A Mercedes-Benz van retrofitted with various kinds of lidar methods, together with Luminar’s Iris, to showcase the variations within the applied sciences.
Michael Wayland / CNBC
Lidar maker Luminar Technologies, stung by a current Wall Street downgrade, is responding in an uncommon approach: taking its case on to the shareholders.
In a letter seen by CNBC on Friday morning, Luminar CFO Tom Fennimore – himself a former Goldman Sachs managing director – takes subject with arguments made in a bearish be aware by Goldman analyst Mark Delaney earlier this week.
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Delaney on Tuesday afternoon lower Goldman’s ranking on Luminar to promote, from maintain, arguing that its shares are overpriced relative to key opponents and that Luminar’s personal pricing assumptions are unrealistically excessive.
Luminar’s shares have fallen about 16% since Delaney’s be aware was revealed.
“We continue to see Luminar as one of a handful of leaders in the very competitive lidar industry,” Delaney wrote. “However, we see downside to the company’s margin outlook with the company targeting revenue per vehicle of ~$1k which we believe implies ASPs [average selling prices] roughly 50-100% higher than key competitors.”
Simply put, whereas Delaney acknowledges that Luminar is one among only some lidar makers successful offers with main automakers, he thinks that Luminar will not be capable of get the costs it is hoping to get from these automakers. And based mostly on 2025 income assumptions, he sees Luminar buying and selling at 4 occasions the valuation of opponents Innoviz and Hesai, each of which have additionally received enterprise from automakers.
Fennimore argues that Delaney missed two key factors.
“One, our tech is better, and people typically pay a premium for tech, but to us this isn’t a theoretical exercise: This is pricing that we actually have in place,” Fennimore informed CNBC in an interview on Friday morning.
Fennimore’s letter factors out that Luminar has already signed contracts to offer {hardware} and software program for over 20 upcoming new automobiles from main automakers together with Volvo, Polestar, Mercedes-Benz and Chinese auto large SAIC Motor. Those contracts lock in pricing by the lifetime of these upcoming fashions, he mentioned.
“‘Premium pricing’ isn’t a theoretical concept we are forecasting, but an achievement we have already made in our major customer contracts,” Fennimore wrote within the shareholder letter.
And the second level Fennimore says Goldman missed: The time-frame Delaney selected to check Luminar’s valuation towards these of its rivals.
“We believe using 2025 revenue as a valuation benchmark versus peers dramatically undervalues Luminar, as many of the 20+ vehicle lines we have been awarded are not expected to reach production until beyond 2025,” he wrote.
Put one other approach, a number of the massive contracts that Luminar has already signed will not generate vital income till these automobiles launch within the second half of the last decade, Fennimore mentioned.
The choice to take the rebuttal on to Luminar’s shareholders is uncommon, however Fennimore believes it is warranted – and he hinted that Luminar would possibly select to ship extra letters like this sooner or later.
“Whenever anybody raises valid and thoughtful concerns about us, we want to respond with valid and thoughtful facts,” Fennimore informed CNBC. “Because I think the capital markets rely on having a good and factual debate.”
Source: www.cnbc.com”
