LUMN: an AI illuminating stock ? Buy ?
I first crossed path with $Lumen Technologies(LUMN)$ a while back and has documented it in a year-end post, dated 30 Dec 2023. Click here ! to read in full.
Extract from 30 Dec post:
LUMN Q3 2023 earnings.
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Revenue: $3.641 million, down -17.1% YoY and -0.5% sequentially.
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Net Loss: $78 Million, compared to a net income of +$578 million YoY.
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Adjusted EBITDA: $1.049 Billion, down -38.4% YoY and flat sequentially.
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Free Cash Flow: $43 Million, down -93.3% YoY and 57.8% sequentially.
Since then, the “comms services” sector stock has seen more downs, than ups.
However, of late, with its pivot to support AI endeavours, it looks as though this company has been given a new lease of life.
Honestly, has it really ?
Q3 2024 Earnings.
On 6 Nov 2024, LUMN announced its latest quarterly earnings.
It does not look ‘pretty’, at first glance. (see below)
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Revenue: $3.221 million, down -11.54% YoY.
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Net Loss: $148 Million, compared to a net loss of -$78 million YoY.
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Adjusted EBITDA: $889 million, down -14.3% YoY.
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Free Cash Flow: $1.18 billion, up +3110% YoY.
Despite the less-than-stellar results, LUMN fared pretty well on Wed, 06 Nov 2024 when ex-president Trump was declared winner of the 2024 presidential election.
Wednesday, 06 Nov 2024 share price
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It rose by +18.53% to close the day at $9.02 per share. (see above)
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The gain came up to about $1.41.
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Propelling the stock closer to the $10 level.
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On Fri, 8 Nov 2024, it traded as high as $9.55, intraday high.
There is no doubt that LUMN has been caught up in the euphoria that has swept through the US stock market on Wednesday, just like most of the stocks.
Are there more credible catalyst/s at play that has renewed investors’ confidence in LUMN ?
Catalysts.
On this, I turned to my next post on LUMN dated 25 Jan 2024. Click here ! for all the details. In this post, analysts estimated LUMN’s fair price to be $5.00.
On a more recent post, dated 4 Aug 2024 - click here ! for details. I believed this was the turning point for LUMN:
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Due to its timely pivot away from its legacy telecommunications businesses and into the next technology leap.
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Its ability to transform proved to be the turning point for LUMN.
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Of course, it was followed with substantial business cases, that helps to draw confidence in investors to take a chance on LUMN. (see below)
(1) Lumen Technologies + $Microsoft(MSFT)$. - July 2024
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Lumen has the network infrastructure, and digital capabilities needed to help support Azure’s mission.
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That is to create a reliable and scalable platform that supports the breadth of customer workloads.
(2) Lumen Technologies + $Amazon.com(AMZN)$ - 30 Oct 2024
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Agreed to build links between Amazon Web Services’ (cloud-computing) main data centers and smaller outposts near big cities.
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Lumen's next-generation fiber network will support AWS infrastructure across the US amid expansion of AI-driven services
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AWS generative AI technologies will transform and streamline Lumen's operations, paving the way for autonomous and dynamic networking capabilities
(3) Lumen Technologies + $Alphabet(GOOG)$ - 7 Nov 2024.
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Lumen Private Connectivity Fabric℠ will expand Google's network to support demand growth for Google Cloud's products and AI innovations.
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At the same time, the partnership with Google Cloud accelerates Lumen's digital transformation and driving innovation for billions of Google customers.
My viewpoints : (mine only)
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Currently, AI traction remains largely with early adopters eg. Mega cap companies with deep pockets to sustain the heavy AI investments required.
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As such the contracts LUMN secured are from the Magnificent 7 members, so far.
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Given the above, one possibility is that LUMN’s customer pool might be limited.
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Conversely, it could also mean LUMN still has a very long runway, as far as AI is concerned.
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Looking back, for the week beginning 04 Nov 2024, LUMN stock price has gain +38.99%, ending the week at $9.59 per share.
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I wonder if the euphoria momentum will continue to persist the following week.
On LUMN’s AI future prospect is it limiting OR is it full of opportunities even after the mega cap companies have attained AI-status ?
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Do you think LUMN could rise to the $10 price level?
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Do you think LUMN’s is a short or long term investment stock ?
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