Luminar: Darkest Before The Dawn (NASDAQ:LAZR)
In the wake of acknowledging a delay in Lidar demand by 1 to 2 years from its customers, Luminar Technologies, Inc. (NASDAQ:LAZR) has seen its share price fall to new lows. Despite the downturn in its stock, the company is forging ahead with its Lidar technology development, already transitioning into production. My investment stance remains highly optimistic on Luminar, despite the current gloomy situation.
The company’s Q2 ’24 financial disclosure was underwhelming, with revenue growth not meeting anticipations:
- The anticipated push from the launch of the Volvo EX90, equipped with Luminar’s Lidar technology, towards a quarterly revenue milestone of $35 million in the latter half of the year fell short due to production delays announced by Volvo.
- Although a slower production ramp-up than expected was reported, Luminar is optimistic about its collaboration with Volvo, especially considering the South Carolina factory’s capacity to produce 150,000 vehicles annually alongside the S60 sedan. However, the $35 million quarterly revenue target now seems a goal for the next year.
During the Q2 ’24 earnings call, Austin Russell, Luminar’s CEO, hinted at a more robust business undercurrent:
“Our Semiconductor division, now referenced as LSI, boasts over 100 distinct clients, spanning leading tech entities, defense contractors, and aerospace firms, utilizing our chip technology in applications from satellites to GPUs. This success narrative has culminated in our attaining an external lifetime commercial program worth in the hundred-million-dollar range, as per our internal estimates, thus reaching a breakeven status for this division.”
This revelation indicates that the Luminar Semiconductor unit, not previously a focal point in stock evaluation, has secured $100+ million in external lifetime orders. This is in addition to Luminar’s nearly $4 billion order backlog, which, so far, has not positively impacted the stock.
Despite Q2 revenues reaching only $16.5 million and Q3 projections hinting at similar figures, Luminar’s engagement with automotive giants like Mercedes-Benz, Polestar, and Nissan in advancing full self-driving (FSD) technologies signals a busy pipeline. The primary concern remains the market’s skepticism towards Lidar companies, fueled by contrasting opinions from players like Tesla on the necessity of Lidar for FSD.
Russell reiterates the company’s lucrative position:
“Our nearly $4 billion order book and the forthcoming launch of 20 vehicle models in the next few years underpin the prospective success.”
Luminar’s strategic moves to address its debt situation and secure additional capital further underscore its readiness to weather the storm. The revamping of debt terms and the attraction of an extra $100 million in senior notes, despite inducing a steep stock price fall, indicate a preparedness to navigate through the current financial straits. This financial restructuring aims to bolster the company’s balance sheet through 2026, a period by which the business expects to be on much firmer ground.
The current market challenge for Luminar is to substantially boost its revenue streams to restore investor confidence in its extensive order backlog and business potential. With the stock price now hovering below $1, the company faces a crucial juncture in addressing the capital squeeze amidst a dwindling stock valuation.
However, Luminar stands as a compelling investment opportunity, trading at a mere fraction of its extensive order book. The present may seem grim, but for those willing to take a calculated risk, the payoff could be significant, provided Luminar navigates its revenue and capital hurdles successfully. With every dark cloud, there’s a silver lining, and for Luminar, the dawn may just be on the horizon.
Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
