Lumen PLUMMET 13% After AT&T’s Laughable $5.5 Billion Buyout Bid…

Lumen Technologies just got served a fat dose of reality after news broke that AT&T is in exclusive talks to buy its consumer fiber business for just over $5.5 billion—a number so underwhelming it made Lumen’s stock plunge 13% faster than a Wall Street Bets die hard realized his “diamond hands” were a terrible idea. 

(Source: Giphy) 

The main reason for the fallout is that investors were apparently hoping for something in the $6 billion to $9 billion range, because, you know, that’s what Reuters reported back in December. But instead, they got a classic case of "adjusted expectations"—aka, disappointment. Meanwhile, AT&T’s stock ticked up ever-so slightly. 

In short, and I’m not going to sugarcoat this, but Lumen was never going to be the consolidator in this space. CFO Chris Stansbury basically said as much earlier this month, admitting that the consumer fiber market was inevitably going to consolidate—but Lumen wasn’t going to be the one doing the buying. Translation: They needed to sell this thing before it became worthless.

(Source: Bloomberg) 

The problem is, Wall Street thought Lumen could squeeze more out of this deal. But instead of some bidding war between the telecom titans, AT&T swooped in, locked down exclusive talks, and now everyone else—Verizon, T-Mobile, BCE—just gets to watch from the sidelines like a bunch of deadbeats. 

To be fair though, Verizon or T-Mobile could probably care less considering they are already heating up the fiber war themselves. For instance, Verizon is buying Frontier for $20 billion in a move that will make them an even bigger fiber powerhouse. BCE is snapping up Ziply Fiber for nearly $5 billion, meanwhile T-Mobile has been on a mission to bundle fiber with wireless, reducing churn and locking customers into their ecosystems like a digital Stockholm Syndrome. 

(Source: StockTwits) 

So yeah, fiber-to-the-home is the new battleground, and Lumen just gave up its seat at the table. But for AT&T, this deal—if it goes through—strengthens its fiber footprint and gives it even more pricing power in bundling broadband with wireless. Investors seem to like it for now, but it’s not exactly a game-changer for AT&T’s $196 billion market cap. 

Of course, with that said though, nothing is set and stone yet. Because while Verizon and T-Mobile didn’t step up with a competing bid—who knows, maybe they’re just waiting for AT&T to finalize the deal before throwing a wrench into the process. Aaaand I for one,  legit wouldn’t be surprised if that happened LOL. 

(Source: Giphy) 

But alas, the fiber consolidation race is on, and AT&T just made the first big move. Now we wait to see who blinks first. In the meantime, keep your eyes on this story and place your bets accordingly, friends. As always, stay safe and stay frosty! Until next time… 

P.S. Just when you thought our beloved congressmen couldn’t get any greasier, one Republican lawmaker decided to YOLO $175k into a stock… right before a major FDIC announcement hit. Lucky timing? Insider edge? You be the judge. We broke it all down inside our recent Stocks.News premium article… click here to check it out ASAP. 

Stocks.News holds positions in T-Mobile, AT&T, Lumen Technologies, and Verizon as mentioned in the article.