Lumen Technologies (LUMN) Stock Surges 29% After CEO Buys $500K in Shares

TLDR

• Lumen Technologies (LUMN) stock surged 29.2% Friday after CEO Kate Johnson purchased $500,000 worth of shares following a post-earnings selloff.
• Johnson bought 78,685 shares at $6.35 per share on Thursday, increasing her holdings by 6.8% after the stock dropped 17% following earnings.
• Fourth-quarter earnings beat expectations but revenue only met forecasts, with full-year free cash flow guidance of $1.2 billion to $1.4 billion including tax refunds.
• The company sold its consumer fiber business to AT&T for $4.8 billion, reducing debt to 3.8 times EBITDA, though revenue and profits continue declining overall.
• Lumen’s growth products now represent 47% of enterprise revenue and grew 7% last year, while total revenue fell 9.5% due to legacy product declines.

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Lumen Technologies stock jumped 29.2% Friday in a dramatic reversal after CEO Kate Johnson bought half a million dollars worth of shares. The purchase came just one day after the stock crashed following the company’s earnings release.

Lumen Technologies, Inc., LUMN

Johnson executed the trade Thursday, buying 78,685 shares at an average price of $6.35 per share. The timing proved opportune as shares rebounded sharply the next day.

The stock had fallen roughly 17% Wednesday after Lumen released fourth-quarter results Tuesday afternoon. While earnings beat analyst expectations, revenue only met forecasts.

The insider purchase increased Johnson’s direct and indirect holdings by about 6.8%. For a CEO, spending $500,000 of personal funds sends a clear signal of confidence.

Earnings Miss Sparks Selloff

Lumen’s fourth-quarter adjusted earnings per share came in ahead of Wall Street estimates. Revenue matched expectations but failed to impress investors looking for upside surprises.

Management issued full-year free cash flow guidance of $1.2 billion to $1.4 billion. That figure includes $300 million to $450 million in tax refunds that won’t recur in future years.

The company continues to face revenue and adjusted EBITDA declines. Legacy products make up a large portion of the business, and demand for these older services keeps falling.

The growth story lies in Lumen’s newer products. Management estimates roughly 47% of enterprise revenue now comes from newer offerings.

This growth segment expanded 7% last year. That gain couldn’t offset declines in legacy products, which dragged overall revenue down 9.5%.

Debt Reduction Progress

Lumen recently closed a major deal that reshaped its balance sheet. The company sold its consumer fiber-to-the-home business to AT&T for $4.8 billion.

That transaction allowed Lumen to pay down a chunk of its debt load. The company now carries debt at just under 3.8 times EBITDA.

While lower than recent years, the debt level still isn’t what most investors would call comfortable. Lumen refocused entirely on enterprise customers after shedding the consumer business.

The stock trades at 6.4 times this year’s free cash flow guidance. That valuation looks cheap on paper for a company with positive cash generation.

Investors seem hesitant to assign a higher multiple until revenue and profits start growing again. The company needs to prove its turnaround strategy can actually reverse declining top-line numbers.

Johnson’s bet on her own stock suggests she believes that inflection point is coming. Her AI-oriented networking solutions need to gain traction in the marketplace for the turnaround to work.

Shares closed at $8.06 Friday after the massive rally. The stock still trades well below its 52-week high of $11.95 but far above its $3.01 low from earlier this year.

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