Please ensure Javascript is enabled for purposes of website accessibility

Why Graf Industrial Stock Is Rising Today

By John Rosevear – Sep 2, 2020 at 11:15AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Velodyne's guidance update was a good one, and the merger remains on track.

What happened 

Shares of Graf Industrial (GRAF) were trading sharply higher on Wednesday. Graf, a special purpose acquisition company that has agreed to merge with lidar maker Velodyne Lidar, released an upbeat guidance update for Velodyne and confirmed that the merger is on track to close by the end of this month.

As of 11:30 a.m. EDT, Graf's shares were up about 12.8% from Tuesday's closing price.

So what

Graf and Velodyne updated the guidance they released when the merger was first announced in early July, and there was good news to share.

  • Velodyne reaffirmed its prior revenue forecasts, confirming that it still expects about $101 million in revenue in 2020 and total revenue of about $1.7 billion through 2024.
  • Velodyne has signed multi-year agreements with two new customers since its early July update, and now has 18 multi-year agreements in place. 
  • It now expects revenue from its long-term customer agreements to total about $970 million through 2024, up from $840 million in its July forecast. 
  • Velodyne settled its patent-infringement suit against rival lidar maker Hesai Technology in July, on favorable terms.
  • The Graf-Velodyne merger remains on track to close by the end of September.
A Velodyne lidar unit tops the sensor stack on a prototype ArgoAI self-driving sedan.

Velodyne makes the "hockey puck" lidar units used by most self-driving development programs, as seen at the top of this Ford's rooftop sensor array. The company is expected to be a major supplier to builders of self-driving cars as driverless technology is commercialized. Image source: Velodyne Lidar.

Now what

While Graf hasn't yet set a date for the shareholder vote that will make the merger official, the company did give a presentation to its investors on Tuesday, outlining the deal and giving an in-depth view of Velodyne's business. The transaction is expected to leave the combined company -- which will take the Velodyne name -- with about $200 million of cash on its balance sheet. 

John Rosevear has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Graf Industrial Corp. Stock Quote
Graf Industrial Corp.
GRAF

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
342%
 
S&P 500 Returns
110%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/05/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.