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Why Luminar Technologies Stock Just Popped 12%

By Rich Smith - Jan 20, 2021 at 2:10PM

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Details emerge on last week's stock upgrade.

What happened

Shares of Luminar Technologies (LAZR -3.57%), which makes lidar technology for self-driving cars, are on a tear Wednesday afternoon, rising more than 12% through 1:20 p.m. EST. Curiously, though, the catalyst for this stock move appears to have happened nearly a week ago.

So what

Last Thursday, investment bank R.F. Lafferty initiated coverage of Luminar stock with a buy rating and a $38 price target. Luminar's stock didn't move much on the news, however (actually, the share price dropped by nearly a dollar). Possibly this was because Lafferty isn't an analyst with huge name recognition -- but there also wasn't a whole lot of detail available on why Lafferty upgraded the stock to begin with.  

That changed last night, though, when dug into the analyst's report and confirmed that Lafferty is predicting Luminar lidar technology will begin appearing in cars manufactured by Volvo and Daimler as early as next year -- a development that could balloon the company's current annual revenue stream of just $17 million.  

Red car amidst traffic, surrounded by concentric circles representing lidar signals

Image source: Getty Images.

Now what

Among Lafferty's other predictions for the future, an automotive market for lidar equipment that currently measures only in the billions of dollars annually ($5 billion) could grow to $150 billion in the next 10 years. As Lafferty points out, if Luminar captures just 4% of this market, its own revenue could skyrocket to $5 billion by 2030 -- and at an estimated earnings before interest, taxes, depreciation, and amortization percentage of 50%, that could translate into $2.5 billion in EBITDA profits, compared to a $72 million EBITDA loss currently.

No wonder investors are excited.

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