Luminar Investor Letter

The Six Five team discusses Luminar’s Investor Letter.

Watch on YouTube

If you are interested in watching the full episode, you can check it out here.

Disclaimer: The Six Five Webcast is for information and entertainment purposes only. Over the course of this webcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors and we ask that you do not treat us as such.

Transcript:

Patrick Moorhead: Luminar, the premier LIDAR system provider for autonomous driving and safety systems, wrote an investor letter. By the way, very rarely do companies come out and write a letter, but if you saw the run-up on the stock that was in February that was driven by all these multi-billion dollar deal expansions with Mercedes-Benz and Polestar, and then you see the stock basically come down like a rock, you got to ask, “Hey, what’s going on?”

So part of this shareholder letter, it addressed a couple things. So first thing it did is, there was some rumor going around and one of their competitors saying that Luminar ripped off their technology because of a graphic that was used in the slides. And the company was very clear to say, “Listen, that is just expected, we’re in the lead. We did not rip off any intellectual property and this company that is coming after us is just trying to basically create a monetization opportunity for themselves. Literally a thumbnail of a generic graphic,” and I’m reading this right from the letter, “of a photonic-integrated circuit on one of the slides in the 165-page presentation.” So they replaced it with an actual photo of their integrated circuit.

By the way, I consider that noise, but it wouldn’t have been noise if a certain research analyst… And by the way, if I look at…I forget what service this comes out of. There is 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12 brokers who follow Luminar, one out of 12 gives it a sell category. Most of them are buy category, which leads you to believe, hey, what is this one broker? Well, this other brokerage company actually has a major push campaign going on in another LIDAR competitor. Now I’m not saying this is the case. I just find it very interesting that one out of 12 is so far out of whack from these folks. So that analyst is either going to be looking like a genius or a total fool.

By the way, it wasn’t really even about the so-called ripped off IP. It was the talk about two things, how long can Luminar keep up these prices? And second of all, the valuation premium on the company. And I liked the company’s response that was essentially, “Yeah, we’re 50 to 100% higher than our key competitors,” because when it comes to safety, companies like Mercedes, like Volvo, and like Polestar don’t want to take any chances and they have hardened contracts with these folks and quite frankly, they’re early to market. So again, I’m not a financial analyst, I’m an industry analyst, so don’t take any of this as investment advice but I just find this unprecedented letter to shareholders pretty interesting.

Daniel Newman: Yeah. So by the way, I’m running a little late here we’re going to have to haul ass. So Pat, long story short is I think, one, it’s always interesting when there’s conflicts of interest that for whatever reason analysts that rate stocks and rate pricings don’t have to call it out. Two is Luminar has actual sales and all these other companies are really just conceptuals in most cases, very little sales, very little design wins. So I really de-market right there straightforward, to the point. It’s a huge amount of spend going to one company and then the other companies are basically disproportionately upset. They think it’s premium, but the premium is being proven in the fact that one’s selling stuff the other isn’t. The ratings thing, I’ve never really understood it.