Lumen Technologies (NYSE: LUMN) stock is seeing big sell-offs in Tuesday's trading. The company's share price was down 9.3% as of 3 p.m. ET. and had been down as much as 11.7% earlier in the daily session. Meanwhile, the S&P 500 index was down 0.5%.

Lumen stock is losing ground in conjunction with news that the company and its Level 3 Financings subsidiary are looking to buy back some of the telecom's outstanding bonds. The company published a press release this morning announcing that it had submitted offers to repurchase debt bonds totaling $945 million.

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Why are investors bearish on Lumen's bond buyback offer?

In addition to a moderate pullback for the broader market today on the heels of recent gains, Lumen stock is facing valuation pressures tied to its bond buyback offer. Along with its Level 3 Financing subsidiary, Lumen has issued cash offers to buy back all of its outstanding unsecured debt notes. The offer covers eight different sets of notes with different interest rates and maturity dates, and the two parties are offering between $0.86 and $1 for every $1 in principal amount.

Lumen has seen recent improvements for its business performance and demand outlook thanks to rising AI-related demand for network technologies and related services. In conjunction with the improving fortunes, the company is making moves to reduce its debt and limit interest expenses. Cutting its debt would be a beneficial development in key respects, but investors may be interpreting the move as an indication that the company thinks its cash is better spent on reducing debt instead of investing in growth initiatives.

What's next for Lumen?

Thanks to private connectivity fabric (PCF) deals with Microsoft, Meta Platforms, and other customers, Lumen stock has gained favor as an artificial intelligence (AI) play this year. Even with today's pullback, the company's share price is up more than 400% across 2024's trading.

Lumen could still be in the early stages of rising, AI-related PCF demand, and additional deals could significantly boost the company's free-cash-flow generation. If so, the company would be in good position to continue paying down debt -- and its share price could continue to rally. On the other hand, it remains to be seen whether PCF technologies wind up being a long-term performance driver for the business -- and there's a risk that the company's valuation has become stretched amid recent business improvements and AI-driven excitement.