Prominent financial analyst Jim Cramer has voiced significant concerns regarding nLIGHT, Inc. (LASR) shares, advising caution to potential investors. His assessment centers on the company's historical inability to generate profits and a noticeable downturn in its sales performance over recent years. Despite the defense sector's potential interest in nLIGHT's technology, Cramer suggests that a strong financial foundation is lacking, making the stock a challenging recommendation.
Cramer pointed out that nLIGHT has not been profitable for the past few years, raising a red flag for investors prioritizing financial stability. He noted that the company's sales peaked in 2021 at $270 million, subsequently falling below $200 million last year. This consistent decline in revenue and sustained unprofitability have contributed to the stock reaching an all-time low earlier in the year.
While acknowledging the potential for defense department spending on nLIGHT's technology, Cramer emphasizes that this factor alone might not be sufficient to offset the company's poor financial track record. His commentary suggests that reliance on government contracts, while a potential boon, doesn't negate the fundamental issues of profitability and declining sales.
nLIGHT specializes in the production of semiconductor and fiber lasers, catering to industrial, aerospace, and defense applications. The company also offers high-energy laser systems and components for precision and directed energy uses. Despite the innovative nature of its products and their relevance to critical sectors, Cramer's analysis underscores the importance of financial performance in investment decisions.
In his critical evaluation, Cramer advises investors to seek out alternative investment opportunities, particularly within the artificial intelligence sector, which he believes offer better growth potential and reduced risk compared to nLIGHT. He implies that while nLIGHT's technological offerings are interesting, its financial instability makes it a less attractive option for those seeking robust returns.