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Lidar Stocks: What Are They & How Do You Pick the Best Ones?

By Colin Dodds · August 19, 2021 · 4 minute read

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Lidar Stocks: What Are They & How Do You Pick the Best Ones?

Many people associate Lidar with the sensors that enable self-driving cars — but there are a growing number of applications for this technology that can offer attractive new opportunities for investors.

New developments in self-driving cars and other smart products are driving demand for Lidar technology, which is in turn helping to spur the growth of Lidar companies innovating in this space, including some that have gone public through a SPAC merger.

What is Lidar? How is it Used?

The word is short for “light detection and ranging,” and Lidar works by using short bursts of light from lasers to create a 3-D rendering of an object or environment. Devices equipped with Lidar detect nearby objects, and process massive amounts of data to determine information such as their size, direction and speed of movement — which is why Lidar has become a core technology in the sensors that may one day allow self-driving cars to operate safely.

What many people don’t know is that Lidar is also at work in the newest smartphones and other automated devices like robot vacuum cleaners, which use Lidar to scan the environment and maneuver through a room.

Lidar is also widely used for measurement and imaging in an array of scientific disciplines, including oceanography, archaeology, forestry, seismology, robotics and atmospheric physics. It’s no wonder that Lidar technology stocks are attracting investor interest.

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The Advantages of Lidar

Lidar offers several advantages over similar technologies, such as radar, because light has a shorter wavelength than radio waves. By sending out repeated laser bursts, Lidar can offer a clearer picture of a given target.

For example, the Lidar sensors on some smartphones can give users almost instantaneous estimates of the size, shape and distance of an object, a capability that has enabled better experiences of augmented reality.

Also, as the Internet of Things (IoT) moves toward increasingly autonomous and interconnected machines, those devices will likely need sophisticated sensors to operate safely and effectively, which is another reason why Lidar companies and Lidar stocks are catching the eye of investors large and small.

Some Lidar Drawbacks

That said, investors considering Lidar technology stocks should be aware of some of the drawbacks as these may present some investment risks. Although Lidar technology can be highly sophisticated, critics note that some Lidar systems can lag in a more dynamic environment (e.g. driving in traffic), where a swift analysis of driving conditions is critical to safety.

Another drawback is that some Lidar sensors may weigh all data points equally in a given environment, and fail to take into account a more present danger like a certain obstacle or bad weather. For example: Lidar functionality has also been compromised by rainy or cloudy conditions, or very bright sun — as any of these can interfere with the light reflection and refraction that’s fundamental to the technology.

Lidar Stocks to Watch

A number of new Lidar companies have entered the market in recent years. Two Lidar technology stocks in particular attracted investor attention last year when it was announced that some models of self-driving cars scheduled to roll out in 2024 might include innovations to assist drivers. One is Luminar (LAZR) and the other is Velodyne (VLDR). Here’s a look at the technology these two Lidar companies currently offer, and some of their biggest competitors.

Luminar

As the largest single Lidar company, Luminar has indicated an interest in being more than Lidar vendor, and becoming a full-stack technology provider for autonomous vehicles. For example, the Sentinel system it helped develop with a Volvo subsidiary integrates Luminar’s Lidar sensors and software with autonomous driving software. Luminar is also exploring opportunities in international markets, including China.

Velodyne

Silicon Valley-based Velodyne went public in September 2020, not through a traditional IPO but a special purpose acquisition company (SPAC) IPO. Despite changes in company leadership this year, Velodyne signed a multi-year agreement with a Russian company, AGM Systems, that is focused on mobile and air applications for Lidar technology. Velodyne is also set to supply Lidar sensors to Knightscope, for the development of autonomous security robots.

Innoviz

Israeli technology company Innoviz (INVZ) is a smaller player looking for ways to deliver competitive Lidar technology to automakers at a lower cost. Some of those cost efficiencies may come from fine-tuning existing technology by optimizing features like the wavelength of laser and the sensitivity of the light detectors.

Aeva Technologies

Another Lidar leader, Aeva Technologies (AEVA) was founded by two former Apple engineers. The company is second only to Luminar as a pure-play Lidar company, evoking a mix of confidence from some analysts and caution from others.

AEye

Taking an innovative approach to Lidar, AEye (AEYE) has leaned into biomimicry to refine the use of lasers and make Lidar sensor data collection highly efficient and adaptable. AEye created its patented iDAR technology — a robotic solution using artificial perception that fuses Lidar, computer vision, and artificial intelligence — to create safer, smarter autonomous vehicles.

Evaluating Potential Investment Risks With Lidar Stocks

Lidar has been finding its ways into the products people use on a daily basis, and it holds great promise as an enabler for many technologies in many different fields. As such, investors may find investment opportunities through one or several public Lidar companies.

But investing in Lidar stocks comes with some risks. One risk factor investors should consider: a single version of Lidar technology might emerge as a frontrunner, elevating one patent-holding company to prominence and relegating others to the status of also-rans.

On the flip side, there is also the risk that one company’s technology might be adopted, but not widely.

And while Lidar is seen by many as an essential technology in self-driving cars, there is some debate on this point, with reports indicating that some automakers are exploring other types of sensors and networks to create safe, viable autonomous vehicles.

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The Takeaways

Lidar technology and sensors are well-entrenched in the autonomous car market, and now a growing number of companies are finding innovative ways to use this laser-driven technology to make advancements in other industries — like oceanography, seismology, robotics and more. While the expanding array of players in the Lidar space may be contributing to a sense of excitement about what the future of Lidar may hold, competing companies and technologies also indicate that this is a sector that’s still in flux, and there is much for investors to weigh when it comes to choosing the best Lidar stocks.

You could get started investing today by opening an investment account with SoFi Invest®. SoFi Invest offers an active investing solution that allows you to choose your stocks and ETFs without paying SoFi commissions. SoFi Invest also offers an automated investing solution that invests your money for you based on your goals and risk, without charging a SoFi management fee.

Photo credit: iStock/Drazen_


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