x it is wiped out (S1, N13). The bull case is not a re-rate but an earnings recovery: TTM EBIT of $6.01B is $6.90B below FY2025's $12.91B (N11, S2), and if operating income merely returned to FY2025 on TTM D&A, EBITDA would be ~$22.1B and at today's 9.2x the equity would be far above today's price. What the market may be missing is the $2B annualized opex savings target over 18 months plus >$1B of Cox synergies announced 2026-11-06 (S5, S102) and $3.93B of TTM free cash flow, a 12.3% FCF yield (N17, N30). But the base case is not +30%: holding today's 9.2x reproduces today's price, and the upside needs either EBITDA recovery or an 11.0x multiple that no peer supports, so this is a watch, not a long. The downside is not -25% or better either, so it is not a short by the rule; the risk/reward is genuinely two-sided and unresolved.
Key numbers
- Share price: $118.07
- Market cap: $31.99B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $55.65B
- EV / EBITDA (TTM): 9.2x
- P/E (TTM): 23.0x
- Price / book: 2.91x
The 15 boxes
- ✓ 1. Long-form business notes
Charter sells monthly subscriptions for Internet, mobile, video and voice to residential, small business and mid-market/large business customers, plus advertising (Spectrum Reach) and regional sports/news assets; FY2025 revenue was $54.77B against $48.10B in FY2020, but revenue has been flat at $54.02B-$55.09B from FY2022 through FY2025 while capex rose from $7.42B to $11.66B. Between the two 10-Ks the company changed from a cable operator reaching "more than 31 million customers" (FY2020) to a converged broadband/mobile company with 58 million homes and businesses passed; mobile lines went from 2,375k (Dec 31, 2020) to 11,766k (Dec 31, 2025) while video fell from 16,200k to 12,605k and voice from 10,439k to 6,046k. Growth now comes from selling connectivity (Internet + mobile) per household, funding a multi-year network evolution to DOCSIS 4.0/1.8 GHz and a subsidized rural build ($7.7B spent since 2022), with the share count cut to 137.74M (FY2025) from 209.27M (FY2020).
- ✓ 2. Competitive advantage
Charter has scale and a cost advantage that shows up in the margin line — operating income of $12.91B on $54.77B revenue in FY2025 versus $8.40B on $48.10B in FY2020 — but the 10-K describes no pricing power or licence moat: AT&T and Verizon already pass 1 Gbps-capable fiber over ~27% and ~16% of the footprint respectively, video economics cannot absorb programming increases, and mobile rides on a third party's network. Revenue stopped growing in FY2025 ($54.77B vs $55.09B FY2024) while capex rose to $11.66B, so the advantage is a capital-intensive network and installed base defended by spend, not a durable toll-booth. Reported equity returns are also shaped heavily by $94.6B of debt principal and repeated buybacks.
- ✓ 3. 10-Q takeaways
Q3 2026 (three months ended September 30, 2026) revenue rose 9.1% to $14,922 million, but the entire increase came from the Cox Transactions ($1.4 billion); excluding Cox, revenue fell $118 million, and on a pro forma basis revenue was $16.5 billion, down 1.5%, with pro forma Adjusted EBITDA of $6.6 billion down 4.0%. Reported results are one-off dominated: a $6.3 billion non-cash franchise impairment pushed GAAP operating income to $(3,526) million and diluted EPS to $(20.50), while a debt-extinguishment gain sat in other income, so Adjusted EBITDA of $5,943 million (+6.9%) is the cleaner operating read. Free cash flow fell to $674 million from $1,621 million a year earlier on lower operating cash flow and an unfavorable capex-accrual swing, leverage was 3.93x, and management paired the Cox integration with a new operating model targeting $2 billion of additional annualized expense savings over 18 months.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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