Luminar Stock Is a Buy Amid Huge Market Potential, Lidar Stocks Gain Traction

Luminar Technologies was founded in 2012 by Austin Russell, who dropped out of Stanford University when he received funding from Peter Thiel to pursue his vision for Luminar. The company develops laser lidar sensors. These sensors essentially serve as the eyes for self-driving vehicles. 

Luminar Technologies went public through the SPAC route on December 3, 2020. The stock almost doubled in value immediately after listing. Since listing, the stock has gained almost 33 percent. It hit a high of $41.8 on Dec. 8, but lost some of those gains. After Luminar's recent debut on stock markets, investors might be wondering if they should buy LAZR stock. 

Investors are excited about stocks associated with clean energy. Since lidar sensors are critical components for autonomous vehicles, lidar stocks have been a hot topic. Many investors are bullish on Stocktwits regarding LAZR’s prospects. One user named Kaisersoza commented, “$LAZR Very high likelihood business for lidar for automotive L3 autonomous driving will consolidate around $LAZR.”  Another user named shootamcgavin said, “$LAZR Perfect Buy Opportunity on the dip. Thank me later.”

While there's a lot of optimism about anything that's related to EVs and autonomous vehicles, more research needs to be done to see which stocks have differentiated products and execution potential to be a good prospective buy candidate. 

Currently, Luminar Technologies doesn't pay any dividends. The company is in the very early stage of its growth with negative earnings. Luminar uses its cash to boost its expansion. The company isn't expected to pay dividends anytime soon.

Five analysts cover Luminar stock, according to CNN Business. Four analysts have a buy rating on the stock, while one recommends a hold rating. Analysts’ median target price is $38 with a high estimate of $41 and a low estimate of $30. The median target price for the stock represents a potential upside of 24.3 percent. 

On January 14, 2021, R.F. Lafferty initiated coverage on Luminar with a buy rating and a target price of $38. Citi started on Luminar with a buy rating and a target price of $40. According to the Citi analyst, “Luminar appears to be one of few LiDAR companies that are well positioned to lead in consumer and commercial autonomous vehicle LiDARs.”

Luminar Technologies is considered to be the market leader in the lidar sensor space, while Velodyne is the primary contender. As autonomous vehicles become more of a norm, lidar is expected to be one of the key technologies in the autonomous vehicle space. As a result, the market potential for Luminar is huge given the cost and performance of its products. 

The company already has contracts with Daimler AG, Intel’s Mobileye unit, and Volvo. The contracts could help cement Luminar's position in the competitive lidar market. Long-term investors can accumulate Luminar stock on dips for its long-term potential.