AT&T (NYSE:T) stock reached its all-time high of $45.24 a share in January 1999. It came close to exceeding it in August of that year and again in the autumn of 2000. But the bursting of the dot-com bubble left the bulls no chance. More than 25 years later now, it trades below $17 a share, down 63% from its record, despite the recovery from $13.43 since the summer of 2023.
The story of this once-glorious company shows the dangers of participating in bubbles. The stock is trading at the levels it used to back in 1993. If it wasn’t for AT&T‘s generous dividends, that would be three completely lost decades for investors. Even the longest of time horizons cannot help if you let animal spirits dictate your investment decisions.
That being said, what was crazy at $45 makes a lot more sense near $15. AT&T has reduced its debt load by over $24B since 2020, trades at less than 8 times its expected 2024 earnings and offers a 6.6% dividend yield. Besides, the stock is finally showing some material upside potential.
The monthly chart reveals that the bull market, which culminated in the 1999 bubble peak, has been followed by a textbook corrective pattern. It is marked as a simple A-B-C zigzag, where wave A is a regular impulse, while wave C is an ending diagonal. They are both labeled 1-2-3-4-5, but differ significantly in shape. Another a-b-c retracement in wave B unfolded in between.
According to the Elliott Wave theory, once a correction is over, the preceding trend resumes. If this count is correct, we can expect a meaningful long-term recovery in AT&T. A bullish RSI divergence between the lows of wave C supports the positive outlook. After a quarter of a century in the doldrums, the stock seems ready to finally start rewarding investors with something more than a juicy dividend.