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Is Luminar Stock a Solid Long Term Investment?


Investors who are seeking to expand a tech-heavy portfolio or generally diversify need to know about Luminar. Whenever emerging tech hits the market, there are naysayers. In some cases, they are entirely correct, but the new technology often does well, primarily when it serves a growing need. Luminar is a company working in a little-understood sector, doing a moderately obscure job essential to the future of the transportation industry. Is Luminar stock a solid long-term investment?

What Is Luminar Technologies

You can't look into Luminar Technologies without first understanding that the company is producing LiDAR software. While this certainly sounds like a hyper-advanced lie detector, but it is unrelated and far more complicated. LiDAR stands for Light Detection and Ranging. LiDAR is already widely used, and the uses continue to expand with each passing year. According to American Geosciences, this is the tech, "used in a wide range of land management and planning efforts, including hazard assessment (including lava flows, landslides, tsunamis, and floods), forestry, agriculture, geologic mapping, and watershed and river surveys." Additionally, it is helpful for applications where mapping the earth's shape is necessary and can pick up some particles and gasses. You can use LiDAR to make more accurate map programs, but that's not the only outstanding use for the technology. Notably, LiDAR is necessary for self-driving vehicles. LiDAR works similarly to sonar. However, instead of sending out sound waves, this method uses laser light waves to map the immediate vicinity. To navigate the road or park without human hands, everything from self-driving semi-trucks to cars and autonomous taxis requires a way to see obstacles and road conditions in real-time. That is where Luminar comes in. According to the company's LinkedIn profile, Luminar produces the only LiDAR associated autonomous vehicle sensor software that meets industry-wide performance safety and economic requirements. That means there is little to no competition in Luminar's niche, and it is in an industry that shows incredible diversity and potential while still in its infancy. There's nowhere to grow but up.

Innovations as Indications

Leading in your field is not always directly correlated with high stock prices, but it is an excellent jumping-off point for predicting future success. If innovation and ability to deliver are your benchmarks, then Luminar is an easy buy. This surprising company has created the lowest-cost high-performance LiDAR on the market at less than a thousand dollars per unit. As InvestorPlace points out, LiDAR is likely to end up in tens of millions of cars by 2030, and it will likely become as common as a backup camera is now. Plus, the company is responsible for multiple breakthroughs. Most LiDAR sensors have trouble with natural sunlight and other LiDAR units causing interference. Luminar not only gets zero interference from these familiar sources, but it also performs better in bad weather than any competing product. Plus, Luminar sensors boast 300 pixels/degree of resolution, easily three times that of the competition.

Why Did LAZR Stock Drop Suddenly

When you look at the timeline on this stock, it's not hard to see that it was up around fifty dollars per share, then it rapidly plummeted. Sometimes this sort of action correlates to a scandal, product failure, or other pronounced problem. However, in other cases, the value tanks as a result of overall market conditions. For Luminar, there is no apparent problem. However, when the stock started to lose value, there was a mass selloff going on in the growth and tech stock sectors. When this happens, it doesn't necessarily indicate a problem with any particular company but rather an overall trend related to world events. Joanna Makris of InvestorPlace, tagged LAZR as one of the three LiDAR stocks to buy despite marketplace uncertainty. Numerous other analysts have similar sentiments. The overall predictions are that this company is on its way up. Conservative estimates anticipate a couple of dollars per share. Meanwhile, some expect massive growth, with the stock looking to hit or surpass its previous fifty-dollars per share high. Tesla has been all over the news due to recent safety concerns. That's a bad thing if you are Tesla, but it is an opportunity when your business is quite literally solving the exact problems that self-driving vehicles like Tesla cars have. LiDAR companies are clamoring to show their worth, but Luminar doesn't need to work very hard since it's beating the competition soundly.

Long Term Prospects

Luminar only went public last year, so there's not much long-term data to look at. However, a long history as a publicly-traded stock doesn't always indicate how well a company will do in the future. When it comes to predictors of how well a company will do in the next year, or five or twenty is who they are partnering with now. According to Luminar, they already have over fifty partners. Seven of the top ten automakers worldwide are on that list, but they haven't stopped there. Daimler, a company dedicated to building self-driving trucks for long-haul solutions, is one of LAZR's partners. Airbus, the top aerospace firm, is working with Luminar for better mapping in the air. Mobileye is also working with the company to create autonomous taxis. It's not hard to imagine that this somewhat obscure company is on the brink of becoming ubiquitous. The long-term chance that Luminar will experience continuous and substantial growth is high. That is a fair indicator that the stock's current low prices are seriously undervalued, especially for the long run.

Final Thoughts

No stock is perfect, but right now, Luminar appears poised at the intersection between affordability and the likelihood of significant ongoing growth and expansion. It is always essential to do your due diligence and understand the risks of investing in the stock market. Long-term well-diversified investing is the smart route to watch your portfolio grow over time, and it can help offset the variability of stocks in the short term. With all the trouble the self-driving vehicle market has had recently, it's easy to discount stocks related to this fast-growing tech to your detriment. That said, Luminar is a superb candidate for buy and hold.

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Allen Lee

Written by Allen Lee

Allen Lee is a Toronto-based freelance writer who studied business in school but has since turned to other pursuits. He spends more time than is perhaps wise with his eyes fixed on a screen either reading history books, keeping up with international news, or playing the latest releases on the Steam platform, which serve as the subject matter for much of his writing output. Currently, Lee is practicing the smidgen of Chinese that he picked up while visiting the Chinese mainland in hopes of someday being able to read certain historical texts in their original language.

Read more posts by Allen Lee

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