Blair LaCorte, CEO of AEye, On Why Now is the Time to Look at LiDAR

by | Feb 10, 2022

Autonomous Driving (AD) and electric vehicles remain one of the most investable emerging growth themes in tech. Boardroom Alpha had a chance to sit down with Blair LaCorte, CEO of LiDAR technology startup AEye (NASDAQ:LIDR). LaCorte, whose background spans multiple industries including tech, aviation, and private equity, provided a thoughtful take on the evolution of Autonomous Driving and Advanced Safety (ADAS), why a lidar shakeout is coming, and what the carmakers really want.    

The Big Picture

  • LiDAR, which is short for “light detection and ranging,” allows computerized systems to develop 3D landscape models and measure variable distances.
  • While lidar has historically been used for a variety of industrial (engineering and construction) applications, the tech has only recently emerged as an enabling technology for ADAS (Advanced Driver Assistance Systems) and autonomous driving.
  • The automotive LiDAR market is estimated at $28 billion by 2032. Key drivers include advent of assisted driving and driverless economy and regulatory and customer demand for safer mobility and transportation.
  • AEye is one of a handful of LiDAR companies to go public via SPAC IPO in 2021, including Luminar Technologies (NASDAQ:LAZR). Innoviz (NASDAQ:INVZ), Velodyne Lidar (NASDAQ:VLDR), Ouster (NYSE:OUST), and Aeva (NYSE:AEVA).
  • Most LiDAR companies are at least a year away from full-scale volume production. Critics say that both the form factor and price need to come down materially before carmakers adopt the technology at scale.
  • While several lidar companies have announced relationships with automakers, these are still in pre-production stages.

Stock Performance and Recent News

  • LiDAR stocks surged in 1H 2021 on the heels of stellar electric vehicle (EV) stock performance. The group experienced a sharp pullback in 2H as revenues and profitability have largely been pushed out to 2023-2024 timeframe. Stocks have largely languished since the start of the year, consistent with the muted earnings profile of these companies and rising interest rate concerns.
  • Luminar, which went public via SPAC IPO through parent company Gores Metropoulos in September 2021, is the current leader of the lidar space, trading at a premium valuation relative to the group and a market capitalization of $5.7 billion. The company has announced relationships with Daimler (OTCMKTS:DMLRY), Volvo (OTCMKTS:VLVLY), and Intel (NASDAQ:INTC) subsidiary Mobileye, among others — aspires to become a full-stack technology provider for autonomous vehicles. Notably, Volvo plans to use Luminar’s lidar on self-driving vehicles in 2022.
  • Velodyne Lidar (VLDR) had a sharp upward move this week after an 8-K filing disclosed that a wholly owned Amazon (NASDAQ:AMZN) subsidiary has received warrants to purchase nearly 40 million Velodyne shares ($200 million). The warrant agreement follows Amazon’s purchase of Zoox, an autonomous vehicle startup, in 2020 for an estimated $1.3 billion.

AEye (NASDAQ:LIDR) in Brief

  • AEye, with a market capitalization of $490 million, went public via SPAC in August 2021 via sponsor Cantor Fitzgerald’s CF Finance Acquisition Corp. III. (NASDAQ:CFAC). The company raised just over $200 million. PIPE investors include GM Ventures, Subaru-SBI, Intel Capital, Hella Ventures and Taiwania Capital. The SPAC had 84% redemptions.   
  • For Q3 2021, AEye reported revenue of $0.1 million, and a GAAP net loss of $(17.4) million or $(0.15) per share based on 114.9 million shares outstanding. Adjusted EBITDA was $(12.5) million.
  • 2023 guidance: revenue of $18 million on EBITDA of $(19) million. AEye expects to be EBITDA positive in 2H 2024 on revenue of $175 million. Revenue projections call for a CAGR of 174% over the 2021-2026 period.
  • Taking a unique approach to LiDAR, AEye has leaned into biomimicry to refine the use of lasers and make lidar sensor data collection more efficient and adaptable.
  • The company’s patented “iDAR” (Intelligent Detection and Ranging) technology is a robotic solution using artificial perception that fuses LiDAR, computer vision, and artificial intelligence (AI) to create safer, smarter autonomous vehicles.
  • AEye’s board is comprised of executives with backgrounds in technology, aerospace/defense, semis and automotive, but light on proven public company experience. The board is chaired by Carol DeBatiste, previously Chief Legal and Compliance Officer and Corporate Secretary at ComScore, Inc. (NASDAQ: SCOR). Other members include Luis Dussan (Lockheed Martin, Northrop Grumman)  Prof. Dr. Gottschalk (Daimler-Benz AG), and Dr. Karl-Thomas Neumann (Motorola, Volkswagen).

AEye (LIDR) Financial Projections and Margin Profile

What’s Next for LiDAR

  • Despite some high-profile naysayers, including Tesla (NASDAQ:TSLA) CEO Elon Musk, LiDAR technology and sensors appear well-entrenched in the autonomous car market, with almost every major manufacturer in various stages of deploying the technology to enable advanced safety features.
  • After a boom-bust cycle for lidar stocks, the market is now starting to take a much more discerning view about which companies are going to get products finished from a design perspective, manufacture them on time, on budget, and at scale, and find customers to buy them.
  • With a dozen or so companies competing for a handful of automotive customers, most lidar companies will fail. We expect the group to consolidate to 2-3 suppliers over time. The recent pullback in valuations sets the stage for potential M&A activity, in our view.
  • With automakers still actively exploring various architectures, we don’t see any clear technology winner yet.
  • Discounted sector valuations afford patient investors some time to choose a handful of winners in the sector. When evaluating LiDAR stocks, we prefer those with announced and active/operational partnerships.

LIDR Stock: Discounted valuation, but likely to trade sideways amidst cooling macro

  • With LIDR shares trading at 2.6x book value, we think the stock could be a buy here for patient, long-term oriented investors. The company has a unique technology approach which should support a higher gross margin profile as volumes ramp. That said, we see little in the way of a catalyst for the shares ahead of the company’s Q4 earnings report (date TBD).
  • Investors should note that sentiment around smaller, non-profitable growth stocks remains negative in a risk-off trading environment amidst interest rate sensitivity.
  • Thursday’s Consumer Price Index (CPI) numbers show inflation increased 7.5% YoY in January, above consensus of 7.3%– representing the fastest rise since 198 and an acceleration from 7.0% YoY in December.
  • SPAC returns have been generally weak since the start of the year. Defiance Next Gen SPAC Derived ETF (SPAK) is down 14% YTD versus a 5% decline for the S&P 500 over the same period. Tech SPACs have been the hardest hit, owing to limited profitability, lack of confidence around aggressive revenue growth projections, and rising interest rate concerns.
<a href="https://www.boardroomalpha.com/author/joanna/" target="_self">Joanna Makris</a>

Joanna Makris

Joanna has been analyzing and investing in emerging technologies for over two decades, having led the Technology, Media, and Telecom research at several global investment banks, including Mizuho Securities and Canaccord Genuity. Navigating stock market volatility since it all began in 2000. Banjo player, artist, and frittata-maker.

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