What is LiDAR and How Do I Invest in It?

By Duncan Ferris


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Self-driving vehicles and detailed high-speed mapping are just two applications of LiDAR technology. But how can you invest in LiDAR?

Photo by Denys Nevozhai on Unsplash

LiDAR technology could soon play a huge role in our lives, potentially making the technology a big opportunity for savvy investors.

That's because being ahead of the curve on exciting tech stocks can be a great way to generate big returns. But not every new gadget or gizmo that comes out is a billion-dollar idea.

So, let's get the lowdown on LiDAR technology and how to invest in it.

What is LiDAR?

As you might have guessed, LiDAR is an acronym. The term stands for Light Detection and Ranging, and it is also sometimes referred to as 3D scanning or Laser Scanning.

This makes things a little clearer but doesn't tell the full story of this useful tech.

Essentially, it's a technology that uses light and laser technology to make measurements or construct images. It works by firing a laser at a targeted object, such as the earth's surface. Then, the technology measures the amount of time it takes for the laser to be reflected at its source. This allows it to calculate distances and build a picture of objects or surroundings.

The technology has several applications, most notably in mapping. For example, a mining company might use LiDAR to survey land during the preliminary stages of selecting a site for construction. The technology can be used to speed up the surveying, mapping and sampling process.

However, this article will touch on more applications of LiDAR technologies as it explores LiDAR investment opportunities.

Why Invest in LiDAR?

So, it's clear that LiDAR technology can be useful in many different circumstances. But does that mean the technology is a good investment?

The LiDAR market is certainly expected to grow rapidly over the coming years. Grand View Research projects it will expand at a compound annual growth rate of 9.8% between 2022 and 2030, having started at a value of $1.81bn.

But what is the catalyst behind this expected growth?

Many analysts point to LiDAR's potential applications within automation as the reason for an explosion in the technology's popularity. For example, the technology is incredibly useful for self-driving vehicles. This is because it can help a vehicle's onboard computer understand its surroundings and respond to them.

Similarly, the technology can be used in robotics to give machines awareness of their surroundings, allowing them to be more adaptive and to perform more precise movements and functions.

It's this functionality that has seen huge tech players like Google owner Alphabet (NASDAQ: GOOGL) backing the technology. The business' Waymo operation, which is its self-driving unit, incorporates LiDAR as a key component of its technology.

The business even used to sell LiDAR to other companies, though these efforts were halted in August 2021. The business said at the time it was renewing focus on developing its self-driving taxi and package delivery vehicles.

However, LiDAR has its detractors too.

Tesla (NASDAQ: TSLA) CEO Elon Musk is among them, having criticized the technology as overly complex and branded it "doomed" back in 2019. Indeed, Tesla has distanced itself from the technology on several occasions.

According to the company's chief AI scientist, the appropriately named Andrej Karpathy, self-driving technology uses a so-called auto-labeling technique that involves a combination of neural networks, radar data, and human reviews.

This hasn't stopped the technology from becoming more and more common. If you have an Apple (NASDAQ: AAPL) iPhone, there's a strong chance the technology is in your pocket. The technology is used to improve smartphones' photography and augmented reality compatibility.

Now that we have examined LiDAR and its growth prospects let's look at an example of a LiDAR stock…

Luminar Technologies

Luminar Technologies Inc (NASDAQ: LAZR) is a key example of a business using LiDAR's capabilities for automated vehicles. The company claims to have created the only lidar sensor to meet the performance, safety, and cost requirements to enable Level 3 through Level 5 autonomous vehicles in production.

For reference, level 3 automation implies a vehicle can make decisions based on environmental detection. Meanwhile, level 5 vehicles require nothing whatsoever from a driver other than for them to key in a destination.

Luminar was the first LiDAR business to go public, with this occurring in December 2020 through a link up with SPAC Gores Metropoulos Inc. The company's share price has fallen significantly since achieving early growth and hitting a high of more than $37. At the time of writing, LAZR stock sits at $7.71 per share.

However, the company has something many of its LiDAR competitors don't. That ace up the sleeve is revenue. The business brought in $12.8m in its most recent quarter. While this isn't enormous, it puts the business ahead of competitors, who are mainly still in development.

The company earns revenue from agreements with automotive companies like Chinese giants SAIC Motor, Volvo and Polestar. Revenues could also accelerate with SAIC Motor, China's largest auto manufacturer, commencing production on its Rising Auto R7 model. This model includes Luminar's LiDAR technology.

But the company can still encounter many pitfalls, and there are other LiDAR stocks to buy. These include Ouster (NYSE: OUST), Microvision (NASDAQ: MVIS) and Aeva Technologies (NYSE: AEVA).


In this article:

Author: Duncan Ferris

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

Duncan Ferris does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above article.

Duncan Ferris has not been paid to produce this piece by the company or companies mentioned above.

Digitonic Ltd, the owner of ValueTheMarkets.com, does not hold a position or positions in the stock(s) and/or financial instrument(s) mentioned in the above article.

Digitonic Ltd, the owner of ValueTheMarkets.com, has not been paid for the production of this piece by the company or companies mentioned above.

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