Velodyne Is Poised to Be a Winning Self-Driving Play

Velodyne’s (NASDAQ:VLDR) LIDAR technology is well-positioned to become widespread. The company’s offerings already are in high demand and long-term investors should buy Velodyne stock.

Image of the Velodyne Lidar (VLDR) sign outside the company's headquarters.
Source: jejim /

Velodyne’s annual revenue is estimated to have reached $100 million. This means LIDAR is widely deployed in automobiles. And both advanced driver-assistance systems (ADAS) and fully autonomous vehicles are poised to proliferate in coming years. Thus, Velodyne’s financial results are set to surge long term.

LIDAR Technology Will Likely Become Widespread

Velodyne CEO Anand Gopalan told Bloomberg that the company’s customers have “tremendous momentum” when it comes to commercializing their ADAS and autonomous-driving systems. Indeed, the company went from three deals at the beginning of 2020 to 18 on Aug. 1, and it expects its top line to jump 60% every year going forward. By 2024, Velodyne will generate revenue of $680 million, Gopalan, the CEO, estimated.

Those figures indicate that the demand for LIDAR is jumping and that the technology will become widely used by the middle of this decade.

Providing further evidence of that view, Bloomberg analyst Andrew Grant said “we believe [LIDAR] will be an important sensor for achieving level four highly autonomous vehicles.” He added that the technology can also be incorporated into trucks and robotics.

Velodyne’s Technology Has Been Well-Validated

On Oct. 5, Ford (NYSE:F) announced that it had obtained 13.06 million shares of Velodyne stock, giving it  7.6% ownership of the LIDAR maker. Moreover, Chinese internet search giant Baidu (NASDAQ:BIDU), announced a three-year deal with Velodyne. Under the agreement, Baidu will use Velodyne’s “Alpha Prime sensors … for autonomous applications,” Velodyne announced.

According to Velodyne, Baidu “selected the Alpha Prime for its range, resolution and field of view that collectively address the high-performance requirements for autonomous vehicles.” In a recent article, the company added that the technology:

“enables autonomous operation within a broad range of settings, including urban and highway environments. It provides exceptional detection of dark or low reflectance objects at long distances, such as tires, dark vehicles, low reflectivity pavement and low visibility pedestrians.”

Finally, in October 2019, Velodyne announced that it would collaborate with South Korea’s Hyundai Mobis. The companies intend “to launch a new lidar-based ADAS that integrates Velodyne lidar technology and Hyundai Mobis cognitive software.” Hyundai Mobis says that it’s the world’s seventh largest auto parts maker with over 32,000 employees.

Given the deal with Baidu, the large investment by Ford and the partnership with Hyundai Mobis, I think it’s crystal clear that Velodyne has developed very strong and extremely useful LIDAR products. Otherwise those large companies would have dealt with one of the other LIDAR developers.

Autonomous Driving May Be Closer Than Many Think

Grant, Bloomberg’s analyst, says the timeline for the launch of autonomous vehicles is “uncertain.” He only “expects roughly 135,000 lidar-equipped robotaxis to hit public roads globally by 2028.”

Even Velodyne’s CEO only anticipates “a limited rollout” of robotaxis beginning in 2022.

But Elon Musk, Tesla’s (NASDAQ:TSLA) CEO, said earlier this month that he expects the company to begin launching its “full self-driving” system on Oct. 20. And as I’ve pointed out in previous columns, Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) Waymo is already providing fully autonomous robotaxis in a Phoenix suburb.

Further, as I’ve also noted in the past, autonomous vehicles are already being used to deliver products. And this trend has accelerated during the novel coronavirus pandemic, Reuters reported in April. Specifically, the news service stated that “Self-driving cars, trucks, sidewalk robots and shuttles are rolling out of the labs and parking garages and onto American streets to help deliver groceries, meals, and medical supplies.”

With Waymo and apparently Tesla already moving to full autonomy, I believe that many automakers will unveil the technology on a massive scale way sooner than 2028. And autonomous vehicles are already being used for deliveries fairly regularly. This trend that should surge by leaps and bounds over the next year. Consequently, I expect demand for Velodyne’s products to be much stronger than expected in the coming months and years.

The Bottom Line on Velodyne Stock

In light of the tremendous validation of Velodyne’s products and the strong demand outlook for LIDAR, I recommend that longer-term investors buy the shares.

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.

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