Why Luminar Stock Surged Today

Luminar (NASDAQ: LAZR) stock posted big gains in Tuesday's trading following the publication of the company's latest quarterly results and the announcement of a new deal. The lidar technology specialist's share price closed out the daily session up 10.8% and had been up as much as 15.7% earlier in the day's trading.

Luminar published its third-quarter results after the market closed yesterday, reporting sales that came in below expectations and a lower-than-anticipated loss. In conjunction with the earnings release, the company also announced that it had secured new contracts with Volvo and a major Japanese automaker.

Luminar stock surges on new contract wins

Luminar posted a non-GAAP (adjusted) loss per share of $0.16 per share on sales of $15.49 million in the quarter. The company's loss was in line with Wall Street's expectations, but sales fell significantly short of the average analyst estimate's call for sales of $19.06 million.

Revenue was down 8.6% year over year in the quarter and came in well below the company's own guidance, but investors appeared to take comfort in management's statement that sales in the period would have actually been up on a sequential quarterly basis if it weren't for the impact of a renegotiated production contract. The company also had some exciting contract wins to announce.

Luminar revealed that its technologies will now be standard features on Volvo vehicles beyond its EX90 line. The company also announced that a major Japanese automaker was increasing its adoption of Luminar's lidar technologies and had also contracted for new software features.

What's next for Luminar?

Luminar is guiding for moderate sequential quarterly sales growth in Q4. Meanwhile, the company's loss is expected to be significantly lower than Q3's, thanks to cost-saving initiatives and a production halt as Volvo moves through existing inventory.

Despite big gains today, Luminar stock is still down roughly 66% across this year's trading. If the company can continue to score major contract wins for its object detection hardware and software and take advantage of autonomous vehicle trends, the stock could enjoy a massive comeback run. But the tech specialist isn't the only player in the lidar space, and investors should understand that Luminar is a high-risk, high-reward investment with a speculative outlook.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.