Luminar (NASDAQ: LAZR) stock price has imploded. After soaring to a record high of $47.78 in 2021, it has become a penny stock trading at $1.65. Along the way, its market cap has dropped from a record high of over $13.5 billion to $745 million. 

Luminar Technologies has been one of the top cash incinerators in the technology industry. That is understandable since the firm has been busy building its Light Detection and Ranging (LIDAR) technology for the automotive industry.

Luminar’s annual losses have been in a strong upward trend over the years. Its net loss rose from $94.7 million in 2019 to over $571 million in 2023. It has lost over $1.7 billion in the past five years alone.

As a result, the company has been highly dilutive to its investors. Its total outstanding shares jumped from 9.8 million in 2020 to over 419 million today. This happened as the company raised money and offered substantial stock-based competition.

Luminar’s losses continued in the first quarter. Its revenue rose to $20 million in Q1 from $14.5 million in the same quarter a year earlier. This revenue figure was lower than the $22.1 million it made in Q4 of last year. It narrowed its loss to $125 million from $146 million in 2023.

It also expects to continue narrowing its loss because it decided to lay off about 20% of its workforce earlier this month. In all, it hopes to have cost savings of over $80 million annually. Also, the firm hopes to save costs by focusing on third-party manufacturers and moving some operations to low-cost countries like India.

Luminar hopes to accelerate its profit growth as Volvo has started using its technology in its cars. As a result, the company believes that most of its revenues will come in the second half of this year. After that, it hopes to deliver the product to other OEMs in the vehicle industry.

As a result, the average estimate is that the company’s revenue will rise to $114 million this year followed by $259 million in 2025. If this happens, it means that Luminar will be one of the fastest-growing companies in the industry.

Therefore, with Luminar, we have a company that is about to start making money and one that has slashed its costs, which is a good combination. The risk, however, is that it will continue losing money for a while. Analysts expect its loss to be 66 cents and 49 cents per share in 2024 and 2025.

There is also a risk that the company will need to raise cash again. It ended the quarter with $248 million in liquidity. Analysts expect that the firm needs to raise $1 billion this year, a move that will dilute investors further. 

Further, as we have seen before, the expected volumes for Volvo EX90 have been reduced while the vehicle has continued to experience delays. 

LAZR chart by TradingView

The weekly chart shows that the LAZR stock price has been in a strong downward trend in the past few years. It has plunged from $47.78 in 2021 to $1.8 today. Along the way, the stock has remained below all moving averages.

Most importantly, it has formed a falling wedge pattern, which is one of the most popular bullish signs. This wedge is now nearing its confluence level. 

Therefore, at this stage, there is a likelihood that the stock will rebound as investors anticipate more revenue growth. If this happens, it could rally to about $3. However, there is also a risk that it will need to raise more cash, which will drag it lower.

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