12/4/2023 0 Comments Luminar stock projectionIn Fed Chair Jerome Powell’s latest appearance before the Senate Banking Committee, his stance on whether a recession is near has shifted from “ no sign” of such risks given the strong American labour market and pandemic-era savings, to now a “ possibility” in a matter of just a week. More aggressive rate hikes are now on the FOMC’s agenda, as demonstrated through the latest rate hike decision of 75-bps. With the latest inflation print coming in at 8.6% – a new 40-year record high – the Fed has made it a priority to suppress rising consumer price pressure. Luminar also faces industry- and company-specific headwinds, spanning a broad-based automotive slowdown due to supply constraints, a regulatory crackdown on SPAC mergers, and lackluster fundamental performance, which have added pressure on the stock’s performance this year despite management’s share buyback efforts. Investor angst is rising as the Federal Reserve amps up the hawk on monetary policy tightening plans to quell inflation, a manner that could inadvertently awaken a violent economic downturn. Growth stocks that are still in development and/or early ramp-up phase, like Luminar, have been dealt the worst blow amidst this year’s broad-market selloff. But for now, volatility will remain the theme given the stock’s classification as a high-risk, duration investment, especially as investors digest potential impacts of a looming global recession. This includes the upcoming launch and production of the Luminar-equipped Polestar 3 SUV ( GGPI) by the Volvo-backed, Swedish premium electric vehicle (“EV”) maker in late 2022/early 2023. We believe a key near-term catalyst for the stock would include mass deployment of Luminar’s technology across major connected vehicle markets in order to drive brand traction and awareness. Yet, a consistent positive track record that demonstrates the viability of Luminar’s technology is still lacking, which is especially important under the current macro environment in order to restore investors’ confidence in the company’s long-term growth outlook. The headwinds have together amplified pains for Luminar’s market performance this year, with little respite in sight.Īs one of the leading LIDAR developers in the industry, with its technology designed for a wide range of applications from passenger vehicles to commercial trucks, Luminar remains well-positioned for significant growth opportunities in the long-run from a fundamental perspective. Meanwhile, companies that have gone public over the last two years through a reverse SPAC merger, like Luminar, are also facing increasing regulatory scrutiny, which has further deterred investors’ confidence. The dire macroeconomic outlook, clouded by record inflation and tightening monetary policies that risk an imminent recession have caused investors to shun growth stocks, given their real returns are the furthest out. Now trading at just a little more than $7.50 apiece, the stock has plunged more than 50% on a year-to-date basis, underperforming the broader market amidst a risk-off environment for equities, although still not as bad as others within its peer group ( VLDR : -70%+ YTD OUST : -60%+ YTD). More than 80% of Luminar’s ( NASDAQ: LAZR) market value has evaporated since it peaked above $40 per share following the merger with Gores Metropoulos SPAC in December 2020. JHVEPhoto/iStock Editorial via Getty Images
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