Shares of LightPath Technologies fell 10.3% to $11.10 after the Orlando-based optics maker disclosed it would sell its entire China subsidiary to local managers for just $4.5 million, paid in installments over five years. The deal eliminates China from LightPath's footprint — but the price tag and payment terms have investors questioning the math.
• The Sale Price Barely Equals One Year of Revenue From the Unit. The former China operation averaged about $4.5 million in annual third-party revenue in fiscal 2025 and 2026, roughly the same figure as the total purchase price. Selling a revenue-generating subsidiary at a 1x revenue multiple — paid in installments, with just $500,000 per year minimum and no lump sum at closing — carries meaningful collection risk. For a company with trailing twelve-month revenue of $37.2 million and a net loss of $14.9 million , giving up even a small revenue stream without near-term cash in hand stings.
• The Real Play Is Qualifying for U.S. Defense Dollars. The divestiture will "eliminate LightPath's China-based operations and complete its shift to a fully Western-aligned manufacturing footprint," positioning it as an NDAA-compliant optics supplier for defense customers. That matters because LightPath ended Q3 fiscal 2026 with a record backlog of approximately $110.6 million, up 196% year over year , heavily weighted toward defense contracts. Shedding China removes a potential disqualifier for classified or sensitive programs.
• Revenue Is Surging, But Profits Are Still Missing. Q3 revenue rose 109% year over year to $19.1 million while gross margin improved from 29% to 36%. Yet the company still posted a net loss of $4.1 million, or $0.07 per share.
Analysts don't expect LightPath to turn a profit until 2027. The stock trades at roughly 9x sales — a premium valuation that demands flawless execution.
• A Fresh Defense Order Softened the Blow — Slightly. Just one day before the divestiture announcement, LightPath disclosed $13 million in follow-on purchase orders from a leading counter-drone defense supplier. That order reinforces the defense-centric pivot but wasn't enough to offset the selloff triggered by the China exit's unfavorable economics.
The bottom line: LightPath is betting that credibility with the Pentagon is worth more than a factory in Zhenjiang. The backlog suggests that bet may be right — but a still-unprofitable company selling assets at 1x revenue on a five-year layaway plan is asking shareholders for a lot of patience.