Lucid, an electric-vehicle start-up, is likely to generate about $1.3 billion in 2022 sales.
Courtesy Lucid
Companies that merged with special purpose acquisition companies, or SPACs, are reporting fourth-quarter numbers. Some are offering 2022 guidance, too. Things aren’t turning out anywhere near as rosy as the initial projections management sold to investors months ago.
There is a lesson for management, and investors, from all the recent reports. It pays on Wall Street to underpromise and overdeliver.
Take lidar maker Luminar Technologies (ticker: LAZR). It’s one of the few examples of doing things the way Wall Street prefers. (Lidar is essentially laser-based radar and is being adopted by auto makers looking to add autonomous-driving features on their vehicles.)
Luminar reported fourth-quarter numbers Monday evening. It reported better-than-expected sales numbers. What’s more, sales guidance for 2022, at more than $40 million, matched analyst estimates.
It was a good earnings report, and shares are up almost 10% in late trading Tuesday. The S&P 500 and Dow Jones Industrial Average are down 1.3% and 1.7%, respectively.
Luminar also has the distinction of offering 2022 guidance that exceeds the 2022 revenue projection management included in its SPAC merger presentation. Back in August 2020, Luminar management predicted it would generate about $35 million in sales during 2022.
Luminar is the exception, not the rule. Three other lidar makers have offered 2022 guidance. All three became publicly traded through SPAC mergers. None of the three are going to generate the sales they expected in 2022 compared with when their mergers were announced. The shortfall amounts to about $269 million or almost 70% of the originally projected revenue.
Velodyne Lidar (VLDR) is the main culprit behind that math. Sales haven’t developed at the company as management originally hoped. That reality is reflected in Velodyne stock, which is down about 80% from its March 2021 52-week high of more than $17 a share. At $3.54 a share, the stock remains far below the $10 price struck in the SPAC merger deal.
Luminar stock is down about 50% from its 52-week high, but at about $15 a share, Luminar stock is still higher than the $10 where its SPAC merger deal was struck.
Sales shortfalls aren’t confined to lidar SPACs. Electric vehicle maker SPACs show similar trends.
Take Lucid (LCID). The luxury EV start-up is likely to generate about $1.3 billion in 2022 sales. That’s an achievement for any start-up auto maker, but the company thought it would generate $2.2 billion in sales when it announced its SPAC merger back in February 2021.
Four EV maker SPACs Barron’s tracks, including Lucid, have offered some 2022 guidance. All are trailing their initial projections.
The biggest miss comes from Lordstown Motors (RIDE). The company predicted $1.7 billion in 2022 sales at the time of its SPAC merger back in the summer of 2020. The company should generate about $30 million in 2022 sales. Lordstown management said recently the company plans to produce and deliver 500 vehicles in 2022.
Overall, the four EV maker SPACs predicted $4.8 billion in 2022 sales at the times of their mergers. Actual 2022 sales should come in at about $1.6 billion, with the majority coming from Lucid.
The relatively better performance of Lucid is why that company’s market capitalization remains substantial, at about $40 billion. Lordstown stock, on the other hand, is at about $2.50 a share and down almost 90% from its March 2021 52-week high of almost $22 a share. Lordstown’s market cap sits at about $500 million.
Looking at the original sales predictions, new sales guidance as well as actual stock performance, it seems that taking a conservative approach to guidance was the better strategy for companies merging with SPACs, at least as it relates to the long-run performance of the stocks.
Write to Al Root at [email protected]
