Self-driving automotive technology isn’t just science fiction anymore. It’s becoming a reality nowadays, and Luminar Technologies (NASDAQ:LAZR) is providing some of the necessary equipment to make it happen. Investors, meanwhile, can capitalize on this phenomenon through a long position in LAZR stock.
To be honest, you’d have a tough time finding a pure-play stock in this niche that beats LAZR stock. There simply aren’t very many publicly tradable companies specializing in lidar (light detection and ranging) technology that are worth looking at.
Now, the skeptics might have some questions to ask about LAZR. For instance, how big will the market for lidar technology actually be? Moreover, what kinds of revenues can we really expect Luminar Technologies to generate?
Those are valid questions, and we’ll definitely touch upon them. First, however, it’s worthwhile to address the recent price action of LAZR stock.
LAZR Stock at a Glance
First it was calm, then it was wild, and then it was calm again. That’s the best way to describe the moves in LAZR stock.
LAZR stock went public through a special purpose acquisition company (SPAC). This took place late last year after a great deal of anticipation.
Prior to the SPAC deal, LAZR stock really didn’t move too much. Indeed, the share price clung to the $10 level throughout much of 2020. That is not atypical price action (or lack thereof) for a SPAC stock in the pre-deal phase.
SPAC mergers often have a way of catalyzing the price action of a stock. That’s certainly the case when it comes to Luminar Technologies. From November to early December, the LAZR share price launched into orbit, reaching an eye-popping 52-week high of $47.80.
However, you won’t need to worry about buying at the peak price. By the middle of January, LAZR stock started to settle down and go sideways. And as of Jan. 22, the share price was a more reasonable $33 and change.
A Vital Technology
When it comes to autonomous vehicle technology, lidar is considered an essential component. As an early developer in this niche, Luminar has a chance to become a market leader.
To be among the best in the business, Luminar has to provide next-generation technology. The company achieves this by offering what it calls “advanced perception.”
That’s a good way to describe the company’s lidar tech, which enables both detection and classification of objects all the way out to 250 meters. It can even make out dark objects at night, such as a tire on the road.
Plus, Luminar’s lidar solutions are “smart” as the technology is capable of learning. Its over-the-air software updates are capable of continuously improving the lidar’s core functionality.
A Massive Market
While lidar tech might sound interesting, doubtful investors have a right to inquire about the growth potential of this niche market. Furthermore, they might ask about Luminar’s positioning in that market.
As InvestorPlace contributor Nick Clarkson points out, Luminar “boasts an impressive list of more than 50 commercial partners, including seven of the top 10 vehicle makers world wide.”
So, there’s no doubt that Luminar is poised to capture significant market share.
As for the market’s size, Luminar estimates that its current total addressable market is under $5 billion. However, the company claims that by 2030, that same market could be worth more than $150 billion.
In addition, R.F. Lafferty analyst Jaime Perez proposes a very lucrative outlook for Lumiar:
Assuming a ~4% vehicle penetration rate… Luminar anticipates it could generate revenues of approximately $5 billion with EBITDA margins of 50% by 2030.
The Takeaway
The lidar market is still in its infancy. Luminar is poised to capture a sizable share of that important market.
Thus, for a pure-play lidar investment with tremendous growth potential, take a serious look at LAZR stock.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
