Innoviz shares plunge after surprise funding at discount
Innoviz shares plunge after surprise funding at discount
Investors react to $40 million capital raise at 12% below market price.
Israeli lidar company Innoviz saw its shares plunge on Wall Street on Monday after announcing a surprise funding round at a significant discount to the market price.
The company revealed that it had raised $40 million from institutional investors at a share price of $1.39. Innoviz shares closed trading on Friday at $1.59, meaning the fundraising was conducted at a 12% discount.
Investors in this round also received options that can be exercised immediately at a price of $1.69 per share, with a five-year expiration period.
The funding announcement came as a surprise, as just a month ago, Innoviz had reported signing an agreement to receive $80 million from its development partners, with $40 million scheduled to be received in 2025. This funding falls under the non-recurring engineering (NRE) model, a common practice in the automotive industry, where component suppliers receive funding from automakers for specific developments.
Innoviz generates little revenue from product sales, with most of its income coming from NRE payments. A year and a half ago, the company faced investor criticism for a similar fundraising move, when it raised $65 million at a 20% discount to its market share price.
While Innoviz has strategic agreements with leading automakers, the implementation of these deals has been slow, forcing the company to raise additional capital. It has yet to generate substantial revenue from operations, reporting just $4.5 million in revenue in the third quarter, while burning through $17.5 million in cash during the same period.
As of the end of September, Innoviz had $87 million in cash reserves, raising concerns among investors about its ability to complete customer developments without further capital injections.
About a week ago, Innoviz cut 9% of its workforce—approximately 40 employees—leaving it with 350 employees. The layoffs are expected to reduce annual expenses by $12 million. Most of the job cuts were in the product development department, which the company sees as having limited economic potential.
