How Is Velodyne Lidar Stock Doing?

Velodyne Lidar (NASDAQ: VLDR) is a company that produces lidar sensors that are primarily used in self-driving and autonomous vehicles. Velodyne stock has declined by over 40% year-to-date, due to mixed fourth-quarter results and also due to some corporate governance related issues. However, there have been some positive developments relating to the stock in recent weeks. Earlier this month, Velodyne signed a multi-year agreement with AGM Systems, a Russian company that develops and integrates laser equipment for mobile and air applications. Velodyne’s Ultra Puck lidar sensor will be used in the new AGM-MS3 Unmanned Aerial Vehicles. Velodyne will also supply its 360-degree Puck lidar sensors for autonomous security robot company Knightscope’s future fifth-generation robots, expanding on its multi-year relationship with the company.

Now while these wins outside the automotive market are encouraging, much of the long-term volume growth for Velodyne will still come from the automotive market. For perspective, the company is targeting a total of as many as 9 million lidar units to be shipped by 2025 compared to cumulative shipments of just about 51k units through 2020. We think that upcoming products such as the lower-priced  H800Velarray Solid-State Lidar (likely to be priced at around $500) – which can be used for driver assistance and autonomous driving systems will be key to Velodyne’s long-term prospects.

Is Luminar, another lidar player, a better pick compared to Velodyne? See our dashboard Velodyne Vs. Luminar: Which Lidar Stock Should You Pick? for more details.

[3/12/2021] Why Velodyne Stock Has Been Trending Lower

Velodyne Lidar (NASDAQ: VLDR), a company that produces lidar sensors that are primarily used in self-driving vehicles, has seen its stock decline by about 40% over the last month. So what’s driving the stock lower? Firstly, both the company’s Chairman of the Board and Chief Marketing Officer were replaced last month, after they were found to have behaved inappropriately with regard to Board and Company processes. ^[1] Although the specific details have not been provided by the company, investors see corporate governance issues as a red flag and the stock fell by about 30% in the days following the news.  Secondly, the company posted a larger than expected loss and declining revenues over Q4 2020, as it continued to reduce prices for its sensors, in order to attract new customers and drive higher volumes. While Velodyne shipped a record 4,237 sensor units, its revenues fell by about 6% year-over-year to $17.85 million. Separately, rising bond yields over the last month have taken some sheen off richly valued tech stocks. This has also likely impacted Velodyne which trades at over 25x forward revenues.

Is Luminar, another lidar player, a better pick compared to Velodyne? See our dashboard Velodyne Vs. Luminar: Which Lidar Stock Should You Pick? for more details.

[12/29/2021] Velodyne Vs. Luminar: Which Lidar Stock Should You Pick?

Velodyne Lidar (NASDAQ: VLDR) and Luminar Technologies (NASDAQ: LAZR), two companies that specialize in lidar technology, went public this year. Lidar – a laser-based technology, which essentially helps computers detect surrounding objects – is poised to grow meaningfully, driven by the broader adoption of self-driving cars, helping both companies. However, the two stocks are valued rather differently. While Luminar’s market cap stands at roughly $10 billion, trading at over 350x projected 2021 revenue, Velodyne – which is actually the more established player in the lidar market – is valued at under $4 billion, or a P/S multiple of about 25x. Let’s take a look at the two companies’ businesses to understand what’s driving the disparity in their valuation and which could be the better pick.

See our dashboard analysis Velodyne Vs. Luminar: Which Lidar Stock Should You Pick? for an overview of the two companies’ valuation and fundamental performance in recent years.

Luminar’s Tech Hits The Sweetspot For Mass Market

Velodyne has largely focused on high-performance, high-cost lidar sensors. The company’s sensors (such as the 360-degree units that are placed on a vehicle roof) are typically used in prototype self-driving cars and other relatively lower volume applications such as research and development. Based on cumulative shipments and revenue data from the company’s form S-1, its sensors cost an average of $14k per unit. The company posted revenues of over $100 million in 2019, down from about $142 million in 2018, due to lower average selling prices and a larger mix of lower price sensors sold.

Luminar, on the other hand, is focused on building sensors that can be used in mass-market vehicles. The company’s sensors are expected to hit the sweet spot for automakers, costing under $1,000 per unit while offering very strong performance relative to their price. For example, Luminar claims its lidar has an industry-leading viewing range of 250 meters. The company is focusing on signing large long-term deals, noting that it has partnered with 50 companies, including 7 of the top 10 global auto players. Volvo’s next-gen electric vehicle, estimated to launch in 2022, will likely be the first consumer vehicle to use Luminar’s high-performance lidar system.

What Are The Risks?

While Luminar’s differentiated technology and promise of low costs are encouraging, there are risks. The company has yet to begin volume production and there could be challenges as it scales up. For perspective, Luminar noted that it expects to sell just 100 lidar sensors in 2020 and the consensus Revenues estimates for the company stand at just about $15 million this year. Separately, Velodyne also appears to be eyeing Luminar’s turf with new sensors that are cheap enough for the mass market. The company recently unveiled a new sensor called H800, which can see up to 200 meters and can apparently be mass-produced for as little as $500. Luminar’s high valuation, the increasing competition, and potential challenges surrounding its production ramp could make its stock the riskier bet at this point, although its upside could also be higher.

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1. Velodyne News Release [↩]