Out Fox The $treet

Updated - Jan. 2, 2025 Luminar Tech. has been crushed since reporting earnings and completing a reverse stock split. The other more speculative Lidar plays like Innoviz Tech. (INVZ) and AEye (LIDR) have both doubled by avoiding the reverse split.  Looking for a portfolio of ideas like this one? Members of Out Fox The Street get exclusive access to our subscriber-only portfolios.  Learn More » Original article posted on Nov. 13.  Luminar Technologies, Inc. is making progress with new deals, but financials remain weak, requiring patience for long-term gains. Volvo's EX90 production ramp and a second model with Iris LiDAR promise future revenue growth, despite current low sales. Luminar's insurance program could offer significant savings, potentially making LiDAR cost-effective for consumers. Despite frustrating financials, Luminar's strategic cost savings and production ramp-up suggest better financials by 2026. The autonomous driving sector continues to heat up, but  ...

Update - Apr. 10 Ouster announced a reverse split effective April 21. The announcement is not a surprise with the stock trading below $1 again and traders pressuring for the move.  Ouster (NYSE:OUST) board of directors has approved a 1-for-10 reverse stock split, par value $0.001 per share. It is expected to become effective on Thursday, April 20, 2023 and trade on NYSE on April 21, 2023 under the existing symbol "OUST".  Original article posted on Mar. 30 Ouster reported Q4'22 results, but the company provides limited details on the Velodyne Lidar business. The Lidar company closed the merger on February 10 with confirmed guidance for combined Q4'22 revenues of at least $23 million. Ouster guided to Q1'23 revenues of only $16 million without providing a complete picture of Velodyne Lidar revenues. OUST stock trades below 4x the '22 bookings of Ouster alone, yet the lack of combined pro forma financials leaves a lot of unanswered questions. This idea was discu...

Aurora Cannabis announced plans for a 1:12 reverse stock split. Most research supports dire outcomes for most reverse stock splits. Not all splits are negative, though, providing potential upside on the stock after already falling on the news. Aurora Cannabis only trades at ~3x sales estimates now. With  Aurora Cannabis  (NYSE: ACB ) trading below $1, the market shouldn't be too surprised the company announced a reverse split of their stock. Historically, reverse splits are negatives for participating stocks, but the cannabis sector is a new space where the capital structure and regulatory restrictions are as much the issue for the company than any dire situation. My  investment thesis  still remains positive on the catalysts for Aurora Cannabis during 2020, while the stock will be volatile during this process. Read the full article on Seeking Alpha.  Disclosure: No position. Please review the disclaimer page for more details. 

LendingClub announced the reverse split will be effective when the stock opens for trading on July 8. Historically, reverse splits are bad for shareholders with stocks underperforming the market by a wide margin. The stock remains perplexingly cheap at an EV/S multiple of 1x and EV/EBITA of 6.5x. Use any reverse split-related weakness to own LendingClub. For multiple reasons, reverse splits don't typically work out well for shareholders. The news that  LendingClub  ( LC ) is pursuing a  1-for-5 reverse split  followed a 10% gain during the trading day. Investors shouldn't necessarily stray away from the fintech on this news due to the  perplexing value  in the stock. Read the full article on Seeking Alpha.  More commentary on WhoTrades   Disclosure: Long LC. Please review the disclaimer page for more details. 

Typically, a reverse merger is a sign of a company facing troubling finances, though I'll be the first person to tell investors that this isn't always the case. Each stock in the process of a reverse merger needs the merits of its individual case reviewed by an investor. In the case of Rite Aid (RAD) and Novavax (NVAX) ,  these reverse mergers are signs that these stocks face incredibly difficult times ahead and the stocks are likely headed even lower. Rite Aid got approval by shareholders for a reverse split that needs to happen by the end of June to cure NYSE requirements for a $1 listing. At $0.57, the stock would trade at $11.40 on a 1:20 split to take place on April 22. The problem is that Rite Aid continues to face more pressure from Amazon in the pharmacy space and stronger competitors that are already struggling. At a pric...

Following the announcement of a planned reverse split, Rite Aid (RAD) continues to fall further below $1. The company now needs to complete a 1-20 split in order to get the stock to $15 post split.

After the close, Rite Aid (RAD) announced the intent to vote on a reverse split at a special meeting on March 21. The stock trades below $1 and the company needs to regain compliance with the NYSE so the move isn't surprising.

Frontier Communications completed a reverse split on Monday. The stock has been absolutely beat up due to this move and a dividend cut. The market needs to focus back on cash flows. Back in May,  my thought  was that  Frontier Communications  ( FTR ) was attractively priced below $1.50. My major concern in owning the telecom stock was a lingering shakeout from the dividend cut and reverse split that has the stock hitting new lows now. Read the full article on Seeking Alpha.  Disclosure: Long CTL. Please review the disclaimer page for more details. 

Halton Resources cut capital spending levels again, marking dramatic reductions from the original 2015 levels. The oil producer remains in a distressed position, requiring a reverse stock split. The recommendation is to avoid the stock, but investors should watch oil production from the company for key indications on price stability. The initial headline that Halcon Resources (NYSE: HK ) was cutting 2016 capital spending in half yet maintaining flat production levels was very troubling. If the distressed oil producer can maintain production levels while undergoing a reverse split, the oil market is in big trouble next year. Read the full article on Seeking Alpha. Disclosure: No position mentioned. Please review the disclaimer page for more details.