Short Sellers Are Targeting Luminar Technologies Right Now. Here’s Why

Short interest data can be a valuable risk management tool. Short sellers tend to do their research. If they’re shorting a stock, there’s usually a good reason they are doing so.

In this report, we are going to analyze the short interest data on Luminar Technologies Inc (LAZR:US). Luminar Technologies develops sensors and software for the autonomous vehicle market. Founded in 2012, it has developed lidar sensor technology designed to address traffic situations that often result in severe injuries and fatalities. The company is listed on the Nasdaq and currently has a market cap of approximately $2.14 billion.

High Short Interest

Looking at the short interest data here, we can see that the stock is getting a lot of attention from short sellers at present.

Currently, 95.67 million LAZR shares are on loan. That represents 40.92% of the free float.

Interestingly, the utilization rate is 100% right now. This tells us that the short sellers have loaned out every share available for lending.

It’s worth noting that the short interest here has increased significantly over the last 12 months. This time last year, only 54 million shares were on loan. So, in the space of 12 months, the figure has risen by over 75%.

Overall, the data indicates that there’s a lot of bearish sentiment towards this stock currently. Clearly, many institutional investors expect it to fall.

Attracting Attention From Short Sellers 

As for why the short sellers are targeting Luminar Technologies right now, it could be down to the company’s valuation. This year, Luminar is only expected to generate sales of $88.7 million. So, at its current market cap of $2.1 billion, the price-to-sales ratio here is 24.2. That’s a high multiple.

It could also be down to the company’s lack of profitability. Last year, Luminar posted a net loss of $446 million. This year, Wall Street expects a net loss of $423 million. In the current financial environment, investors don’t have a lot of time for companies that are losing money hand over fist.

Alternatively, it could be related to potential unlawful business practices. In March, media outlets reported that semiconductor developer Lidwave had accused Luminar of attempting to pass off a Lidwave chip as Luminar’s own technology. Lidwave threatened Luminar with legal action, and Luminar subsequently removed images of the processor from an investor presentation and its website. 

Whatever it is the short sellers are seeing here, we think caution is warranted towards the stock at the moment. We see the high level of short interest as a red flag.