AEye (LIDR)

AEye (LIDR) provides technologies for enhanced mobility such as vehicle autonomy solutions, advanced driver assistance systems and robotic vision applications. The company offers its products to the automotive and industrial markets worldwide. The company’s headquarters are in Dublin, California.

I am bearish on this stock.

The stock’s share price is down 0.4% so far this year. Due to problems in the global auto industry and rather unfavorable macroeconomic conditions, I believe this stock will fall over the next few weeks.

For now, LIDR has a 14-day Relative Strength Index (RSI) of 50.88, suggesting that shares are neither oversold nor overbought. When the RSI is above 70, the stock is generally considered overbought, while below 30 is considered oversold.

Reasons to be Bearish

Market headwinds are weighing on the performance of this stock.

There are several headwinds, but the main one is that traders seem overwhelmed by the opportunity to speculate on rising oil and gas prices, diverting attention from almost everything else, especially growth stocks. Unfortunately for AEye, the company belongs to this stock category.

Q4 and Full Year 2021 Results

In its most recent quarter, AEye managed to grow its revenue by 543% year-over-year to $1.8 million.

Despite the huge revenue growth, pro forma earnings were still negative as the company posted a net loss of -$0.13.Pro forma EBITDA was also negative at -$19.8 million for the quarter.

For the full year, AEye had revenue of $3 million, pro forma net loss per share of $0.49 and pro forma EBITDA of $50 million.

Tough Outlook

As long as the macroeconomic backdrop remains difficult and challenges persist in the automotive sector, it will not be easy for AEye to improve its profitability.

The difficulties for the company essentially stem from the following three points:

• High risk of stagflation: if this phase hits as central banks try to fight runaway inflation by raising interest rates, it will impact the auto industry, reflecting an extremely challenging environment for auto parts suppliers like AEye. Not to mention that higher interest rates are very likely to hurt demand for vehicles and related products as households shrink the size of their balance sheets and focus more on essentials.
• China’s resurgence of COVID-19 infections: imposing lockdowns and other restrictions to curb the spread of the coronavirus could seriously damage automotive supply chains and create a dangerous backlog of orders. The Chinese economy is crucial to the growth prospects for global automakers owning the most important brands.
• Problems in the safety systems of Chinese-made cars: this is another concern for industry analysts after big brands like Toyota and Tesla (TSLA) were recently forced to recall thousands of units made in the East Asian country, attempting to take advantage of cheaper labor.

Looking ahead to the first quarter of 2022, the company is forecasting total revenue of $4 million to $6 million.

Wall Street Analysts Estimate Earnings and Sales Changes

Wall Street analysts estimate that LIDR’s revenue will grow 73.90% to $5.23 million this year and 464.60% to $29.53 million next year.

Still, the net loss should narrow by 5% this year and become -$0.57 per share but deteriorate 8.80% in 2023 and become -$0.62 per share.

The Balance Sheet

As of December 30, 2021, the company’s financial position had $164 million in treasury and zero debt.

While a current ratio of 13.07 indicates more than enough cash to meet near-term commitments.

Valuation & Ratings

Shares are changing hands around $5.23 as of the writing of this article for a market cap of $817.63 million, a P/E ratio of -14.3, and a 52-week range of $2.59 to $12.25.

The stock has a price/book ratio of 4.73, a price/sales ratio of 222.05 and a price-to-free-cash-flow ratio of -14.10. LIDR doesn’t pay dividends.

AEye Inc. (LIDR) has no recent recommendation ratings or price targets on Wall Street.

The stock has an underperforming rating as a Smart Score owing to very negative retail investor sentiment and negative profitability metrics such as a 12-month return on equity of -22.05%.

The score is also weighed down by negative momentum of -47.59% and negative 12-month asset growth of -47.59%, while hedge fund holdings reduced their position in the stock by about 1 million over the last quarter.