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Self-driving automobiles once seemed as futuristic as the DeLorean time machine piloted by Michael J. Fox in the 1985 blockbuster “Back to the Future.” Today, however, they are not only regarded as the wave of the future, but of the not-too-distant future.

That is just what Aeva Technologies Inc. (AEVA) was counting on when the LiDAR start-up went public on March 15th through a merger with multi-strategy special purpose acquisition company (SPAC) InterPrivate Acquisition.

LiDAR technology and the rise of autonomous vehicles

Aeva, which was started by former engineers for Apple Inc., is a developer of imaging and sensing technology LiDAR —the acronym for light detection and ranging sensors that use pulsed lasers to measure the surface of objects and create precise 3D maps. In the case of autonomous vehicles, Lidar is a critical component in helping vehicles identify and gauge the distance of everything from the road, to pedestrians and any other objects surrounding a vehicle.

Looking further ahead, Lidar, which is also generating interest among consumer electronic companies, is expected to be adopted for non-automotive uses ranging from robots, to smart cities and even geospatial analytics that can be used to identify geotechnical hazards.

While there is no shortage of LiDAR companies that have their sights set on capitalizing on such future developments, Aeva is among a handful of that have already set themselves apart as the industry’s leaders.

One reason Aeva stands out is that the company is the first to create 4D Lidar technology directly on a semiconductor, which also lowers power consumption. Its LiDAR technology is also the only one with the ability to measure velocity to determine how quickly an object is moving, in addition to real-time distance measurement.

Founders’ ties to Apple Inc look like an asset

Aeva’s founders’ ties to Apple also don’t hurt, given that Apple recently announced it plans to produce and begin selling self-driving electric cars in 2024. And Aeva has inked deals with multiple manufacturers of auto components, is actively working with roughly 30 major automotive manufacturers to include its Lidor technology within their autonomous driving systems and counts Porsche among its investors.

“We have made significant progress on our business plans – forming foundational commercial partnerships, accelerating our product roadmap and bolstering the management team with industry leaders,” said Aeva co-founder and CEO Soroush Salehian of the company’s IPO.

Added Aeva’s co-founder, President, CTO and Chairman Ahmed Fattouh: “This key milestone marks the next stage of our growth, as we look forward to accelerating our ability to bring our unique 4D LiDAR on chip technology to not just automotive, but consumer, industrial and beyond.”

But for now, despite such differentiators, Aeva is no different than most of its competitors and remains in a pre-manufacturing phase, with expectations for any real revenue generation still three years off.

The company is one of six LiDAR sensor producers that have already gone public through SPAC mergers or announced that they will soon and, though optimistic that LiDAR will be profitable in the long-term, analysts are a bit skeptical that there could already be somewhat of a bubble.

LiDAR technology is still under development

Brad Gastwirth, Wedbush Securities’ chief technology strategist, recently warned investors to remember that the LiDAR technology is still somewhat in a nascent stage of development and that significant questions still remain regarding the speed of innovation compared with the growth of its end markets and which companies will ultimately come out on top.

A date for your diary

On the 21st of October, Stuart Fieldhouse will be joining Sarah Lowther and Mark Watson-Mitchell to discuss which small cap investments they like the look of and, perhaps, which ones they do not. It promises to be a lively and insightful discussion. If you are interested in investing in small cap stocks then this could be a profitable use of your time. We hope you can make it! Sign up now

Aeva began its first day of trading at $13.80 per share, giving it a market cap of roughly $3 billion and making it one of the most highly valued public LiDAR companies. That same day the stock hit its high of $18.91 before closing at $16.16. The stock has since lost some momentum and reached a low of $11.37 in trading on March 25th before inching up to close at $12.36.

Nonetheless, despite concerns that there is likely to be significant consolidation within the field of LiDAR technology companies moving forward, and that Alphabet Inc.’s Waymo subsidiary and Intel Corp.’s Mobileye subsidiary have announced their own plans on the LiDAR front, analysts seem to be optimistic that Aeva is well positioned. The average recommendation for the stock among analysts is to buy, with a consensus target price of $24.25.

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Britt Erica Tunick

Britt Erica Tunick

Britt Erica Tunick is an award-winning US-based writer with in-depth experience writing about the alternative investment industry and virtually every aspect of finance. She has spent more than two decades writing extensively about finance, most recently as a senior writer for AR Magazine (Absolute Return & Alpha), where she wrote cover stories and in-depth profiles on many of the hedge fund industry's biggest and most influential firms, as well as comprehensive features on a range of topics pertinent to the alternative investment industry.

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A date for your diary

On the 21st of October, Stuart Fieldhouse will be joining Sarah Lowther and Mark Watson-Mitchell to discuss which small cap investments they like the look of and, perhaps, which ones they do not. It promises to be a lively and insightful discussion. If you are interested in investing in small cap stocks then this could be a profitable use of your time. We hope you can make it! Sign up now

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