A class action lawsuit has been filed against Lumen Technologies in the state of Louisiana alleging the company misled investors about the realities surrounding its Quantum Fiber build in order to keep its stock price up.
The complaint, which was filed last week, comes shortly after Lumen cut its Quantum Fiber build target from the original 12 million locations planned to a new goal of 8 million to 10 million locations. Upon announcing the decision last month, Lumen officials said the move was meant to ensure it was building to achieve quality passings rather than just hitting a certain number.
But the lawsuit accused Lumen of intentionally deceiving the investing public and alleged investors who purchased Lumen’s stock at an “artificially inflated” price suffered losses as a “direct and foreseeable consequence of [the] Defendants’ concealment of the true financial condition” of the company.
The lawsuit was filed by an individual named Diane Voight, but is meant to include all investors who bought stock between September 2020 and February 2023. Those dates correspond with when CenturyLink rebranded as Lumen and its announcement about the lower Quantum Fiber target.
Lumen declined to comment on the pending litigation.
According to the complaint, Lumen indicated to investors that it was expanding its Quantum Fiber footprint and increasing penetration, and that its plans were not capital-constrained. All the while, the complaint alleged, “Lumen was experiencing serious headwinds that were impeding its ability to grow its newly-targeted fiber markets.”
The lawsuit states cracks began to show when Lumen publicly admitted in February 2022 its expansion was moving slower than expected, before the company said in February 2023 it had hit “more of a stop button than a pause button” on its Quantum Fiber build. That comment came during a Q4 2022 earnings call.
Publicly available stock market data shows that as of February 2020, Lumen’s stock price stood around $10.55 per share. Over the intervening period it rose to a high of more than $15 in June 2021 before beginning to drop sharply in September 2022. The lawsuit noted that by market close on February 8, 2023, the price had fallen to $3.95.
As a remedy of losses suffered by investors, the lawsuit is seeking unspecified damages with interest as well as attorney’s fees and any other relief deemed appropriate by the court. At least two law firms have put out press releases seeking additional investors to petition the court as party to the class action suit.