Why Lumen Stock Is Sinking Today

Lumen (NYSE: LUMN) stock is slipping in Friday's trading despite a better-than-expected quarterly report. The company's share price was down 4.9% as 3 p.m. ET. The stock had been down as much as 21.3% near the market open.

Lumen issued its third-quarter report after the market closed yesterday and posted stronger-than-expected sales and earnings. The company also reiterated its full-year guidance, but the stock is still seeing a pullback today.

Image source: Getty Images.

Lumen stock sinks despite Q3 beats

Lumen recorded a non-GAAP (adjusted) loss of $0.20 per share on revenue of $3.09 billion in the third quarter. Meanwhile, the average Wall Street analyst estimate had called for an adjusted per-share loss of $0.27 on sales of $3.04 billion.

Revenue was down 4% year over year in the period, but the company has continued to make progress in centering networking technologies and services for artificial intelligence (AI) as the new core of its business. This strategy has fueled a major comeback for Lumen stock, and its share price is up 82.5% year to date even with today's pullback.

What's next for Lumen?

For the full year, Lumen continues to expect that adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) will come in between $3.2 billion and $3.4 billion. Free cash flow for the year is projected to be between $1.2 billion and $1.4 billion.

While the company confirmed its previously issued guidance, some investors were hoping for Lumen to raise its forecast in light of recent AI-related deals. Revenue from the company's private-connectivity-fabric services may some time to show up, but it's clear that the company is scoring some big wins with demand connected to artificial intelligence.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.