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The 5G rollout is underway and picking up speed.
It promises to increase mobile data speed far beyond that of 4G. This will bring a fundamental change in our lives and potentially open the door to endless opportunities. From faster connectivity speed to ultra-low latency and tremendous bandwidth, the new technology has the power to advance society. It will transform industries and enhance users’ daily experiences.
Do you remember the dream of 2010? E-health, connected vehicles, traffic systems, and advanced mobile gaming? All of those futuristic services are moving within reach with 5G.
But it’s not plain sailing, as cutting-edge tech inevitably raises new challenges. Let’s take a look at recent developments and possible ways they could affect 5G stock prices.
The New Tech and the US Airport Puzzle
In December 2021 AT&T and Verizon decided to postpone the expansion of their 5G services. The reason behind this sudden move turned was the US airlines flagging a possible delay in thousands of flights. This was due to the new technology’s effect on US planes.
The FAA warned about possible interference with several different systems. Airlines for America expressed concern about the operation of altimeters. The concern was that the new technology could affect a pilot’s ability to land safely in inclement weather. It could slow down the plane while landing, which could result in the plane veering off the runway.
With that, AT&T and Verizon had to delay 5G rollout twice. A temporary compromise followed that placed a two-mile buffer zone around airports. However, that’s not a practical solution for the long term, since significant populations live and work in that area.
Yet the 5G Rollout Continues
In 2021, there was significant progress in the spread of 5G tech. In fact, by the end of 2022 industry watchers expect its reach to double.
By late November 2021, 170 mobile companies had launched commercial 5G networks around the world, reaching 7% of the world’s population. The maps below show the US and Europe both possess widely distributed 5G networks.
Image source: https://www.speedtest.net/ookla-5g-map
Image source: https://www.speedtest.net/ookla-5g-map
In the US, telecommunication companies are ready for the 5G rollout this year. Once AT&T launches 5G+ in 8 metropolitan cities, they expect to extend it to 40 cities. They will then be covering approximately 75 million customers as the year rolls around. That’s a huge chunk of the population with access to 5G network services. On top of all that, the US market is likely to gain a boost with the arrival of 5G entrant Dish, which says its commercial 5G service will go live early in 2022.
But the biggest 5G rollout winner so far in 2022 is Verizon.
Verizon Capitalizing on 5G Adoption Gains
2021 turned out to be a poor year for Verizon, with share prices declining. But the chance of progress in 2022 with a 5G rollout is very much in the cards. As noted by Livy Investment Research, “Stepping into the New Year, Verizon has been on a steady reversal of said losses by capitalizing on the growing 5G momentum.”
With its service of 5G Ultra Wideband on the high-band mmWave spectrum, for ultra-high-speed connections which are ten times faster than 4G LTE, Verizon has what it takes in terms of 5G services. Its 5G Ultra Wideband rollout is on track to meet its goal of covering over 100 million customers in more than 1,700 US cities by the end of the first quarter of 2022.
The progress of 5G nationwide is fairly strong. This is especially true if we take a look at the number of US cities that already have the service. More than 2,700 cities in the US have taken their leap into this new technology.
Verizon has been rapidly gaining market share by attracting switches to its unlimited 5G subscription plans. In recent quarters, the company has reported strong results.
Since the launch of the 5G Nationwide network back in 2020, Verizon has converted more than a quarter of its consumer phone base to 5G-enabled devices. Moreover, 70% of them are already compatible with the C-Band spectrum.
5G Stocks Rollout Exposes 5G Stocks to Buy
If 2022 ends up becoming the year of widescale 5G adoption, it will directly affect the 5G stocks in the market.
Market watchers expect all types of 5G stocks, including 5G network stocks, semiconductor chip stocks, and 5G infrastructure stocks, to benefit. So while there may be hiccups and challenges on the way, there is still room for confidence in the future of this technology and its entire ecosystem of components, companies, suppliers, manufacturers, consumers and use-cases surrounding it.
For current performance and holdings, please visit defianceetfs.com/FIVG
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Fund holdings and sector allocations can change at any time. You should not consider these to be recommendations to buy or sell any security.
Consider the Funds’ investment objectives, risks, charges, and expenses carefully before investing. The prospectus contains this and other important information about the investment company. Please read carefully before investing. You can request a hard copy of prospectuses by calling 833.333.9383.
Investing involves risk. Principal loss is possible. Also as an ETF, the funds may trade at a premium or discount to NAV. Shares of any ETF are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. The Funds are not actively managed and would not sell a security due to current or projected under performance unless that security is removed from the Index or such action is required upon a reconstitution of the Index. A portfolio concentrated in a single industry or country may be subject to a higher degree of risk.
The value of stocks of information technology companies are particularly vulnerable to rapid changes in technology product cycles, rapid product obsolescence, government regulation, and competition. The Funds are considered to be non-diversified. Therefore, they may invest more of its assets in the securities of a single issuer or a smaller number of issuers. Investments in foreign securities involve certain risks including risk of loss due to foreign currency fluctuations or to political or economic instability. This risk is magnified in emerging markets. Small and mid-cap companies are subject to greater and more unpredictable price changes than securities of large-cap companies.
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The possible applications of 5G technologies are only in the exploration stages. The possibility of returns is uncertain and may not be realized in the near future.
The “BlueStar 5G Communications Index™,” “BFIVGTR™ Index” (collectively “5G Communications Index”), is the exclusive property and a trademark of BlueStar Global Investors LLC d/b/a BlueStar Indexes® and has been licensed for use for certain purposes by Defiance ETFs LLC. Products based on the Global 5G Communications Index* are not sponsored, endorsed, sold, or promoted by BlueStar Global Investors, LLC or BlueStar Indexes®, and BlueStar Global Investors, LLC, and BlueStar Indexes® makes no representation regarding the advisability of trading in such product(s). It is not possible to invest directly in an index.
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The Defiance Next Gen Connectivity ETF is the first ETF to emphasize securities whose products and services are predominantly tied to the development of 5G networking and communication technologies. The fund does this by tracking The BlueStar 5G Communications Index. The Fund attempts to invest all, or substantially all, of its assets in the component securities that make up the Index.
Total return represents changes to the NAV and accounts for distributions from the fund.
Median 30 Day Spread is a calculation of Fund’s median bid-ask spread, expressed as a percentage rounded to the nearest hundredth. The calculation identifies the Fund’s national best bid and national best offer as of the end of each 10-second interval during each trading day of the last 30 calendar days. Then it divides the difference between each such bid and offer by the midpoint of the national best bid and national best offer. Finally, it identifies the median of those values.
Diversification does not ensure a profit nor protect against loss in a declining market.
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Go to defianceetfs.com/fivg to read more about FIVG including current performance and holdings information. Fund holdings are subject to change. You should not consider these holdings as recommendations to buy or sell any securities.
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