What Happened?
Shares of telecommunications infrastructure company Lumen Technologies (NYSE: LUMN) jumped 4.7% in the afternoon session after the company announced it has surpassed 1,000 customers on its Network-as-a-Service (NaaS) platform, a major milestone since the service's launch. The Network-as-a-Service (NaaS) platform, which launched in late 2023, allows business customers like Best Buy, Foot Locker, and Columbia Sportswear to digitally manage and scale their network connectivity on demand. This milestone follows a recent second-quarter earnings report where Lumen posted a much narrower-than-expected loss per share of $0.03, significantly beating the consensus forecast of a $0.25 loss. During the earnings call, the company had highlighted strong growth in NaaS adoption. Adding to the positive sentiment, the company's CEO recently purchased over $500,000 worth of company stock, signaling strong internal confidence.
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What Is The Market Telling Us
Lumen’s shares are extremely volatile and have had 49 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was about 24 hours ago when the stock gained 4.3% on the news that a key inflation report met expectations, bolstering hopes for a Federal Reserve interest rate cut, while a separate report indicated rising optimism among small businesses.
The July Consumer Price Index (CPI) report showed annual inflation holding steady at 2.7%, aligning with forecasts and increasing the probability of a Federal Reserve interest rate cut to over 94%. Lower interest rates can stimulate the economy by making it cheaper for businesses to borrow and invest. Further boosting confidence, the National Federation of Independent Business (NFIB) Small Business Optimism Index rose to a five-month high. This is a crucial indicator for the Business Services sector, as many of its companies cater to small and medium-sized enterprises. The combined positive data fueled a broad, "risk-on" sentiment, where investors favor economically sensitive sectors, leading to gains across IT services, staffing, and manufacturing.
Lumen is down 24.7% since the beginning of the year, and at $4.23 per share, it is trading 58.3% below its 52-week high of $10.12 from November 2024. Investors who bought $1,000 worth of Lumen’s shares 5 years ago would now be looking at an investment worth $389.40.
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