Al Root
Luminar Technologies is laying off 20% of its workforce, according to a company memo reviewed by Barron's.
The self-driving technology company employs about 700 people. The decision will impact some 140 workers.
"We stand at the crossroads of two realities: the core of our business has never been stronger across technology, product, industrialization, and commercialization; yet at the same time, the capital markets perception of our company has never been more challenging," reads part of the company-wide communication from CEO Austin Russell.
"These kinds of decisions are never easy, and we're taking steps to provide significant support for our exiting employees," added Russell. "We know these are the necessary steps to best position Luminar and maximize success throughout the decade."
Luminar's shares have dropped from a 52-week intraday high of $8.32 in July to $1.65 in Friday trading. In turn, its market value has fallen from $3 billion to $700 million. Shares are down roughly 50% this year and 95% from all-time highs reached in 2021.
That drop makes it all the more difficult to raise capital, which has led management to pursue cutting costs. Luminar estimates savings of about $80 million a year.
The problem for the company doesn't appear to be with Luminar's lidar technology or dynamics of the car industry. Luminar's sales and applications for lidar technology are growing.
Lidar, essentially laser-based radar, is a set of eyes for a car. It improves the capability of today's diver assistance technologies, such as automatic emergency braking, and is seen as a key enabling technology for tomorrow's truly self-driving cars.
Luminar generated sales of about $70 million in 2023 and is expected to generate $115 million in 2024 and $243 million in 2025, according to FactSet. The company's growth has been partly driven by lidar tech progressing from testing phase to real-life application. The first production vehicle using a Luminar lidar is the Volvo EX90.
Luminar has invested some $1.8 billion over its history -- spending needed to develop the technology and grow. Wall Street projects the company will use about $450 million in the coming three years to build its business. Luminar ended 2023 with about $340 million in cash and liquidity.
"Now that we've made the necessary billion-dollar R&D investments from the chip level up and successfully launched with [the] start of production as a standardized technology, the business model and cost structure that enabled us to achieve this leadership position no longer fit the needs of the company," Russell explained in the memo.
The reorganization means that Luminar will outsource more of its industrialization process to partners.
Tesla CEO Elon Musk said something similar on his company's first-quarter earnings conference call in April, which came shortly after his company announced layoffs impacting some 14,000 of Tesla's 140,000-strong global workforce.
"We've had a long period of prosperity from 2019 to now. And so if the company sort of organizationally is 5% wrong per year, that accumulates to 25%, 30% of inefficiency," said Musk, explaining the reason for layoffs. "We've made some corrections along the way but it is time to reorganize the company for the next phase of growth."
Tesla's layoff-related savings are expected to be more than $1 billion annually.
The auto industry makes tens of millions of cars containing hundreds of millions of components each year. Scaling up a new technology as a start-up can be expensive.
Write to Al Root at allen.root@dowjones.com
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May 03, 2024 16:22 ET (20:22 GMT)
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