Shares of LightPath Technologies surged 10.2% to $6.78 on Friday after the micro-cap infrared optics maker confirmed it had closed the sale of its China subsidiary — a deal that formally severs its manufacturing footprint in the world's second-largest economy. Yet the bounce barely dents a punishing five-day slide from $8.10, raising the question of whether shedding China risk is enough to stabilize a stock caught between geopolitical repositioning and shrinking revenue. LightPath Exits China and the Stock Pops — but After a Brutal Week, Is the Defense Pivot Enough to Stop the Bleeding
Shares of LightPath Technologies jumped 10.2% to $6.78 Friday after the Orlando-based infrared optics maker confirmed it completed the sale of its China factory, capping a years-long effort to become an entirely Western supplier. But the rally only partially reverses a 16.3% slide over the prior five sessions from $8.10, leaving investors to weigh a cleaner geopolitical profile against real revenue lost and a still-unprofitable bottom line.
The China Exit Was Cheap — and the Proceeds Will Trickle In Slowly. LightPath sold its Zhenjiang, China subsidiary — including all manufacturing operations — for $4.5 million, to be paid in installments over five years.
The buyer is an entity owned by the facility's incumbent management team. That amounts to roughly $900,000 a year in cash coming back — a modest sum for a company that posted $71.7 million in fiscal 2026 revenue. The divested unit generated approximately $4.5 million in average annual third-party revenue , meaning LightPath traded a recurring revenue stream for a purchase price of the same size, paid on layaway.
The Defense Bet Is Real, but the Company Still Loses Money. Full-year revenue nearly doubled to $71.7 million, and adjusted EBITDA swung to a positive $4.2 million — yet net income remained deeply negative at -$20.5 million . The strategic logic is clear: the 2026 NDAA requires the Pentagon to eliminate reliance on Chinese-sourced optical glass by 2030 , and LightPath can now market itself as fully NDAA-compliant with zero China exposure.
Just days before the sale closed, LightPath secured an order for over 50,000 drone-camera optical assemblies from a defense customer , and its backlog surged 197% to $110.9 million .
Dilution and Valuation Deserve a Hard Look. LightPath has 70 million shares outstanding, up 30.6% year-over-year , meaning shareholders have been diluted to fund acquisitions and growth. At $6.78, the market cap sits near $475 million — roughly 6.6× trailing revenue for a company still burning cash. Short interest stands at 16.3% of shares , reflecting persistent skepticism that defense orders can scale fast enough to justify the price.
Bottom line: Shedding China removes a regulatory headache and unlocks defense contract eligibility, but the divestiture also strips out revenue and delivers minimal cash. With earnings due November 10, investors will soon learn whether the backlog is converting into profit — or just growing alongside the losses.