Investors who are interested in self-driving automotive technology. should keep an eye out for Collective Growth (NASDAQ:CGRO), a special purpose acquisition company (SPAC) that’s undergoing a merger with lidar (light detection and ranging) specialist Innovi. If you see a future for this type of technology, then CGRO stock may deserve a place in your portfolio.
Investors in this lidar start-up include a couple of big auto-equipment companies: Magna (NYSE:MGA) and Aptiv (NYSE:APTV). Another investor is the well-known Japanese financial firm Softbank (OTC:SFTBY).
And here’s a fun fact: early on, it was expected that the shell company would merge with a cannabis-related firm. So, if you were wondering why the stock ticker symbol CGRO was chosen, now that decision should make a little bit more sense.
As some point in time, CGRO stock will disappear and be replaced on the Nasdaq Exchange by Innovi which will trade under the ticker symbol INVZ. But while we’re waiting for that to happen, we can home in on Collective Growth’s price action and, hopefully, build a solid bull case in favor of owning the stock.
A Closer Look at CGRO Stock
Collective Growth, a blank-check company, initially went public in late April of 2020. From that time until early December, CGRO stock stayed close to the $10 level.
That’s quite typical for SPAC stocks that are in the pre-deal-announcement phase. It’s interesting to consider that some of the early owners of CGRO stock were probably expecting it to merge with a cannabis company.
Still, even if the reality didn’t match their expectations, those who invested in CGRO stock did quite well. From Dec. 3 to Dec. 23, the shares shot up from around $10 to $17.75.
I generally don’t recommend chasing stocks after they’ve made a vertical move, and CGRO stock serves as a textbook example of why that’s the case. After peaking in late December, the shares petered out in January.
In early morning trading today, CGRO stock was changing hands for $12.90. That still represents a substantial increase compared to the pre–deal share price. And folks who were sitting on the sidelines can now scoop up some of the shares at a more favorable price point.
There are really only a handful of pure-play, publicly traded lidar stocks on U.S. stock markets. Each firm has its own strengths and weaknesses.
For Innoviz, a primary advantage is the company’s cost-effective lidar solutions. With Innoviz’s help, the days when a lidar system cost $10,000 will be a faded memory.
By the end of 2021, Innoviz expects to launch the InnovizTwo lidar system. Samples of it will be available in the third quarter.
CEO Omer Keilaf declined to reveal the exact price of InnovizTwo. Yet Keilaf indicated that it would not cost more than $500.
Paving the Path
“I believe most customers probably will start with InnovizOne to launch earlier and then will move to InnovizTwo to get scale at a lower cost,” Keilar further clarified.
But don’t assume that price is the only advantage of Innoviz’s new product. As a press release from the company explains, InnovizTwo offers not only significant cost savings, but also a performance improvement over InnovizOne.
“InnovizTwo aims to meet automakers’ desired price target for LiDAR and allow car manufacturers to offer safe L2+ vehicles while paving the path to full L3 automation through roadway data collection and software updates,” the company added.
Evidently, transitioning from L2+ to L3 technology is a major challenge for automakers, particularly when it comes to high-speed, hands-free highway driving.
With InnovizTwo, the lidar maker has developed an L3 platform that could have multiple applications. For instance, it could be used by delivery vehicles or robo-taxis.
And since it’s comparatively cheap, InnovizTwo should appeal to a broad variety of businesses.
The Bottom Line
With its L3-compatible platform, Innoviz is relentlessly pushing lidar technology forward.
Plus, the company offers state-of-the-art lidar solutions at competitive price points. All of this adds up to a mighty strong argument in favor of owning CGRO stock today.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.