Why Did Cepton Inc (NASDAQ: CPTN) Jump by 343% Yesterday?

Lidar firm Cepton (NASDAQ: CPTN) celebrated a warm welcome on the NASDAQ stock exchange yesterday as investors bid up its share price above $80. It closed the session at $42. That's a 343% gain on entry but close to a 50% drop for those unfortunate shareholders bidding on the highs.

In pre-market trading on Thursday, Cepton is down 23% at the time of writing.

Cepton, Inc. is an emerging growth company. It develops lidar-based solutions, sensing and ranging systems for the automotive (ADAS/AV), smart cities, smart spaces and smart industrial application industries.

Cepton's public debut results from a special purpose acquisition company (SPAC) combination with Growth Capital Acquisition Corp. (NASDAQ: GCAC). 

The merger took place on 10 February. The next day the company issued 5,950,000 shares of common stock to certain investors in exchange for $59.5 million in consideration. These are known as the PIPE shares.

Altogether Cepton issued:

•   127,426,541 Consideration Shares;

•   5,950,000 PIPE Shares;

•   4,312,500 Founder Shares;

•   5,175,000 Private Placement Warrants; and

•   5,175,000 shares of common stock issuable upon exercise of the Private Placement Warrants.

The company has a history of losses and expects to incur significant expenses and continuing losses for the foreseeable future.

Cepton is the eighth Bay Area lidar company to go public via SPAC since September 2020.