I am very bullish on the LiDAR sector as a whole as autonomous cars picks up steam in the 2020s, but the outlook for $VLDR is increasingly worrisome. You can read the latest earnings call transcript here. Analysts have an average stock price of $12 and while the stock was up Monday, I don’t think it’s sustainable with declining revenue.
The current price is $7.40. Some analysts are quite optimistic. An recent analyst report suggested the stock of Velodyne and competitor AEye could almost quadruple. While I agree in theory, the problem is the timing.
- They shipped more than 4,400 sensors in the third quarter, continuing our market leadership.
- They have over 35 multi-year agreement with customers and aim for 38 this year.
- They believe industrial and robotics market is one of Lidar market’s closest to commercialization, and expect our activity with customers in this market will only accelerate.
Velodyne Lidar is also welcoming a new CEO. The sensor company said that Theodore Tewksbury would take over the role starting November 10, the most recent in a string of changes to Velodyne’s C-suite since the beginning of this year.
Theodore Tewksbury nice statements: “I was attracted to Velodyne for a very simple reason which is, as you all know, the company is the undisputed lidar technology pioneer and market leader.” “I have a proven track record of building and scaling innovative technology businesses, and driving revenue growth, profitability and shareholder value, which in my view is exactly what Velodyne needs today.”
I personally think the LiDAR TAM is large enough for many companies to prosper including:
- $VLDR
- $LIDR
- $LAZR, among others.
Just how long they can burn cash until the golden age of autonomous cars and robotics really begins is the question too.
The company has been without a CEO for several months, after Velodyne announced the departure of Anand Gopalan in July, after around a year and a half on the job. Prior to Gopalan’s tenure, Velodyne had been caught in the throes of internal chaos, with the company’s founder, David Hall, pitted against the company’s board of directors. Hopefully the worst politically is behind it for the company.
Velodyne calls itself the global Lidar leader, shipping more sensors in the third quarter than the aggregate of all our peers combined that have reported shipping sensors year to date. They expect to ship more than 15,000 sensors in 2021, up at least 28% over 2020 and significantly more than our peers. The interest for our new solid-state products continues to grow.
Velodyne shipped over 630 solid-state sensors in the third quarter, more than double the prior quarter. We are excited about the potential for these next-generation products and anticipate long-term growth in the linear fashion, smoothing out what could be volatility from quarter to quarter. So growth is occurring, even if the revenue didn’t look great.
Velodyne had altered its full-year revenue guidance to between $60 million and $63 million, down from between $77 million and $94 million at the end of the previous quarter this year. The company’s operating expenses are also significantly down compared to the previous quarter, mostly due to marketing and sales expenses shrunk down to $6.5 million, compared to a whopping $47 million in the second quarter.
They said product revenue was $11.8 million, slightly down from $12 million in the second quarter of 2021 due to a combination of the lower weighted average ASP than the prior quarter, reflecting the ongoing evolution of our product mix toward consumer affordable solid-state sensors and ensuring consistent performance across and within our product lines, crucial for our customers as they ramp toward massive commercialization.
Overall I would consider Velodyne better diversified than some of their competitors. Luminar has a young founder who has too much hype and I’m not sure $LIDR is in the same league as $VLDR in terms of product maturity and diversification of revenue from robotics, drones and the variety of IoT customers. So $VLDR among the three companies is perhaps the safest bet.
However I believe you can buy this at a discount as it continues its costly transition to commercialization. It’s market cap is $1.5 Billion now but does it warrant that valuation in 2021, especially given the high short interest reported by short interest API? Sales are only $81 million. The short float is rather high so I’m not alone in this thinking. I would enter the trade at a much lower price perhaps around the $5.30 range. The latest run over $7 is to me not sustainable given the price history of the 1-year chart.
Still this company has a lot of bragging rights. Velodyne’s Intelligent Infrastructure Solution, or IIS, was selected for a major deployment in the University of California Irvine Smart Cities initiative, where it will be used at 25 intersections as part of a $6 million road network project in Irvine.