What happened
Shares of Luminar Technologies (LAZR 3.97%) plummeted by as much as 10% today after getting a downgrade from Wall Street and facing criticism from prominent short-seller Citron Research. The company went public earlier this month after closing its merger with Gore Metropoulous, a special-purpose acquisition company (SPAC). Citron prefers rival Velodyne (VLDR) over Luminar; Velodyne was up 11% as of 3 p.m. EST.
So what
Luminar shares have skyrocketed after the company closed the merger and changed its ticker symbol to "LAZR," leading to some concerns about its valuation. Luminar specializes in making lidar sensors for the automotive sector that will be used in the development of autonomous vehicles. Citron criticized Luminar's valuation, suggesting that its $14 billion market cap is excessive compared to Velodyne's $3.5 billion market valuation:
$LAZR at $14 bil ($40) is not even a casino stock...you can actually win at a casino..it is more of a "suckers game" Would much rather own industry leader $VLDR at less than $4 bil mkt cap. Citron expects $LAZR back at $20 and $VLDR at $30. Real outstanding shares for LAZR pic.twitter.com/6kHdv0QfBk
— Citron Research (@CitronResearch) December 8, 2020
Citron predicts that Luminar shares could get cut in half (compared to yesterday's close) to $20, while Velodyne stock could climb to $30.
Image source: Getty Images.
Now what
Northland Capital Markets is optimistic about Luminar's long-term prospects, but noted that the company is still young and faces execution risks since its volume production ramp at Volvo is still a couple of years away. The entire automotive lidar market is expected to grow to $2.5 billion in 2025, and Luminar is being valued at approximately six times that entire market opportunity.
Northland analyst Gus Richard downgraded his rating on Luminar from outperform to market perform while assigning a $41 price target.
