Luminar Technologies, Inc. (LAZR) is having the kind of Monday that makes you wonder if anyone checked the calendar before filing bankruptcy papers. The lidar company announced it initiated voluntary Chapter 11 proceedings, and investors responded by absolutely hammering the stock down more than 61% to just 35 cents per share.
How Did We Get Here?
Luminar filed for bankruptcy in the U.S. Bankruptcy Court for the Southern District of Texas, entering the process with backing from approximately 91.3% of first-lien noteholders and 85.9% of second-lien noteholders. That's about as friendly as a bankruptcy gets, but the market wasn't exactly throwing a party.
Before pulling the bankruptcy trigger, Luminar managed to offload its Luminar Semiconductors Inc (LSI) subsidiary to Quantum Computing Inc for $110 million in cash. The LSI unit isn't part of the Chapter 11 filing and should keep operating normally throughout the process, which is one small bright spot in an otherwise rough situation.
The writing was on the wall for a while. Back in November, the company brought in a new CFO and disclosed it was exploring strategic alternatives including selling all or part of the business, raising capital, or restructuring its debt. Turns out they picked option three.
What Management Is Saying
"Over the past six months, we have taken meaningful steps to drive operational discipline, streamline our cost structure, and sharpen our strategic direction, but our legacy debt obligations and the pace of industry adoption have challenged our ability to operate the business in a sustainable way," said Paul Ricci, CEO of Luminar.
"After a comprehensive review of our alternatives, the board determined that a court-supervised sale process is the best path forward."
Translation: They tried cutting costs and getting focused, but the debt load was too heavy and autonomous vehicle adoption hasn't happened fast enough to save them.
What Happens Now?
During the Chapter 11 period, Luminar expects to keep the lights on, continue delivering its LiDAR hardware and software, and work with suppliers to avoid major disruptions. That's the plan, anyway.
The company's recent performance hasn't exactly inspired confidence. Luminar missed revenue expectations in two of the past five quarters, and analyst consensus sits at a sell rating. Shares hit an all-time low of 33 cents today as the bankruptcy news rippled through the market.
Luminar shares were trading at 35 cents at the time of publication, down 61.13% on the day.