Why Is LUMN Stock Down Despite Q4 Earnings Beating Wall Street Estimates?

• For fiscal year 2026, the company now expects adjusted core profit of $3.1 billion to $3.3 billion, below an analyst estimate of $3.37 billion.
• The company also said on Tuesday that it exceeded its cost reduction targets, ending the year with over $400 million in run-rate savings.
• A company executive clarified during a post-earnings call that it is no longer required to borrow money to fund its operations.

Shares of Lumen Technologies (LUMN) fell 4% after-hours on Tuesday on the heels of the company reporting a deep drop in fourth-quarter (Q4) revenue, although earnings beat Wall Street expectations.

The telecommunications company reported Q4 revenue of $3.041 billion, down from the $3.3 billion reported in the corresponding quarter of 2024 and marginally below an analyst estimate of $3.043 billion, according to data from Fiscal AI.

The company reported diluted earnings per share excluding special items of $0.23, compared to $0.09 in the corresponding quarter of 2024. Analysts on average were expecting the company to report loss per share of 23 cents.

Outlook

For fiscal year 2026, the company expects adjusted core profit of $3.1 billion to $3.3 billion, below an analyst estimate of $3.37 billion.

Earlier this week, Lumen announced that it has completed the sale of its Mass Markets fiber-to-the-home business in 11 states, including Quantum Fiber, to AT&T (T) for $5.75 billion in cash as it seeks to focus on its stronger segments. The company used $4.8 billion of the proceeds to reduce its debt.

“The combination of a solid fourth quarter and the close of the AT&T transaction marks a defining moment for Lumen and strengthens our foundation for growth,” said Lumen CEO Kate Johnson.

Cost Cutting Efforts

Lumen said on Tuesday that it exceeded its cost reduction targets, ending the year with over $400 million in run-rate savings. The company is on track to deliver $700 million of cost savings in 2026 and $1 billion exiting 2027.

A company executive also clarified during the company’s post-earnings call that it is no longer required to borrow money to fund its operations.

“We have excess cash over the five years, and we'll get into specifics on that,” they said. “Our objective is to, one, fully fund our growth initiative and our transition of the company, and that is fully funded in that model. You know, the second thing would be to continue to reduce leverage a little bit, and after that, if there's nothing that achieves those first two objectives, then we'll look to start buying back stock.”

How Did Stocktwits Users React?

On Stocktwits, retail sentiment around LUMN stock rose from ‘bullish’ to ‘extremely bullish’ territory over the past 24 hours, while message volume increased from ‘high’ to ‘extremely high’ levels.

A Stocktwits user said that the earnings doesn’t change the company’s long-term story but they are still disappointed by the 2026 guidance.

LUMN stock has gained 74% over the past 12 months. 

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