LIDR Stock Plunges 18% After r/WallStreetBets Squeezed the de-SPAC Play

Innovations in technology for both artificial intelligence (AI) and transportation have gained prominence in the past year as market needs have become increasingly clear. One company, which lives at the intersections of the two, has recently seen the type of growth that can be emblematic of both trends. AEye (NASDAQ:LIDR) saw its shares rise considerably on Sept. 16, but some early declines today have brought cause for concern regarding LIDR stock’s sustainability in the longer term.

Graphic demonstrating self-driving car technology

Source: Shutterstock

What’s Happening With LIDR Stock?

In answer to that question, there are a few factors to consider. Since yesterday, LIDR stock has received considerable attention on social media forums, specifically Reddit and Twitter. As of this writing, LIDR has received 143 mentions on r/WallStreetBets in the past 24 hours.

LIDR stock peaked yesterday, rising almost 56% for the day at one point, although close of markets saw it finish with a gain of 35.55%. Since them, though, it has declined by more than 23%. As of this writing, shares are down 17% on the day.

While it’s still early in the day, this weak start calls to mind the possibility that yesterday’s rally was the result of another meme stock catching wind temporarily, but falling almost as fast as it rose.

What It Means

It’s all too easy for meme stocks to rise quickly and without much warning. For a company like AEye, though, it’s not hard to see why interest on internet forums would be high. Its mission of providing AI-driven LiDAR systems could absolutely change road travel for the better. Generally, investors have come to view LiDAR innovations as a way of making driver easier and safer.

That said, it doesn’t seem as though the type of hype that comes from temporary social media buzz is going to be enough to drive LIDR stock permanently into the green. Reddit users were excited when it broke the $10 mark yesterday, but their tunes started to change when shares began to decline.

This seems like a classic case of what Bloomberg’s Chris Bryant calls the “de-SPAC redemption trade” in which stocks that initially began as SPACs experienced unexpected surges and, despite constant social media chatter, were quick to fall. This list includes Helbiz (NASDAQ:HLBZ) and AgileThought (NASDAQ:AGIL). The de-SPAC pattern is one that we’ve seen before.

What’s Next for LIDR Stock

Today’s declines don’t mean that AEye is a stock without potential. On the contrary, it could certainly go up in the future and likely will. That said, it is clear that it will take more than the artificial inflation of share prices that comes from Reddit surges to drive long-term sustainability.

For investors willing to buy now and sit on LIDR stock, it could absolutely yield positive results as the company becomes more established and wheels out more innovations. In instances such as this, we must be careful not to confuse social media superficiality with long-term sustainability, but equally careful not to write it off for the same reason.

Unlike Helbiz, AEye is a company operating in a market with plenty of growth potential. LIDR stock, though, will need time to mature.

On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

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