What risk mitigation strategies should we consider for existing positions in LAZR?

Risk‑mitigation take‑aways for your LAZR exposure

1. Protect downside with tight stop‑losses or hedges – The class‑action filing (covering purchases from 20 Mar – 14 May 2025) has injected fresh negative sentiment (‑70) and could trigger a short‑term sell‑off, especially if the news spurs a wave of “large‑loss” investors liquidating. If you are long, set a hard stop just below the current swing‑low (≈ $4.20) or, if you prefer a non‑directional hedge, buy a near‑term LAZR‑linked put (or a VIX‑related volatility product) to offset potential volatility spikes.

2. Scale back or trim exposure – Given the legal uncertainty and the fact that the alleged “large‑loss” cohort represents a sizable share of recent float, a prudent move is to reduce position size now (e.g., sell 25‑30 % of the holding) while keeping a modest core stake for the longer‑term upside. This limits capital at risk if the stock slides below $4.00 and still preserves upside if the case is dismissed or the market digests the news without a prolonged price hit.

3. Watch key technical signals – LAZR is currently testing a descending‑triangle formation on the daily chart, with the 20‑day SMA hovering around $4.45 and the 50‑day SMA near $4.70. A break below the 20‑day SMA with volume above the 10‑day average would confirm a bearish move, prompting an immediate exit or a tighter stop. Conversely, a bounce off the $4.55 support level (the lower trend‑line of the triangle) on strong buying volume could signal a short‑cover rally, allowing you to hold the trimmed core position.

Actionable plan:

- Immediate: Place a stop‑loss at $4.20 (or buy a protective put).

- Short‑term: Sell 25‑30 % of the position to de‑risk while monitoring the $4.55 support level.

- Medium‑term: If the stock holds above $4.55 and the legal case shows no further escalation, consider rebuilding the position on pull‑backs; if it breaks below $4.20 with heavy volume, exit the remaining stake.

These steps balance capital preservation against the upside potential of Luminar’s Lidar technology, while keeping you positioned to profit from any reversal once the litigation risk subsides.