Buying some more Innoviz

A placement leads to 25% haircut...good or bad?

I've detailed my long thesis for Innoviz here and here (with part three coming soon).

Today I'll be buying more, here's why:

• The major overhand on Innoviz is simple: cash runway. Today's offering goes a long way to ameliorate that. The offering brings in $37m to the company, bolstering the $68m cash pile they had at year end 2024. This brings them to $105m in cash on hand.

• They recently slashed costs once more, bringing burn down by another $12m in 2025.

• Both of these decisions are tough, but the right move by management to get the company on the road to breakeven.

• A conservative rough approximation: with $105m in cash, $40m in NRE cash from VW in 2025, ~$15m in product revenue (I'll assume a zero to low single digits gross margin), this brings the company's burn rate down to ~$25-30m during 2025. Should they sign any further NRE cash deals that will be a net positive to cash burn. This puts Innoviz at year end 2025 with $70m in cash at the low end. Not a great position, but not terrible either. Upside scenarios, that are not unlikely, of NRE signings or product revenue with higher gross margin bring this burn closer to $10-15m, putting the company at $90m in cash at year end.

• There's added upside - should the stock stay above $1.7 for a few days, the rest of the warrants should be exercised, brining in another $37m to the company. While the company's stock has collapsed today, I think this is fairly likely as 2025 will show to finally be the year that OEMs start closing their programs and the market understands that the shift to L2, L2+ and L3 is finally here. See Mobileye's collaboration with Lyft announced just today as proof of this. Any shift like this will move Innoviz's stock in the right direction and product the cash injection for the company. This would mean that at the low end Innoviz will end the year with $107m or at the higher end $120m. A much better place to be in.

• Re the Mobileye <> Lyft collaboration - that's going to be with Mobileye's Drive platform. Who's integrated into that? Reminder - Innoviz.

A lot of my decision to buy comes down to position sizing. During 2024 I made two main errors in my position sizing for Innoviz (which you can read about in my 2024 wrapped). In Q4 I slashed my position dramatically and only added slightly after the very positive VW announcement. Innoviz is a company in a long, long turnaround. This is a five year journey, and while the stock moves with incredibly volatility, it's good to remember that. Therefore my buy plan has been to add only around events when I de-risk the company's liquidity position or market timing.

Today's announcement has dramatically improved the company's liquidity and with the large 25% drop, I'm going to be taking advantage of that to double my position. This will bring it up to 4% of my portfolio. At 4% this is meaningful enough for my portfolio on the upside while not taking up too much capital for the time horizon I see this playing out. I will continue adding if:

• Price drops by 35% (~0.82 per share)

• De-risk of market timing (for example an OEM announces an L3 program)

• De-risk NRE or liquidity position (for example the company announces a new impressive collaboration on their earnings call)