LUMN an AI Rocket or next Super Micro $SMCI ?

My last post on $Lumen Technologies(LUMN)$ was just 4 days ago, published on Sun, 04 Aug 2024. Click here ! to read about it and repost ok.

When LUMN closed on Fri, 02 Aug 2024 it was $3.07 per share.

Since then, its stock price has exploded due to forward pricing of the company’s recent business potentials, cover in my Sunday pick post.

On Wed, 07 Aug 2024 when US market “opened high and ended low”, LUMN was able to:

  • Power higher to close at $6.63 per share; a +32.6% higher than Tuesday $5.00 closing.

  • Shaked off its weak Q2 2024 earnings results.

  • Revealed more billion-dollar business prospects are in discussions.

The sudden surged in its stock price has led Baron’s to question whether (a) LUMN is an AI rocket or (b) the next $SUPER MICRO COMPUTER INC(SMCI)$ ? (see below)

Preface.

LUMN recent rally is mainly because of a deal with $Microsoft(MSFT)$ using LUMN's network for data centers.

Short sellers who have bet against the stock had to buy it back quickly (to cover the shortfall), pushing the price up even more.

Most of the LUMN buyers are ordinary people, not big investors.

This looks similar to what happened with SMCI, but there's a big difference.

SMCI is profitable, while Lumen is still losing money.

Q2 2024 Earnings.

On Tue, 06 Aug 2024, LUMN announced its quarterly earnings.

  • Revenue: came in at $3.27 billion, that is a -10.73% YoY loss.

  • Earnings per share (EPS) adjusted: -$0.05 per share, that is a +99.44% YoY gain.

  • Net income: was -$49 million, a +99.44% YoY gain.

  • Net margin: came in at -1.5%, that’s a +99.37% YoY improvement.

2024 Full Year Outlook.

Lumen shares rallied in after-hours trade after the firm sharply increased its free cash flow forecast for the full year of 2024.

As indicated in bold below, FCF is up to $1.2 billion. (see below)

The Pivot.

Lumen is trying to change its business to focus on data centers.

It has a deal with Microsoft worth about $5 billion over the next few years.

According to Moffett Nathanson, Analyst Nick Del Deo :

  • The MSFT-LUMN deal will only make a small amount of money for Lumen at first.

  • Lumen also has a lot of debt and is losing cash.

  • To do well, Lumen needs more deals like the Microsoft contract.

  • It needs to cut costs too.

  • Until then, the stock price could be too high.

  • People who bought the stock early might want to sell now to make a profit.

Technical Analysis.

Above is the 1-day “old” technical analysis summary.

  • Overall consensus is a “Buy”.

  • Technical analysis consensus is a “Sell”. Give past 3 of 4 quarters were negative, this is expected.

  • Moving averages consensus is a “Strong Buy”, given its recent rally.

My viewpoints: (mine only)

In the past 5 days, LUMN has risen by +111.79% to $5.57 per share.

It peaked at $8.04, on 06 Aug 2024 and experienced pull backed for the past two days.

During the post earnings conference, LUMN CEO Kathleen Johnson has shared:

  1. First, movement enterprise operational turnaround is progressing well with continued sales momentum across our growth portfolio and further improvement in customer satisfaction.

  2. Lumen has been anointed as the trusted network for AI by some of the most important technology companies on earth with over $5 billion in major partnerships in to date and visibility to nearly $7 billion more in opportunities, we see the market for Lumen's private connectivity fabric as providing a major positive momentum shift for this company.

  3. Given our success in forging these partnerships, we're seeing a significant improvement in our overall liquidity profile further securing our ability to transform the company and pivot to growth.

Granted that most post earning conferences try to be positive. Now it's time for investor to decide: Do you keep LUMN stock (with conviction) or sell it to make a profit ?

Must ReadClick on below titles to access. Give a like & help to repost ok. Thanks.

  • Do you think LUMN will be able to secure more billion-dollar contracts within next 4 months ?

  • Do you think past 2 days of pullback will be over soon or will it persists ?

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Comment18

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  • vippy
    ·08-14
    TOP

    Getting ready to drop again. The average price is $3.15, but the gap that needs to be filled is $2.50

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    • JC888
      Hi, tks for reading my post and sharing yr views. I think LUMN needs another contract announcement to help brk thru the resistant le el of $6...Fingers crossed....
      08-19
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  • wigglyz
    ·08-14
    TOP

    A lot of accumulating going on. Strong bounce to $6 up next. Squeeezeeee

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    • JC888
      Hi, tks for reading my post. Hope u liked it. All that is reqd now is just one gd contract signed. Hope that will help break the $6 ceiling.... Fingers crossed...
      08-16
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  • wubbie
    ·08-14
    TOP

    LUMN tried to sustain a dead-mouse bounce to regain $5.00 level

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    • JC888
      Hi, tks for reading my post and sharing your view, very important. Here's hoping $Lumen Technologies(LUMN)$ will cont'd to stay above $6 and break the $7 resistant level... Yay!!!
      08-24
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  • bubblyx
    ·08-14
    TOP

    Strongly believe that we will touch $9 EoW

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    • JC888
      Hi, tks for reading my post. And sharing your view. Hope the $9 price level will happen in mid Sep...
      08-30
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  • Taurus Pink
    ·08-12
    TOP
    [龇牙] [龇牙] [龇牙] [龇牙]
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    • JC888
      Hi, tks for reading my post. Happy that you liked it. Hope LUMN can zoom back to previous high or higher.... Yay....
      08-22
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  • Ri1110
    ·08-13
    TOP
    recently pull back is painful for investors
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    • JC888
      Hi, tks for reading my post. I share the same sentiments. Hope that $Lumen Technologies(LUMN)$ is the croakoach of US stock - - hit it as hard as you may, but it always comes bouncing back, stronger than ever.... Hahaha
      08-14
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  • happygo
    ·08-14
    TOP

    Looks like rotation back to mag7 chip stocks

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    • JC888
      Hi, tks for sharing yr views.. Latest Mag 7 seemed to be a mixed bag performance and little breakthrough.... Can't wait for a breakthrough for all 7 stocks... Hee hee
      08-30
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  • JC888
    ·08-13
    It's a humbling experience when the lucky charm stock seems to be losing it's lustre.

    Is it really.?

    The mkt did it becos it's the week of inflation report again....

    Help to Repost & share so that more Tiger readers will know about Lumen Technologies... Tks

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  • Exciting momentum
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    • JC888
      Hi, tks for reading my post.
      Yes, it's an Exciting time for LUMN.
      If the prospect can be converted into sales and propel profits further, $Lumen Technologies(LUMN)$ will definitely soar higher..
      Exciting indeed!
      08-12
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  • JC888
    ·08-12
    Hi, tks for reading my post. I make time to write & share.
    Pls "Re-post" so that more get to know. Tks! Rating is important (to me).
    Consider "Follow me" and get first hand read of my Daily new posts? Thanks!). Tks!
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