Luminar Technologies, Inc.

LAZR Details

Luminar Technologies, Inc. (NASDAQ: LAZR) is focused on developing advanced sensor technologies for the autonomous vehicle industry. Its revenue-generating segments are 1) Autonomy Solutions, which designs and markets commercial lidar sensors using laser light to detect distance and create an accurate three-dimensional (3D) map for automobile mobility applications, and 2) Component Sales, which develops ultra-sensitive pixel-based sensors.

Latest News:

• LAZR's Inclusion in NVIDIA DRIVE Hyperion Platform: On November 09, 2021, LAZR stated that its lidar solution is now part of the NVIDIA DRIVE Hyperion autonomous vehicle reference platform sensor suite. The vehicle computing platform aims to fast-track the development of autonomous consumer vehicles, with production expected to commence in 2024.

Q2FY21 Results:

• Surge in Revenue: The company reported an 84.26% increase in revenues to USD 6.31 million in Q2FY21 (ended June 30, 2021) compared to USD 3.42 million in Q2FY20, resulting from an increase in sensor sales and program revenue from customization services.
• Expansion in Net Loss: Q2FY21 net loss amounted to USD 36.83 million vs. USD 25.44 million reported in Q2FY20, owing to higher R&D and general and administrative expenses.
• Strong Balance Sheet: The company exited the quarter with a cash balance (including marketable securities) of USD 580.44 million, and total debt amounted to USD 0.73 million.

Key Risks:

• Customer Concentration: LAZR's top three customers represented 30%, 30% and 25% of its total Q2FY21 revenue. Hence, the loss of any of these key customers could hurt its financials.
• Concentrated Ownership: Each share of LAZR's Class B common stock has ten votes, compared to one vote for each share of its Class A common stock. As of December 31, 2020, Mr Austin Russell (Founder, President & CEO) owned all outstanding Class B shares, representing an 82.8% voting power. This constrains the ability of other shareholders to influence corporate decisions.

Outlook:

• Revenue Estimates: In its Q2FY21 earnings release, LAZR stated that it anticipates generating USD 30 – 33 million in revenues during FY21.

LAZR Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

LAZR's stock price surged 133.57% in the past twelve months and is currently leaning towards the lower band of its 52-week range of USD 10.11 to USD 47.80. The stock is currently trading above its 50 and 100 DMA levels, and its RSI Index is at 82.64.

Considering the significant uptick in the stock price, other technical indicators, and associated risks, we recommend a "Sell" rating on the stock at the current price of USD 23.74, up 35.66% as of November 09, 2021, 9:31 AM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

Riot Blockchain, Inc.

RIOT Details

Riot Blockchain, Inc. (NASDAQ: RIOT) is a cryptocurrency mining company that engages specialized computers (miners) with application-specific integrated circuit (ASIC) chips to solve complicated cryptographic algorithms for the Bitcoin blockchain in return for cryptocurrency incentives, principally Bitcoin (BTC). It conducts its operations through its subsidiary Whinstone US Inc. (acquired in May-2021).

Latest News

• October BTC Production Data: On November 03, 2021, RIOT reported that it produced 464 BTC in October 2021, up 433% from 87 BTC made in October 2020. As a result, it holds ~3,995 BTC as of month-end.
• First Industrial Scale BTC Mining Operations: On October 19, 2021, RIOT announced the development of 200 megawatts of immersion-cooling technology at its Whinstone plant. The development will comprise two buildings currently under construction and host ~46,000 S19 Antminers from the pre-existing RIOT miner fleet.

Q2FY21 Results:

• Robust Increase in Revenue: RIOT reported a massive 69x increase in total revenue to USD 34.35 million in Q2FY21 (ended June 30, 2021) compared to USD 1.94 million in Q2FY20, primarily due to higher BTC values plus a higher number to BTC awarded during 2021.
• Positive Earnings: Its Q2FY21 net income was USD 19.34 million vs. a net loss of USD 10.59 million reported in Q2FY20.
• Strong Balance Sheet: As of June 30, 2021, the company had cash and cash equivalents (including investments in marketable securities and cryptocurrencies) of USD 220.24 million and no outstanding debt.

Key Risk:

• Increasing Cost of Miners: If the current relatively high market price of bitcoin continues, the cost of procuring new and replacement miners may rise, which might have a significant and negative impact on the company's financial condition and results of operations
• Third-Party Dependence for Mining Pool Services: RIOT generates its cryptocurrency mining income via mining activities through a third-party mining pool operator. Hence, RIOT's ability to mine and receive payments may be impacted if the pool operator's system is down due to a cyber-attack, software failure, or other similar issues.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

• % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

RIOT Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

RIOT's share price has surged 65.62% in the past month and is currently close to the mid-point of its 52-week range of USD 3.20 to USD 79.50. The stock is currently trading above its 50 and 200 DMA levels, and its RSI Index is at 75.87. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 37.39.

Considering the significant uptick in the stock price in a short time, the volatile underlying asset, and the current valuation, we recommend a "Sell" rating on the stock at the current price of USD 42.69, up 16.34% as of November 09, 2021, 9:34 AM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.