Velodyne (VLDR) Shares Rise as the Company Inks a Three-Year Sales Agreement With Baidu

Oct 12, 2020 09:28 EDT
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Velodyne (NASDAQ:VLDR), the manufacturer of Light Detection and Ranging (Lidar) remote sensing devices, is in the spotlight today amid news that the company has entered into a sales agreement with the Chinese multinational technology company, Baidu.

As per the press statement released by Velodyne today, its Alpha Prime sensors will be utilized by Baidu for “autonomous applications”:

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“[Velodyne has entered into] a three-year sales agreement with Baidu for its Alpha Prime™ lidar sensors. The Alpha Prime sensors will be utilized for autonomous applications. Velodyne’s low-cost, high-scale manufacturing delivers attractive pricing for Baidu and its Apollo partners.”

The statement went on to note:

“Baidu and Baidu’s Apollo program, an open-source autonomous vehicle software platform, selected the Alpha Prime for its range, resolution and field of view that collectively address the high-performance requirements for autonomous vehicles. Quality 3D lidar vision is a critical component for autonomous vehicles to accurately perceive the environment.”

As a refresher, the Alpha Prime sensor leverages millions of data points per second in order to accurately detect proximal objects, thereby, enabling reliable autonomous navigation. The lidar is also capable of guiding the vehicle through a range of weather conditions, including rain, sleet, and snow.

Given the momentous nature of today’s announcement, it is hardly surprising that investors are responding positively. As an illustration, Velodyne shares are currently up over 3 percent in pre-market trading.

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This development, of course, comes as a welcome relief for investors. Bear in mind that Velodyne merged with the Special Purpose Acquisition Company (SPAC), Graf Industrial, toward the end of September. However, the shares of the combined company were hammered in the immediate aftermath. We had reported at the time that the company’s PIPE investment structure may have aggravated this heightened volatility regime. As per the Form S-1/A filed by Graf Industrial on the 22nd of September, 15 million shares were registered in accordance with the SPAC’s agreement with its PIPE investors, corresponding to gross proceeds of $150 million for the company. As a refresher, a Private Investment in Public Equity (PIPE) is an arrangement whereby institutional investors inject crucial liquidity into a company in return for shares that are issued at a substantial discount. However, in a departure from the norm, these PIPE shares, including those awarded to the Ford Motor Company (NYSE:F), were not subject to a lock-up period that bars any liquidation. Consequently, the stock was pressured by expectations of an incoming wave of liquidation once the PIPE Resale Registration Statement is declared effective by the SEC.

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