Lumen Technologies: Recovery Potential or Another Downturn Ahead?

Lumen Technologies Inc. (LUMN) delivered another challenging quarter, with weakness in revenue, profitability, and cash flow. Structural industry headwinds, competitive pricing, and sluggish consumer broadband growth drove these declines. The company is responding with strategic moves, including the sale of its consumer fibre business and aggressive debt refinancing. However, the technical indicators show the stock trading near historic lows, signalling the risk of broader consolidation.

This article reviews Lumen’s financial and technical performance to assess the stock’s next move. The analysis finds that the price action remains uncertain near 50-year lows, as the market waits for a clear directional breakout.

Lumen Technologies Q2 2025: Financial Highlights and Key Trends

Revenue Drop Highlights Industry Pressures and Market Shifts

Lumen Technologies posted weaker revenue in Q2 2025 earnings. The revenue has dropped 5.4% year-over-year to $3.092 billion. This decline is pressured by continued softness in mass markets and $46 million in one-time RDOF givebacks.

The chart below clearly shows that Lumen Technologies’ quarterly revenue has been on a persistent decline since its peak in the late 2010s. The revenue hit nearly $6 billion, but has dropped to $3.09 billion in Q2 2025. This drop represents an almost 50% decline from peak levels.

This sustained contraction reflects structural headwinds: declining legacy telecom revenues, competitive pressures in enterprise services, and underperformance in consumer broadband. The trajectory suggests that Lumen’s traditional business lines are shrinking faster than new growth initiatives can offset.

This declining trend explains why Lumen is selling its consumer fibre business to AT&T Inc. (T). The company’s management is shedding lower-margin, slower-growth assets to focus on enterprise and infrastructure services.

Profitability Weakens Amid Impairments and Debt Burden

On the other hand, the adjusted EBITDA declined to $877 million from $1.01 billion, reflecting lower sales and margin compression. Moreover, the net income for Q2 2025 was $(915) million, which was driven by a $628 million non-cash goodwill impairment tied to the mass markets divestiture.

The chart below shows the net income for Lumen and paints a challenging profitability picture that complements the revenue decline.

The company began experiencing deeper negative swings starting in 2018, reflecting rising costs, restructuring charges, and legacy revenue erosion. The most severe drop occurred in 2023, when net income plunged below –$8 billion, primarily tied to substantial impairment charges and restructuring expenses. These extreme losses show that operational profitability has been inconsistent and heavily impacted by one-time charges.

Moreover, the cash flow trends were mixed. The operating cash flow improved to $570 million from $511 million, aided by better working capital management. However, free cash flow remained negative at $(209) million, reflecting elevated restructuring and transformation costs.

Strategic Moves Aim to Support Future Recovery

Lumen announced the sale of its consumer fibre business to AT&T for $5.75 billion, refocusing the company on enterprise services. The management also raised its 2025 exit run-rate cost-reduction target to $350 million. This positions the company at the upper end of its full-year EBITDA guidance.

These actions aim to create a leaner, more competitive structure with the capacity to reinvest in growth. The next test will be closing the AT&T deal and converting cost savings into sustainable positive free cash flow.

Lumen’s $2 billion First Lien Notes issuance, an upsized deal from the initial $1.25 billion plan, signals aggressive debt restructuring. By redeeming high-cost 11% and 10.75% notes due in 2029 and 2030, the company will substantially lower annual interest expense. This reduction directly improves cash flow, which may be considered a credit-positive catalyst. The stronger debt service metrics boost market confidence for a company with persistent losses and heavy leverage.

Lumen’s Long-Term Technical Breakdown and Recovery Prospects

From Parabolic Rise to Prolonged Decline

Lumen Technologies shows strong price uncertainty and volatility, as seen in the quarterly chart below. The price surged from lows of around $1 during the 1970s to a high of $50 in 2007 in a parabolic move. This stock price surge was due to strong growth momentum and expanding telecom demand.

The company benefited from industry deregulation, which opened new markets and boosted competition-driven expansion. Moreover, the rising adoption of the internet and broadband services fueled revenue and profit growth. Additionally, strategic acquisitions strengthened its market position and broadened its service portfolio.

However, after peaking in 2007, the stock entered a prolonged bearish phase, forming a downtrend pattern between 1998 and 2016. A break below the $22 area in 2017 triggered a sharp decline and produced a strong sell signal.

This drop intensified bearish pressure and eventually drove the stock to a 50-year low. After marking a low near this historic level in 2024, the stock rebounded briefly but formed a bearish hammer in Q4 2024. This bearish hammer signals selling pressure at the resistance.

The price history reveals significant risk and persistent uncertainty. The stock has effectively erased nearly four decades of gains, returning to levels not seen since its early trading history. However, with the price now near historic lows, a strong rebound from these levels may develop. The intensity of this rebound will determine the next move in Lumen stocks.

Lumen Monthly Chart Signals Ongoing Weakness but Hints of Stabilisation

To understand this long-term price action, the monthly chart below shows the formation of an M-type top. After this pattern emerged, the stock price continued to decline, eventually breaking below the $22 area.

Following the break, the stock traded within a descending channel and reached resistance near the $10 region in 2024. After hitting this resistance, the price has been consolidating at lower levels, searching for its next direction.

The RSI has also broken below the 50 level, signalling further downside potential for Lumen’s stock. However, based on the current price structure, Lumen Technologies may be attempting to stabilise and strengthen over the longer term. This setup positions Lumen as a low-level, high-risk stock, with strong potential for recovery.

Lumen Weekly Chart Points to Critical Resistance Levels

The weekly chart shows that the stock price has been consolidating at lower levels, showing negative price action below the $4.50 area. A break above $4.50 would indicate potential for the stock to move higher toward the $10 level. However, a break below the $3 region could trigger a further drop toward the $1.80 level.

Since the stock price reached its 50-year low in 2024, it presents a potential opportunity for long-term investors to consider buying for future growth. While the short-term trend may remain weak, the long-term outlook could improve if the company strengthens its fundamentals.

Market Risks

Lumen faces sustained revenue pressure from structural industry shifts. As a result, its legacy telecom services are losing market share to newer technologies, eroding the company’s traditional revenue base. Furthermore, competitive pricing in enterprise services and slow growth in consumer broadband add to the challenge of top-line recovery. These headwinds may offset gains from cost reductions and restructuring.

Given the company’s high leverage, financial risk remains high. Even after the $2 billion First Lien Notes issuance and refinancing, debt levels stay high. Moreover, interest expense continues to pressure cash flow. If earnings underperform or credit markets tighten, refinancing costs could rise again. This would strain liquidity and limit the ability to invest in growth initiatives.

From a technical perspective, the stock is trading near a 50-year low and remains below key resistance levels. A break below $3 could accelerate downside momentum. The weak sentiment, combined with operational volatility, may keep the share price under pressure until clear signs of revenue stabilisation emerge.

Conclusion: Can Lumen Overcome Headwinds for a Sustainable Recovery?

The company is taking bold steps to reshape its business through asset sales, cost cuts, and debt restructuring. These actions aim to strengthen liquidity and focus resources on higher-growth segments. However, revenue continues to decline, and profitability remains under pressure. Without an apparent reversal in top-line performance, these measures alone may not be enough to restore long-term growth.

From a technical standpoint, the stock is rebounding from the 50-year low. This rebound from the historical lows indicates a bottom formation process. Since the price has dropped strongly after peaking at $50, the bottom formation process may take time.

These bottom formation processes include consolidation at the lower levels before breaking higher. However, the stock is very cheap at the lower levels and can be considered as a long-term investment. A break above $4.50 will indicate future upside. However, a drop to $1.80 will be viewed as a strong buying opportunity for long-term investors.