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1/ Interesting thing happening in the LIDAR industry right now. 5+ companies will soon or have SPAC'd. Their value is based on *projected* revenue that comes from *entirely overlapping* potential customers, with very little discount applied to future projections. Is this bad?
2/ And how did we end up here? SPACs aren't subject to the same effective restrictions on future revenue projections as traditional IPOs. It's totally possible the numbers will be correct for one of these companies. But it's not possible for all to be correct.
3/ SPACs may be a good thing for pre-revenue companies or companies that have chosen to go public before they meet the more customary milestones for an IPO ($100m in ARR, for example).
4/ If these companies were to be valued based on earnings today, they would be severely undervalued. But if you look at the market caps for each of these companies, they're each being valued as if they had already realized some of their ambitious future projections.
5/ Of course, it's certainly not unusual for startups to be valued based on future revenue projections, even in a highly competitive space. But I typically see private markets put a much larger discount on these future projections than what we see with these SPACs.
6/ Let's look at the overlap (from public pitches):
* All targeting ADAS or robotaxi market as the top of one of the top revenue sources
* All include value added software for perception
* All counting on today's nascent industry adoption of LIDAR to balloon
In no order:
* All targeting ADAS or robotaxi market as the top of one of the top revenue sources
* All include value added software for perception
* All counting on today's nascent industry adoption of LIDAR to balloon
In no order:
7/ AEVA
8/ Innoviz
9/ Ouster
10/ Velodyne
11/ Luminar
12/ What does this mean? First, I have great respect for all of these companies. They're each innovating in different ways, and competition is great for the industry. Robotaxis will have an enormous positive impact on society, so it's critical to see progress here.
13/ But we saw a consolidation / collapse of the robotaxi space over the last 24 months (down to a handful of players), and LIDAR is next. This probably means lower market caps for most of these co's, which sucks for everyone involved, but may the best product win!
