Charter Communications (CHTR): Assessing Valuation After Customer Losses and New Class Action Lawsuits

The past few weeks have been anything but quiet for Charter Communications (CHTR). After reporting its second quarter 2025 results, which highlighted larger than expected losses in internet and video customers following the end of the FCC's Affordable Connectivity Program, the company has found itself at the center of multiple class action lawsuits. These suits allege that Charter and several executives were not forthcoming about the true impact of the ACP’s termination and how it would affect customer retention and revenue. It’s a situation that raises immediate questions for investors trying to decide what to do with their stake.

The sharp reaction to the disappointing earnings was swift. Charter’s stock slid more than 18% following the announcement, capping off a year that has seen shares fall 26%. That extends a rough stretch, with the stock down 57% over five years, even as the company has managed to grow earnings. The latest pullback comes amid ongoing legal uncertainty and growing debate about Charter’s ability to regain its footing, despite some positive signals like insider buying in recent months and upcoming investor events on the calendar.

After such a dramatic downturn and with sentiment clearly shaken, the question becomes: is Charter trading at a bargain for those willing to look past near-term headwinds, or is the market simply anticipating even more pain ahead?

Most Popular Narrative: 32.9% Undervalued

The prevailing narrative points to Charter Communications as significantly undervalued. Analysts believe the company's future growth initiatives and efficiency gains present a compelling long-term opportunity, despite recent turbulence.

"Charter is leveraging its fully converged network and expanding CBRS deployment to handle increasing broadband and handset data usage efficiently, which should reduce costs and improve margins. The company is expanding its high-speed Internet offerings with multi-gigabit speeds and DOCSIS 4.0 upgrades that enhance network capabilities, supporting customer growth and improving competitive positioning."

What is fueling this bullish thesis? The narrative hints at bold margin expansion and future earnings strength. However, the underlying projections are not what you’d expect from a company facing so much market skepticism. Want to uncover which financial levers and daring assumptions underwrite this surprising valuation gap? Explore the numbers that make analysts believe Charter is primed for a powerful rebound.

Result: Fair Value of $395.75 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent competition and the aftermath of the Affordable Connectivity Program's loss could continue to put pressure on Charter's subscriber growth and revenue trajectory.

Find out about the key risks to this Charter Communications narrative.

Another View: What Does Our DCF Model Say?

Taking a different angle, our DCF model suggests Charter may be undervalued, which supports the optimistic narrative from the earlier valuation. But are these discounted cash flow assumptions too hopeful, or do they really capture the intrinsic worth driving today's price?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Charter Communications for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Charter Communications Narrative

If you see things differently or want a hands-on look at the underlying numbers, you can quickly build your own perspective in just minutes. Do it your way.

A great starting point for your Charter Communications research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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