Gores Metropoulos (NASDAQ:GMHI) is a special purpose acquisition company (SPAC), that has agreed to merge with Luminar, a company that is well-positioned to revolutionize the auto industry. As a result, I recommend that longer-term investors buy GMHI stock.
Luminar’s LIDAR (light detection and ranging) technology looks poised to finally enable automakers to sell self-driving cars to the public. My belief is largely based on Volvo’s (OTC:VLVLY) decision to equip some of its vehicles with Luminar’s LIDAR starting in 2022.
According to The Verge, very few automakers sell vehicles that are equipped with LIDAR because the technology is “ridiculously expensive, with the leading suppliers pricing theirs at around $75,000.”
But Luminar is selling its LiDAR for a significantly cheaper (though unspecified) price. As a result, Volvo will add the company’s system to a number of its cars starting in 2022, and those vehicles will be completely autonomous on highways.
A Closer Look at GMHI stock
LiDAR will set Volvo apart from its competitors which do not plan to sell autonomous vehicles to the public. Instead, multiple other automakers intend to use autonomous vehicles as robotaxis that will transport consumers in exchange for per-trip fees.
It appears that Luminar is the only LIDAR maker whose system is cheap enough to sell to the general public. Given that huge advantage, I believe automakers will eventually seek to buy Luminar’s LIDAR, making GMHI stock a great name to own.
Another InvestorPlace columnist, Matt McCall, recently identified one of the keys to Luminar’s success. Specifically, he reported that LiDAR was completely built in house, including the semiconductors.
I believe that Luminar’s decision to cut out the middlemen enabled it to sell its LIDAR for much cheaper than its competitors.
According to MIT’s Technology Review, “Luminar’s device uses longer-wavelength light than other sensors, allowing it to spot dark objects twice as far out.”
Luminar’s competitors will likely need years to duplicate its parts-making operation. By the time they do so, Luminar will probably have a tremendous first-mover advantage when it comes to selling LIDAR to automakers.
Validation of Luminar and Its Technology
The deal with Volvo indicates that Luminar’s technology works well. Additionally, the Swedish automaker invested an undisclosed amount in the company in 2018. That suggests that Volvo was impressed by the company and its 25-year-oldf ounder and CEO, Austin Russell.
Moreover, veteran billionaire investor Peter Thiel was a backer of Russell very early on, providing him with $100,000 to develop Luminar’s technology within the framework of the Thiel Fellowship program.
Under the program, college dropouts are given $100,000 to develop new technologies. Thiel subsequently invested additional funds in Luminar, indicating that he’s confident in Luminar and Russell after having observed them in action for years.
Russell, who will also control a majority of the company’s stock, is not the ideal age to lead a major, publicly-traded tech firm, b the investments by Volvo and Thiel indicate that Luminar and by extension Russell, know what they’re doing, Moreover, Mark Zuckerberg was in his 20s when Facebook (NASDAQ:FB) launched its IPO, and Facebook stock has done very well.
Finally, Luminar may have supply and cost issues when demand for its LIDAR soars. But another revolutionary company, Tesla (NASDAQ:TSLA), managed to overcome similar problems, and I’m confident that Luminar will be able to emulate Tesla in that area.
The Bottom Line on GMHI Stock
Trading with a market capitalization of just $530 million, Gores Metropoulos looks like a proverbial steal, given Luminar’s huge potential.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Larry has conducted research and written articles on U.S. stocks for 13 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Among his highly successful contrarian picks have been solar stocks, Roku, Plug Power, and Snap. You can reach him on StockTwits at @larryramer. Larry began writing columns for InvestorPlace in 2015.
