Lumen Technologies (LUMN) shares experienced a sharp decline on Tuesday following the release of a bearish report by Kerrisdale Capital. The report, titled “AI-N’t Gonna Fix This Mess,” expressed skepticism about Lumen’s claims of an AI-powered turnaround. Kerrisdale Capital argues that Lumen’s recent contracts are merely attempts to raise capital in the face of dwindling revenue and liquidity concerns. The short seller highlights the company’s Core Business segment revenue decline of 8.6% in the latest quarter, the worst in its history.
Investors are now grappling with the implications of Kerrisdale Capital’s report. Lumen’s stock has surged over 200% in the past month, trading well above its 50-day moving average, making this drop particularly notable.
Wall Street analysts remain divided on Lumen’s prospects. Currently, no analysts have issued positive ratings, with 4 neutral and 4 negative ratings. The average 12-month price target sits at $3.64, suggesting potential downside from current levels.
It’s important to note that while the average analyst price target suggests further downside, Lumen’s year-to-date performance is up 192.6%. This underscores the volatility and uncertainty surrounding the company’s future. As with any investment decision, thorough research and careful consideration are essential.
As of Tuesday’s close, Lumen Technologies shares were down 10.5% at $5.48.
