Here's How Analysts View The Velodyne Lidar - Amazon Warrant Deal - Amazon.com (NASDAQ:AMZN)

Velodyne Lidar Inc VLDR disclosed offering 40 million warrants at $4.18/share to Amazon.com Inc AMZN, with full vesting contingent on $200 million of sales from Amazon. Velodyne will issue a warrant to a subsidiary of Amazon to acquire up to 39.6 million shares.
Amazon is a well-rumored customer, specifically for last-mile delivery applications. Craig-Hallum analyst Richard Shannon believes overlap with a $318 million contract Velodyne highlighted in its SPAC process, so the stock being up 60% in the aftermarket seems like "an overreaction" at first glance.
Shannon also points out that this warrant deal makes this revenue stream more specific, but there are no large purchase orders in place at this time.
Lastly, Amazon implicitly confirms a large-scale need for lidar in non-automotive applications, which should provide a lift for all lidar companies with focus there, specifically Ouster OUST, the analyst argues.
Shannon has a Hold rating and a price target of $3.50 (7.2% downside to February 7, 2022, closing price of $3.77) on Velodyne's shares.
BofA analyst John Murphy said the motivation, industrial logic, and impact of the transaction are "not entirely clear."
He also noted that Amazon frequently makes minority investments in companies via warrants, and said details around the transaction contained in the warrant agreement are "lacking."
From Velodyne's perspective, the transaction makes sense to fortify an existing customer/partner relationship with Amazon and gain a public endorsement for the theoretical value of the company's equity. Still, this agreement also may incentivize Amazon to award Velodyne additional commercial agreements.
While the endorsement is "helpful," he maintains an Underperform rating on Velodyne, given his view that the future for commercially-targeted LIDAR is "far from clear."
Additionally, the company appears to be lagging behind its closest peer Luminar Technologies Inc LAZR, in booking multi-year contracts for automotive/ADAS/AV series production.
Price Action: VLDR shares traded higher by 0.50% at $4.06 in the premarket session on the last check Wednesday.

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Here's How Analysts View The Velodyne Lidar - Amazon Warrant Deal

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