Luminar Technologies (LAZR) vs. Velodyne (VLDR), Which is the Better Lidar Stock?
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The Light Detection and Ranging (Lidar) market is rapidly-growing as the logistics and automobile industries shift to increased implementation of self-driving, or autonomous, systems.
According to Fortune Business Insights, the industry is expected to have a compounded annual growth rate (CAGR) of about 27.6% until 2026. Another report by Allied Market Research estimated that the industry’s revenue will reach $2.7 billion by 2027, a substantial increase from $700 million in 2019.
Despite the recent trends in Lidar technology, leading players in the industry have lagged the broader market. As shown below, the share prices of most companies in the industry have dropped by more than 50% this year while the S&P 500 index has risen by about 20%. However, this dip could prove to be an excellent buying opportunity for some of the key players in the lidar market.
Source: TradingView
With this in mind, today I will compare two popular companies in the Lidar industry, Luminar Technologies (LAZR) and Velodyne Lidar (VLDR), to see which is a better buy.
Luminar Technologies
Luminar Technologies is a Lidar company that focuses mostly on the automobile industry. It went public in 2020 by merging with a special purpose acquisition company (SPAC). On its first trading day, the company’s stock popped by 30% and rose to an all-time high of $41.85. Since then, it has fallen by more than 62%, giving it a market capitalization of $5.48 billion.
Luminar Technologies sells its solutions to automotive companies who are looking to implement autonomous systems in their cars. It has solutions for all stages of autonomy ranging from Level 0 to Level 5. To date, the company has partnered with companies such as Daimler, Toyota and Volvo.
Currently, most of Luminar’s business is still in development, and the company is not making any meaningful sales. In the most recent quarter, the company had total revenue of about $6.3 million and narrowed its loss to more than $36 million. It also boosted its forward guidance, citing the impact of its partnership with Volvo. LAZR expects to bring in between a total of $30 million and $33 million this year.
Luminar has also continued to build its order book and partnerships. In addition to having partnerships with some of the biggest auto manufacturers, the company has reached supply deals with companies like Airbus, SAIC, and Zensact. The company’s current order book stands at about $1.3 billion.
Luminar Technologies will publish its next earnings on November 11th. Analysts expect that the company will make about $8.60 million and a loss of 10 cents per share.
Velodyne Lidar
Velodyne Lidar is a technology company that went public in September 2020 through a SPAC merger. The stock soared to an all-time high of $27 in December 2020. Since then, the stock has dropped by more than 76% and is currently trading close to it’s all-time low. Valodyne has a market capitalization of $1.2 billion, so it is substantially smaller than Luminar.
While Luminar mostly focuses on the automobile sector, Velodyne’s products cater to drones, security, and mapping, in addition to automobiles. It envisions a situation where its technology is used by vehicle OEMs, mining companies, retailers, and logistics companies as a means to automate certain processes in each industry.
Velodyne is an unprofitable company, with its business still in development. In the most recent quarter, the company’s revenue was $13.6 million while its loss widened to more than $79 million. It had a net loss of $5.3 million in the same quarter in 2020. Analysts expect that the company’s revenue for the third quarter will be at $20.76 million while its loss will be 15 cents per share.
In the past few months, Velodyne has inked several deals that are important for its growth. For example, it will provide lidar solutions to Irvine’s road network project, as well as render its Puck lidar sensors to Renu Robotics, and a partnership with AGM Systems LLC.
Despite raising its forward guidance and announcing major deals, the Velodyne stock has struggled partly because of the internal struggles in the company. Recently, the company’s ousted CEO, who is also a major shareholder, renewed calls for additional board resignations, spooking some investors.
The Bottom Line
The lidar industry is expected to see significant growth in the next few years as the logistics and automobile industry changes. For one, most cars sold in the future are expected to have some autonomous systems built-in, which is noteworthy since more than 74 million new cars are sold each year and the trend is expected to continue. However, the Lidar industry is also a crowded one, with several companies seeking to take market share.
However, of the two companies outlined in this article, I believe that Luminar Technologies offers a better investment at this point. The company also has established its niche in the automotive industry, which has helped it ink substantial deals with the leading players in the sector. It has made deals with about 50 companies. These deals will help the company stay ahead of the competition as further adoption of lidar systems continues.
Additionally, analysts are bullish on Luminar Technologies, with the average price target more than 85% higher than where the stock is currently trading.