Verizon Falls Nearly 8% at Open to Five-Month Low as Joint Venture Expected to Cause Up to $800M Q2 Loss
Alina Collins
Verizon fell nearly 8% to $43.07 Monday morning, hit by a double blow — its removal from the Dow Jones Industrial Average and an accounting-loss warning tied to a new joint venture with BT Group.
Why did it drop nearly 8% in a single session?
Two events landed on the same day: Verizon was officially removed from the Dow Jones Industrial Average, and the details of its joint venture with BT Group were confirmed.
This means → every index fund tracking the Dow must sell Verizon. That creates a wave of mechanical, passive selling pressure unrelated to the company's fundamentals.
The JV's accounting-loss warning (see below) gave active investors an additional reason to sell. The two forces stacked, pushing the stock to a five-month low.
What is this joint venture?
Verizon and BT Group agreed to merge their international enterprise businesses into a JV with combined annual revenue of roughly $4 billion and equal voting rights.
Verizon will also pay BT a $625 million "equalization payment." In plain terms = the two sides are contributing assets of different sizes, so Verizon pays cash to close the gap.
The deal still requires regulatory approval and has not yet been finalized.
Where does the $700–800 million loss come from?
Verizon expects the deal to produce a $700–800 million accounting loss in Q2.
In plain terms = this is not an operating cash loss. The business assets being injected into the JV must be reclassified as "held for sale" — an accounting label meaning they are about to change hands — and revalued, which generates a paper loss.
This means → the hit is a one-time accounting entry that does not affect Verizon's day-to-day cash flow, but the quarterly earnings report will look ugly.
The Dow reshuffle — who's in, who's out?
On the same day Verizon was removed, Alphabet (Google's parent) officially joined the Dow, rising over 3% to $348 — a stark contrast to Verizon's slide.
Alphabet's weight in the Dow is roughly 4%, below its ~6% in the S&P 500 and ~8% in the Nasdaq 100.
This reflects how the Dow works as a price-weighted index: higher-priced stocks carry more weight, and with only 30 components the weighting logic differs sharply from market-cap-weighted indexes.
What to watch next?
Near term: when the passive selling pressure finishes — index-fund rebalancing typically concentrates within a few trading days around the effective date.
Medium term: whether the JV clears regulatory approval, and whether the promised synergies in international enterprise services actually materialize afterward.
This means → the current sell-off is driven by two one-time events stacking up, but the long-term value test for this deal is whether the JV delivers real benefits once approved.
Content is for reference only, not financial advice.