Lumen CEO buys nearly $1 million in stock after historic selloff

By Emily Bary

Lumen's stock has shed 91% over the past two years and saw its sharpest one-day percentage decline on record Wednesday

Lumen Technologies Inc. shares sold off sharply in the wake of earnings, but the telecommunication company's chief executive has been buying.

CEO Kate Johnson scooped up 1 million Lumen shares (LUMN) Thursday at an average price of 97 cents, spending $970,000 on the purchase, according to a filing with the Securities and Exchange Commission released Friday.

Johnson's buying spree came on the heels of a historic selloff in Lumen shares Wednesday, as the stock fell 32.9% to 98 cents and clinched its largest single-day percentage decline on record. Shares touched as low as 78 cents in Thursday's session, the day of Johnson's purchasing, though they ended that session at $1.06 and then moved higher Friday as well, to close the week at $1.12.

After buying the latest batch of stock, Johnson now owns over 5.1 million Lumen shares directly, according to Friday's filing.

"Kate's decision to purchase shares speaks to her confidence in the long-term potential of Lumen and her commitment to our success," a Lumen spokesperson said in a statement.

Johnson took over as Lumen's CEO about a year ago and has been tasked with steering a turnaround for the company, which provides networking, cloud storage and more. Shares have tumbled 81% over the past year and 91% over the past two years.

The company, once known as CenturyLink, announced a new credit agreement earlier this week and disclosed that it planned to scale back fiber investments and headcount.

Analysts still aren't sold on the company's attempt at a transition.

"Although we like the improved liquidity position and effort to invest and return to growth at Lumen, we expect continued pressure on fundamentals in 2023 and 2024 due to multiple years of under-investing in the Enterprise asset base and rising competition from fiber overbuilders, [fixed-wireless access], and cable to pressure mass-market revenue at the same time as Lumen has scaled back on its build," JPMorgan's Philip Cusick wrote Wednesday.

He rates the stock at underweight, saying that he's "skeptical on shares as revenue declines continue, leverage inches higher, and the company attempts to execute an unproven and very capital-intensive strategy."

MoffettNathanson's Nick Del Deo was similarly cautious in light of revenue pressures seen again in the latest quarter. "Net net, it's the top line that strikes us as most important: Absent better top-line performance, it's hard to make the rest of the model work," he wrote late Tuesday, while sticking with his sell rating and $1 target.

-Emily Bary

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11-04-23 1526ET

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