By now, I’m sure at least some of you are getting quite tired hearing about special purpose acquisition companies, or SPACs. Seemingly every other market debut is a SPAC, essentially a backdoor way of doing an initial public offering. Nevertheless, Gores Metropoulos (NASDAQ:GMHI) stock has attracted much attention and for good reason.
By buying GMHI stock, you’re getting a stake in Luminar Technologies (once the transaction is complete), one of the startups in autonomous driving innovations.
Specifically, Luminar Technologies specializes in an advanced system based off lidar, or light detection and ranging. Utilizing pulses of electromagnetic radiation, lidar signals “ping” off objects and calculates their distance based on the time it takes for the signal to return.
Since the speed of light is a constant, lidar systems are incredibly accurate. Further, with proprietary adjustments, companies like Luminar can greatly enhance the range of object detection.
To be clear, the case for GMHI stock isn’t so much the lidar system itself. Rather, it’s the innovations that Luminar has incorporated that makes its superior to other lidar-based platforms. Perhaps the most impressive is the company’s three-dimensional velocity detection system. Whether it’s a car changing lanes or a pedestrian that inadvertently crossed into an autonomous vehicle’s path, Luminar’s system can pick up and classify the object and make the necessary (or appropriate) avoidance measures.
Another factor supporting GMHI stock is the underlying company’s stress testing. Most autonomous technologies today incorporate lidar due to its range and accuracy. However, traditional lidar systems have been stymied with inclement weather. For instance, a typical system could mistake falling snowflakes as a wall in the middle of the freeway. Obviously, that’s not something you want.
However, Luminar’s goal is to achieve full autonomous driving at scale. Clearly, if a driverless vehicle couldn’t perform in various weather conditions, it would be rendered pointless. But the company has put its lidar system through the ringer with very encouraging results.
The Lidar Versus Camera Debate
Of course, nothing is without some disadvantages to consider. For GMHI stock, the underlying lidar technology has been cost-prohibitive. But even here, Luminar has managed to get its proprietary system down to a reasonable cost and with outstanding performance. At this point, you might be thinking that this is a unicorn company.
That was my initial thought as well. However, when something sounds too good to be true, it usually is. Don’t get me wrong – I don’t have anything against GMHI stock. Certainly, the science sounds incredibly compelling. But here’s something to chew on before you dive in – Tesla (NASDAQ:TSLA) CEO Elon Musk is no fan of lidar.
In last year’s edition of Autonomy Day, Musk stated:
LiDAR is a fool’s errand…Anyone relying on LiDAR is doomed. Doomed! [They are] expensive sensors that are unnecessary. It’s like having a whole bunch of expensive appendices. Like, one appendix is bad, well now you have a whole bunch of them, it’s ridiculous, you’ll see.
If you had any doubts about Musk’s conviction, he added that lidar is “lame.” It’s not just the expense issue, which Luminar has addressed. Rather, it’s that lidar relies on data interpretation. However, with a camera, you’re mimicking natural vision. Over time, it’s theoretically possible that camera sensors can read road signs, even those that are put up impromptu. By relaying this information, camera-based autonomous vehicles can possibly make better decisions than lidar-based vehicles.
Also, another factor that supports cameras is that they are passive systems. In other words, a driverless vehicle can “see” other cars without interfering with the environment. Again, this mimics human functionality, unless you’re one of those mutants that can shoot laser beams out of your eyes.
That’s not really a joke because that’s basically what happens with lidar, which is an active system. In order for this platform to detect objects, it must somehow “touch” them. Unfortunately, this means that the safety profile regarding the 1550nm wavelength that Luminar utilizes is not quite clear.
This is a controversial issue because other experts state that 1550nm lasers are safer for the eyes than the more popular 905nm wavelength. Nevertheless, I’m not entirely clear on the safety implications, as well as potential interference resulting from lasers being shot all over the place should this technology go mainstream.
Don’t Sell Yourself Short
Interestingly, both Luminar and Tesla claim to benefit from their respective autonomous systems because of mass data collection. Thanks to profound artificial intelligence technologies, machines can learn from the collection of real-world data, finetuning their capacity exponentially.
While that’s great and all, here’s a fact that can trump both lidar and camera-based systems: the human brain will always be superior to the best AI or autonomous system ever developed.
Consider for instance the massively sized supercomputer, which forms the basis of multiple advanced technologies. To get around the enormous space and energy requirements of supercomputers, IBM (NYSE:IBM) invented Blue Gene. This radically reduced the size and cost of these remarkable machines.
Yet Blue Gene is not what you would call cheap to run in absolute terms. It still consumes substantial energy, enough so that it requires thousands of gallons of water to cool the system. Further, IBM’s supercomputer requires multiple stacks of processors that are as tall as an average-sized human male.
The point is, if you want true autonomy, you must apply a brute-force method by incorporating more processing power, which increases size and energy requirements. And all that computing capacity can’t replace the instinct and on-the-spot decision-making capabilities of the human brain, which weighs on average about three pounds.
Frankly, driving is much more than knowing the exact distance of an object 200 meters away. All drivers operate on a mixture of training, personal experiences and gut reactions. To replace these attributes via AI may be impossible – who knows? More realistically, I see autonomous technology being utilized as a driver assistance rather than a driver replacement.
But in the meantime, buying shares of GMHI stock isn’t a bad way of speculating on the next big thing. In the immediate term, lidar has more practical capabilities. Just be careful that in the long run, improving camera sensors may give lidar-based systems serious competition.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
