Velodyne Lidar (NASDAQ:VLDR), which makes lidar systems, has recently issued a warrant that would allow Amazon.com (NASDAQ:AMZN) to buy around a 16% stake in the company. The announcement instantly made the headlines and put the spotlight on lidar stocks.
The potential growth of autonomous vehicles has been increasing the demand for lidar technologies. Regular InvestorPlace.com readers would know that lidar systems emit laser pulses to create a three-dimensional image of the surrounding area. Thus, they can see obstacles, such as cars, pedestrians, buildings, or trees. As a result, the technology could become a game-changer in advancing driver-assistance systems.
Research Dive estimates that the global automotive lidar sensor market will likely deliver close to $2.5 billion in revenue by 2026. Such an increase would mean a compound annual growth rate (CAGR) of 39% between 2018 and 2026.
Given the potential in the segment, lidar companies are currently in a race to establish themselves as viable partners for global automakers. And Wall Street is paying attention to lidar stocks.
Lidar stocks are currently operating at a loss as they are primarily focused on scaling manufacturing. Analysts suggest that the cost of lidar sensors needs to decline before we see can widespread commercial adoption. Yet, the recent pullback in tech stocks, including lidar shares, offers an attractive opportunity for patient long-term investors.
With that said, here are three lidar stocks that could gain significant traction this year.
Lidar Stocks: Innoviz Technologies (INVZ)
52-week range: $3.19 – $14.19
Israel-based Innoviz Technologies designs lidar semiconductor sensors as well as perception software. Its products are found in numerous industries, such as automotive, robotics, drones, and mapping. The company aims to gain market share by offering lidar systems at low-cost.
For instance, Innoviz manufactures a solid-state lidar system at 905 nanometers (nm). On the other hand, our next stock, Luminar, manufactures at 1,550 nm. The 905 nm lidar costs significantly less than the 1,550 nm. counterpart.
Innoviz announced third-quarter 2021 results on Nov. 10. Revenue increased 13% year-over-year (YOY) to $2.1 million. Net loss stood at $26.4 million, or 20 cents loss per diluted share, compared to a net loss of $15.7 million a year ago. Cash and equivalents ended the quarter at $139.5 million.
The lidar maker boasts a partnership with BMW (OTCMKTS:BMWYY) to implement its InnovizOne sensors. Meanwhile, its next-generation InnovizTwo sensors achieve a 30x performance improvement over InnovizOne, as well as a 70% cost reduction. Analysts point out that the newer technology could accelerate the adoption process by more vehicles.
Moreover, INVZ recently launched Innoviz360, a patent-pending HD lidar architecture. Industry watchers point out that that it enables multiple scanning software configurations at a lower cost.
INVZ stock is priced at $4, down almost 70% over the past year. The 12-month median price forecast for Innoviz stock stands at $9. Interested readers could consider buying around the current level. It is due to report earnings on March 2.
Luminar Technologies (LAZR)
52-week range: $11.52 – $40.15
Our next stock, Luminar Technologies, also develops lidar sensor technologies. The company aims to become a leading supplier for the auto industry. For instance, in 2021, the company forged a partnership with Volvo (OTCMKTS:VLVLY) for autonomous highway driving.
In addition, Luminar recently announced that its Iris lidar technology is expected to be integrated within the roofline of Volvo’s all-electric next-generation SUV. The deal marks the beginning of the first fully electric SUV with highway autonomy capabilities in North America.
Luminar released Q3 2021 financials on Nov. 11. Revenue increased 89% YOY to $8 million. Net loss widened to $36 million, or 10 cents per diluted share, compared to $28.2 million in the prior-year quarter. The company had $129 million in cash and $416 million in short-term investments at the end of the period.
In January, Luminar also announced a partnership with Mercedes-Benz (OTCMKTS:DMLRY) to accelerate the development of future highly automated driving technologies for its passenger cars. The partnership represents a crucial commercial win for Luminar.
Moreover, chip giant Nvidia (NASDAQ:NVDA) has recently selected Luminar’s lidar sensors to be used for its Nvidia DRIVE Hyperion autonomous vehicle platform.
Ahead of next week’s scheduled earnings release, LAZR stock hovers around $16, down 56% over the past 12 months. The 12-month median price forecast for Luminar stock stands at $24. Buy-and-hold investors could consider opening a position in Luminar.
Lidar Stocks: Ouster (OUST)
52-week range: $2.86 – $15.90
Our last stock Ouster also manufactures high-resolution digital lidar sensors. They are primarily used in industrial automation, smart infrastructure, and automotive sectors.
For example, in January, Ouster made a multi-year lidar deal with Serve Robotics, an autonomous sidewalk delivery company. Now, Ouster will provide its OS1 digital sensors to Serve Robotics through 2023, so that sidewalk delivery robots can navigate alongside pedestrians.
Ouster issued Q4 2021 metrics earlier this week. Revenue increased 53% YOY to $11.9 million. Net loss decreased to $28 million $13 million compared to a net loss of $57 million in the prior-year quarter. It posted 30% gross margins, compared to 31% in fourth quarter 2020, and 24% in third quarter 2021.
The group also has a partnership with Vecna Robotics to deliver 3,000 digital lidar sensors through 2025. Vecna is a material handling automation company that focuses on warehouse and logistics automation.
OUST stock is currently priced slightly above $3, down 78% over the past 12 months. The 12-month median price forecast for Ouster stock stands at $13.
On the date of publication, Tezcan Gecgil 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.
Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.