But, it’s not as if LAZR stock will trade sideways before all of a sudden making a drastic upward move. Now, $150 billion in annual sales for the industry remains many years away. I based this number on the possible total addressable market ($150 billion) for lidar technology (per numbers provided in the company’s August 2020 investor presentation). Previously, I argued that Luminar could be worth at least $50 billion one day, if all goes right. Instead, it’s what results could reasonably be five to 10 years down the road. But this isn’t a stock you can value using traditional metrics.Īs is the case with most auto-tech plays, it’s not current results that matter. The company is also set to remain in its early stages this year as well, with projected sales for 2021 coming in at $27.7 million. In the past twelve months, it’s generated just $17.3 million in sales. LAZR stock may look pricey at its current valuation. However, if things play out as projected, nearly $30 per share is going to look more than reasonable.Ī Reasonable Pathway to Triple-Digit Gains That’s part of why investors have assigned it a nearly $8.8 billion market capitalization, even though the company is yet to generate meaningful revenues. Plus, in terms of quality, few AV names can hold a candle to Luminar. Instead of sending significant sums out the door in the form of licensing fees, LAZR is going to soak up a greater share of the upside. Not only does it enable the company to differentiate itself, but it also provides opportunity for higher profit margins once Luminar scales up. As I said previously, there are many advantages to this approach. Instead of farming out the development of components to third parties, the company has built its system completely in-house. So, with the competition heating up, what’s going to give Luminar an edge? That’s good news, of course, for LAZR stock - even if it’s far from being the only up-and-coming name in this space. However, with most going with lidar, it’s set to become the standard. Other automakers are pursuing alternative systems. It’s not the only technological option out there to facilitate self-driving. What’s lidar? “Lidar” is short for light detection and ranging. But, if you want direct exposure, you need to buy pure-play lidar stocks. Why is Luminar one of the best ways to play the self-driving trend? Sure, many electric vehicle (EV) stocks are indirect plays on the future of autonomous driving. What Makes LAZR Stock One of the Best AV Plays However, in the coming years, today’s prices may look like a fantastic entry point in hindsight. But, no matter how quickly (or to what extent) self-driving cars proliferate, the potential long-term upside vastly exceeds the risk. It’s still debatable how fast AVs will gain critical mass. Based on projections going into the next decade, it’s easy to see this stock eventually trade for many times what it changes hands for today. If this megatrend plays out, it’s companies like Luminar that stand to gain the most. How so? This remains one of the best long-term plays out there on the future of AVs.
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