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Analysts explained that dominant ecosystems are typically vertically-integrated chip-hardware-software companies, and they view LAZR as “best positioned to capture a dominant share in the nascent LiDAR market due to its full-stack platform.”
While they acknowledged that it is easy to be skeptical of the company due to its higher-than-anticipated cash burn and many EPS misses, they said a lot of the bad news appears to be baked in, and with the stock losing 90% of its value since its peak in Dec ’20, the analyst said it is still not cheap, “but below auto-chip pure play AMBA (6.1x).”
“The LiDAR opportunity is huge,” they wrote. “With global auto unit sales of 85m annually, and at a $1,000 ASP, the LiDAR TAM is $85 billion. If deployed broadly, LiDAR holds the potential to save a large number of the 1.3 million auto-related deaths that occur each year. History tells us that consumers will pay for additional safety functionality of cars, so we view a 10% penetration of that market in a 5- to 10-year time frame as reasonable.”
On the point of the company reminding the firm of NVDA, the analysts explained that “LAZR appears to have superior technology,” with its 1550nm technology having a “longer range than the competing 905nm.”
“Secondly, the company has a list of tier 1 customers, including Volvo and Mercedes Benz, with an order book of over $3bn. Most importantly, the company has a vertically-integrated, chip+hardware+software solution. We view LAZR as a full-stack ecosystem company, which we think positions it to be a dominant supplier of LiDAR systems,” said the analysts.
