4 LIDAR Stocks to Benefit From Self-Driving Car Revolution
Gone are the days when driverless vehicles were limited to the realm of science fiction. Thanks to ongoing innovation and technological breakthroughs, robots are finally taking over the wheels. In recent years, autonomous vehicles (AVs) have been in the spotlight, and auto and technology giants have relied heavily on futuristic robotic vehicles. (Read More: Driverless Racing Accelerates: Who Is Leading The Game?)
LIDAR illuminates AV perspectives
Since driverless technology is one of the hottest investment ideas in the automotive market, the best way to capitalize on the AV revolution is to invest in the core technology that will make self-driving cars a reality. And this basic technology is nothing more than LIDAR - which basically stands for light detection and removal.
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LIDAR comprises 3D scanning technology and uses laser beams to detect objects. This provides accurate measurements of spatial positions based on the time it takes each laser pulse to reflect back to the sensors. Self-driving vehicles are to be equipped with these laser light perception sensors called LIDAR, which reproduce precise images of the surroundings of the cars and react to the surroundings with human-like abilities. Basically, it is this LIDAR technology that helps give vehicles a three-dimensional view of the road that culminates in the utopian AV concept to eventually become a disruptive reality.
The race for AV supremacy will only get tougher in the years to come. Improved neural network capabilities and advances in digital mapping and obstacle detection capabilities are expected to result in safer navigation, fewer accidents, and greater commuter convenience. An increasing degree of automation should improve the LIDAR market prospects. According to ReportLinker data, the global LIDAR market is expected to have a CAGR of 22.5% over the period 2021-2028. Amid the bullish scenario, we're going to highlight five LIDAR stocks that you should keep an eye on. But before that, let's take a look at the lidar makers that have gone public or announced their 2020 IPO plans to capitalize on the AV revolution.
It's raining SPAC IPOs for LIDAR stocks
The latest LIDAR developer to announce IPO plans is US startup Ouster, which will go public by partnering with a special purpose vehicle (SPAC), Colonnade Acquisition Corp CLA. The deal values the maker of lidar sensors for driverless cars and smart cities at $ 1.9 billion. Specifically, Ouster, whose goal is to generate around $ 19 million in revenue in 2020, is the fifth LIDAR share to follow in the footsteps of Velodyne Lidar Inc., VLDR, Luminar Technologies, LAZR, Innoviz Technologies and Aeva go public on SPAC.
Around 10 days ago, Israel-based LIDAR startup Innoviz announced plans to go public by partnering with a SPAC called the Collective Growth Corporation. After the merger, which is expected to close in the first quarter of 2021, the merged company will be listed on NASDAQ under the ticker symbol “INVZ”. Innoviz's most important strategic partners and customers include Magna International, BMW AG and Aptiv PLC.
California-based LIDAR company Aeva merges with InterPrivate Acquisition Corp. merge worth $ 2.1 billion. The merger is expected to be completed in the first quarter of 2021. Aeva will then be listed on the NYSE under the ticker symbol “AEVA”. With the support of Porsche SE, Aeva has signed a contract for sensor systems with Volkswagen VWAGY and announced a partnership with the German car manufacturer ZF Friedrichshafen AG for the delivery of 4D LIDAR based on frequency-modulated continuous wave technology.
California-based Velodyne began trading on NASDAQ on September 30, 2020 after the SPAC merger with Graf Industrial Corporation was completed. Earlier this month, Luminar made its NASDAQ debut following a reverse merger with Gores Metropoulos Inc.
The race for the LIDAR market is gaining momentum. Companies are trying to provide automakers with the key sensor that they can use to improve their driverless game. Below are four stocks that will emerge as winners in this AV technology.
Luminar: Since their market debut on December 3rd, the stock has gained more than 107%. Luminar's proprietary software, which is designed to unlock full lidar functionality, will enhance automakers' ability to provide autonomy for high-speed highways on a commercial, high-volume scale. The company has major deals with Daimler AG DDAIF, the INTC Mobileye unit of Intel Corp., Volvo Group, and others that are likely to cement their position in the LIDAR market. Volvo's vehicles will be equipped with Luminar iris lidar sensors from 2022. The company expects sales of $ 15 million in 2020, which is projected to increase to $ 837 million by 2025. The Zacks consensus estimate for next year sales points to the year - growth of 69.3% year over year. Luminar currently has a Zacks Rank 3 (Hold). The full list of today's Zacks rank 1 stocks (Strong Buy) can be found here.
Velodyne: Since going public on September 30, the stock is up 46%. Zacks Rank # 3 is currently a leader in the LIDAR market based on its first mover advantage, broad product portfolio, and around 300 customers including major auto and technology companies. In October, the company announced a three-year contract with Baidu for its Alpha Prime ™ lidar sensors. A few days ago, Velodyne signed a multi-year sales agreement with Motional, which has been at the forefront of driverless innovation for decades. As of September 30, Velodyne had shipped more than 47,500 units. According to the company's latest presentation, around 175 projects in various industries could potentially result in deliveries of around 9 million units by 2025. At the end of the third quarter of 2020, the leading lidar supplier's revenue increased 137% year over year. Revenue for the full year 2020 is estimated at $ 101 million.
ON Semiconductor ON: ON Semiconductor offers various intelligent detection solutions for automotive and autonomous perception with superior technology for image sensors, radar and LIDAR. ON Semiconductor is well positioned to benefit from the solid dynamics of the image sensors with steady growth in the advanced driver assistance systems ("ADAS") sector. ON Semiconductor currently has a Zacks rank 3. The SiPM dToF LIDAR platform developed by ON Semi offers a comprehensive solution for cost-effective single-point LIDAR for industrial distance measurement. New product launches by the company, including image sensors for ADAS in the automotive end-market for next generation automotive designs, bode well for the leadership position. The company's collaboration with Korea-based LIDAR startup SOS LAB to accelerate the development of LIDAR technology in the automotive market should also improve its prospects. The company expects an expected EPS growth rate of 5.3% over the next three to five years.
Veoneer, Inc. VNE: The partnership with Velodyne has strengthened Veoneer's position in the LIDAR market. Swedish company Veoneer manufactures and markets LIDAR systems for the automotive sector using the scalable auto-grade LIDAR sensor and Velodyne's core 3D software technology. Veoneer is also working internally on short-range lidar. Working with US tech giant Qualcomm is a good sign. Veoneer - which currently has a Zacks Rank 3 - is well on its way to realizing its first organic sales growth in the fourth quarter of 2020 after being spun off from Autoliv in 2018. The Zacks Consensus Estimate for 2021 is profit and sell signals for the full year - annual growth of 42.6% and 23.6% respectively.
Zack's top 10 stocks for 2021
In addition to the stocks discussed above, would you like to find out more about our top 10 tickers for the whole of 2021?
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Intel Corporation (INTC): Free Stock Analysis Report
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ON Semiconductor Corporation (ON): Free Stock Analysis Report
Veoneer, Inc. (VNE): Free Stock Analysis Report
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Velodyne Lidar, Inc. (VLDR): Free Stock Analysis Report
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