Can T-Mobile Reach New All-Time Highs After Q1 Earnings?

Communications giant T-Mobile US, Inc. (TMUS) is expected to report its first-quarter earnings post-market closing on Thursday (April 25th) and its stock is currently trading in the vicinity of the all-time high of $168.84 it made on March 7th.

The consensus among analysts on the Street is that the company would be reporting EPS (normalized) of $1.91 for the quarter, which will be a significant 30% jump from the $1.46 in EPS it reported for the same quarter last year.

However, in the past 90 days, all the 9 analysts who cover the stock have lowered their EPS guidance for Q1. This hasn’t affected the stock price much but has definitely impacted sentiments going into earnings.

When T-Mobile reported Q42023 results in January, it missed EPS estimates by $0.13. Despite it reporting a revenue beat and a growth in subscribers for that quarter, its shares tanked the next day. So, what’s going to happen this time around? Let’s see what the charts have to say.

 

Consistent growth over the years

T-Mobile’s long-term monthly charts show exactly what the company has achieved over the years – consistent growth. It has been the best-performing telecom stock for more than a decade now. The stock, which in June 2012, was trading below $8 has since then generated a twentyfold return as it currently trades near its all-time highs at $163.25.

(Click on image to enlarge)

TMUS chart by TradingView

 

The stock did take a large beating between July 2021 and January 2022, but it rebounded quickly. Although it has gone nowhere over the past four months, the mere fact that it hasn’t fallen during this time shows that there is still strength remaining in the stock to march upward, which is good news for long-term shareholders.

But, can the stock now break upward from this range and can Q1 earnings act as a catalyst? For that, we will need to take a look at short-term charts.

 

The floor at $158.8

T-Mobile’s short-term 1-hour charts show that over the past four months, the stock has established solid support at $158.8. Every time the stock has fallen over these months, buying emerges at that level.

TMUS chart by TradingView

Another interesting thing to note in the chart is the emerging head and shoulder pattern. This is not a good thing for short-term bulls or people looking to enter the stock at current levels because usually if a head and shoulder pattern forms and the low, which in this case is $158.8, gets taken away, the stock can have a quick and drastic fall from there.

So, going into earnings, the best strategy for traders wanting to go long at current levels is to place an extremely tight stop loss a few cents below $158.8. Additionally, for extra protection, they can also buy T-Mobile’s $160 Put option expiring on April 6 for under $1.

Traders who want to short the stock must wait before it falls below $158.8. If it does, they can take short positions with a stop-loss at $168.84.


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