The state of Louisiana has filed a class action lawsuit against Lumen Technologies, accusing the company of misleading investors about the reality of its Quantum Fiber buildout in order to keep its stock price up.
The complaint was filed shortly after Lumen cut its Quantum Fiber buildout target from its initial plan of 12 million locations to a new target of 8 million to 10 million locations. In announcing the decision last month, Lumen officials said the move was to ensure it was building to achieve high-quality delivery, not just to reach a certain number.
But the lawsuit alleges that Lumen intentionally defrauded the investing public and says investors who bought Lumen stock at "artificially inflated" prices suffered losses as a "direct and foreseeable consequence of Defendants' concealment of the company's true financial condition".
The lawsuit was filed by an individual named Diane Voight, but is intended to include all investors who purchased shares between September 2020 and February 2023. These dates coincide with CenturyLink's name change to Lumen and its announcement of lower Quantum Fiber targets.
Lumen declined to comment on the pending litigation.
According to the complaint, Lumen told investors that it was expanding its Quantum Fiber footprint and increasing penetration, and that its plans were not limited by capital constraints. The complaint states that all along, "Lumen has encountered significant resistance that has hindered its ability to develop new target fiber markets."
The lawsuit alleges that the cracks began to show when Lumen publicly admitted in February 2022 that its expansion had been slower than expected, and the company subsequently said in February 2023 that it had pushed "more of a stop button than a pause button" on its Quantum Fiber build. The comment was made during a fourth-quarter 2022 earnings call.
Public stock market data shows Lumen's share price at about $10.55 per share as of February 2020. During that time, it rose to a high of more than $15 in June 2021 before beginning a significant decline in September 2022. By the time the market closed on February 8, 2023, the price had fallen to $3.95, the lawsuit states.
As a remedy for the losses suffered by investors, the lawsuit is seeking unspecified damages, as well as interest, attorneys' fees and any other relief the court deems appropriate. At least two law firms have issued press releases seeking additional investors to petition the court as a party to the class action.
