Lumen Technologies, Inc. (NYSE: LUMN) is experiencing a surge in its stock prices during today’s trading session. As of 3:15 p.m. ET, the telecommunications company’s stock has risen by an impressive 17.5%, based on data from S&P Global Market Intelligence.
Lumen’s Partnership with Tech Giants
The excitement surrounding Lumen’s stock can be attributed to two major developments. Firstly, the company announced a partnership yesterday with tech giants Microsoft and Google’s Alphabet division. The collaboration revolves around a new network interconnection system called ExaSwitch. This innovative system enables the efficient routing of internet traffic between networks, eliminating the need for third-party services.
Lumen’s Chief Technology Officer, Andrew Dugan, believes that this collaboration represents the future of network interconnections, allowing for the deployment of network capacity across all types of data traffic exchanges. The market has responded positively to this promising partnership.
Lumen Benefits from Low Inflation Rates
Secondly, Lumen has received positive news on the inflation front. The latest Consumer Price Index (CPI) data indicates that inflation has risen by a mere 0.1% sequentially and 4% year over year. This moderation in inflationary pressures alleviates the need for the Federal Reserve to raise interest rates. For Lumen, this news is particularly beneficial as the company carries a significant amount of debt. The reduced pressure to raise interest rates brings relief to the telecom company.
Lumen’s Stock Shows Potential for Significant Growth Amid Turnaround Efforts
Lumen is currently undergoing a substantial transformation initiative, shifting its focus from copper-wire based services to those built on higher-performance fiber optics. In addition, the company is exploring the potential of edge computing and managed network services as integral components of its turnaround strategy. The introduction of ExaSwitch marks a promising advancement in this direction. However, despite these positive developments, the market remains somewhat pessimistic about Lumen’s comeback.
Despite today’s impressive rally, Lumen’s stock has experienced a year-to-date decline of approximately 59%. Presently valued at less than 15% of its expected sales for the year, there is considerable potential for Lumen’s stock to rise significantly if the company can achieve substantial progress in its turnaround efforts.