News About Tesla Could Lift MicroVision Stock Soon

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News about Tesla (NASDAQ:TSLA) is likely to spark short-term and medium-term rallies by MicroVision (NASDAQ:MVIS) stock, as well as other names in the lidar sector.

Concept image of a self-driving car lidar system.
Source: temp-64GTX/Shutterstock.com

A Model Y electric vehicle owned by Tesla was recently photographed using lidar. The news led to speculation that Tesla is testing lidar for use in its EVs.

And indeed, Bloomberg reported that Elon Musk’s EV maker was testing lidar made by Luminar (NASDAQ:LAZR), a leading company in the space. What’s more, the news service stated that Tesla has made a deal with Luminar to to test and develop the company’s lidar sensors.

Bloomberg quoted its unnamed sources as saying that Tesla may be solely comparing its own technology to that of Luminar or it “also could be testing lidar for future use.”

My Interpretation of the News

A number of media outlets have dismissed the importance of the news about Tesla, saying that the EV maker for years has used lidar as a benchmark against which to test its own self-driving systems. Also making these news outlets skeptical about Tesla embracing lidar is the fact that Tesla CEO Elon Musk has criticized the technology in the past.

Despite these points, I think there’s about a 75% chance that Tesla is at least considering incorporating lidar as part of the full self-driving (FSD) system that it’s developing.

If Tesla was just testing its own system against lidar, why would it go to the trouble to sign a contract with Luminar, one of the leading companies in the space? Wouldn’t it be much easier, faster and cheaper to just casually purchase a few lidar systems from a much lower-profile lidar maker or from Luminar? Further, Bloomberg specifically stated that the deal between Luminar and Tesla referenced “testing and development.”

If Tesla was using Luminar’s lidar only for testing, why would the companies’ partnership also involve development? Put another way, if Tesla was only using Luminar’s products as a benchmark, why would the automaker care about utilizing its lidar for development?

I guess it’s possible that Tesla is somehow using Luminar’s lidar to develop a camera-based system, but that seems unlikely.

And finally, if Tesla and Luminar definitely were not working together, I believe that Bloomberg’s sources would know that is the case and clearly state that the companies are not partnering with each other.

Given all these points, I think the odds are that, like many young couples with a budding romance, Tesla and Luminar are trying to conceal their developing partnership.

Animal Spirits or FOMO

As GameStop (NYSE:GME) and the other Reddit stocks have proven, stocks do not always rise and fall based on logic. There’s even an expression called “animal spirits,” which refers to the emotions triggered by the belief that one has found a superb moneymaking opportunity. Younger people appear to be more used to calling this emotional state FOMO, or fear of missing out.

In any event, I believe that, if it’s confirmed that Tesla is planning to use Luminar’s lidar system or even considering doing so, animal spirits or FOMO will tremendously lift the shares of all the names in the sector, including MVIS stock. That’s because if the scenario does unfold, investors will be so excited about the huge potential of lidar that they will largely ignore concerns about valuation.

The Bottom Line on MVIS Stock

The odds are good that Tesla is at least considering utilizing lidar. If that news is definitively reported, MVIS stock and other lidar stocks, boosted by animal spirits or FOMO, are likely to get a huge lift.

As a Reddit stock itself, MicroVision could even go parabolic on the news. Therefore, I advise risk-tolerant growth investors to buy a small amount of MVIS stock at this point.

On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 14 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015.  Among his highly successful, contrarian picks have been GE, solar stocks, MGM, and Snap. You can reach him on StockTwits at @larryramer.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been SMCI, INTC, and MGM. You can reach him on Stocktwits at @larryramer.


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