My #1 Play for the Lidar Revolution
Manward Financial Research|July 5, 2022
Right now, America’s biggest industries are being transformed by a disruptive technology called lidar, which stands for Light Detection and Ranging.
Simply put, it’s the radar of our future. Only, instead of radio signals, lidar uses lasers.
This gives it an incredible level of detail, allowing it to bring (better than) human-like awareness to machines and devices. This also makes it an ideal system for automobiles, precision robotics, logistics, manufacturing, smart infrastructure, military applications and much more.
Lidar is already helping countless businesses around the globe…
Thanks to new technology, the transformation has only just begun…
Lidar has transitioned from an analog device with thousands of components to a digital device powered by a single chip.
The result is a full range of high-resolution lidar sensors that deliver superior imaging at a dramatically reduced price.
The overall market for this technology is forecast to nearly quadruple in the next five years.
That’s why I’m convinced this transformative tech will be the biggest profit opportunity Americans have seen in decades.
There’s still time to get in on the ground floor of this burgeoning tech boom… and I’ve got a sub-$5 small cap stock based right here in America that’s a leader in this innovative technology.
The Radar of Our Future
Based in San Francisco, California, Ouster (NYSE: OUST) designs and manufactures high-resolution digital lidar sensors and enabling software that provides 3D vision to machinery, vehicles, robots and fixed infrastructure assets.
Here’s what sets the company apart from its competition…
Ouster has developed a way to consolidate the hundreds of lasers and other components in each sensor and put them all into one tiny circuit the size of a grain of rice.
Plus, Ouster keeps improving its technology. In the company’s recent quarterly report, CEO Angus Pacala said…
“We’re going to be able to double, quadruple, 10X the resolution, without any change [in cost].”
And the company is already one of the lowest-cost producers. Currently, Ouster’s products are available for as little as $200 per sensor… 5X cheaper than many of its competitors’ products.
And its prices should drop even lower in the future… making Ouster the premier player in this space.
A $10 Trillion Opportunity
Digital lidar is about to change the way the world works…
Today, thanks to digital formatting, improved technology, miniaturization, cost-efficient production and the Internet of Things, lidar can be put into nearly anything.
Lidar – alongside Ouster’s products – has the capability to revolutionize entire industries, including transportation, robotics, consumer electronics, manufacturing, consumer health, warehouse automation, smart infrastructure and many others.
Those kinds of applications make future growth a near certainty. And lidar is a global phenomenon. The total addressable market is worth more than $10 trillion.
That’s why the world’s smartest money is getting involved… including Bill Gates and Elon Musk, among others. Big Tech names linked to lidar include Amazon, Microsoft and Apple. Practically all the major auto manufacturers, plus big investment firms like Vanguard and BlackRock, are pouring in millions.
This technology is just beginning to hit mainstream use. But labor shortages and supply chain bottlenecks are accelerating its adoption.
Ouster’s lidar products – OS0, OS1 and OS2 – are capable of “seeing” their entire fields of vision, and they can see objects up to 200 meters away. Ouster’s technology enables a lidar-enhanced device or system to see and understand its surroundings. This gives it the ability to rapidly detect and classify images and objects in order to take the appropriate action.
These systems create a virtual reality version of what’s in front of them. That way, the system can make proper decisions based on real-time changes.
The most publicly visible use of lidar is in autonomous vehicles…
Lidar is totally disrupting the MASSIVE auto manufacturing industry… and ushering in a brand-new autonomous vehicle market. Suppliers are now able to cost-effectively create the technology auto manufacturers have hoped for.
Ouster’s lidar technology is helping car manufacturers make the leap from semi-automatic to fully autonomous. Almost every single company working on self-driving cars uses lidar technology.
But even more importantly, lidar technology is used in multiple ways in electric vehicles (EVs), the fastest growing segment of the automobile industry.
EV sales in the U.S. should grow to reach approximately 29.5% of all new car sales in 2030, which would be a big jump from the roughly 3.5% of car sales that were EVs in 2021.
The technology beams pulsing lasers out of a device mounted on a vehicle (the device is unnoticeable). These lasers can measure the proximity and shape of an approaching object based on the time difference and angle of signals reflected back toward the vehicle.
Lidar-equipped vehicles are immediately able to determine how fast other objects are moving. That, in a way, helps them “see” better than human eyes can. And since the system can get instant software updates wirelessly (thanks to 5G connectivity), it can learn in real time.
And Ouster is protecting its technology. The company has 140 automotive-related patents now, plus dozens more pending.
Major car manufacturers are champing at the bit to get Ouster’s lidar systems.
But the automobile industry is just one of the sectors lidar is transforming…
Laser Focused on Lidar
In 2021, Ouster’s automotive business segment accounted for 34% of sensors shipped. The industrial segment accounted for 25% of sensors shipped. Robotics and smart infrastructure accounted for 26% and 15% of sensors shipped, respectively.
And the company has recently made huge strides toward capturing more of those markets. Here are highlights from the company’s 2021 annual report:
- Revenue in 2021 was $34 million, but more than one-third of that – $11.9 million – came in the fourth quarter. Fourth quarter sales in 2021 increased 86% year over year.
- Ouster had signed 68 Strategic Customer Agreements as of the end of 2021, up from only 10 as of year-end 2020.
- The company shipped more than 6,475 sensors in 2021. 2,400 of those sensors shipped in the fourth quarter, up 198% year over year.
- Ouster expanded into Japan and South Korea.
- In total, Ouster has more than 600 customers in more than 50 countries. Its lidar technology is protected by 250 exclusively licensed patents, with 200 more pending.
- The business backlog totals about $500 million. Cash and cash equivalents at year-end 2021 were $184.7 million. Total debt is less than $20 million.
- Although not yet profitable, in the fourth quarter, Ouster reduced its net loss by more than half.
- Looking ahead, Ouster aims to more than double revenue in 2022 to between $65 million and $85 million.
Ouster kept the momentum going in the first quarter of 2022. The company reported $8.6 million in revenue, up 29% compared with the first quarter of 2021.
Ouster shipped 1,550 sensors in the first quarter, up 58% year over year.
Because its digital lidar array enhances reliability, lowers cost, simplifies development and is inherently suited to volume manufacturing… management expects to be the low-cost leader across multiple markets.
Here’s what Pacala had to say in the company’s fourth quarter report:
This year was a turning point for Ouster as we scaled up our commercial engine, proved our high-volume manufacturing capabilities, accelerated our automotive roadmap and won key customers across each of our target vertical markets. We expect 2022 to be even stronger, with important product and customer milestones that we are excited to share throughout the year. Ouster’s diversified, digital lidar strategy has taken stride. We have a clear plan to grow our business, further differentiate our product offerings, capture market share and extend our market leadership.
Pacala started a different lidar company in 2012 and helped build it to a billion-dollar valuation. And Pacala has assembled an impressive management team around him. That tells me he’s committed to building value for shareholders.
To that end, the company just created what it expects to be the most powerful lidar chip ever made.
A Market Where We Could Triple Our Investment
It was only through an acquisition in October 2021 that Ouster formally established its automotive division.
The growth potential in this business segment is massive…
For example, Ouster’s automotive multi-sensor lidar suite (five sensors) currently costs about $1,000 per car. The company aims to get the cost of its lidar suite down to as little as $500 per car. That’s about what it costs to add seat heaters or a high-quality window tint. And at such an affordable price, the demand for self-driving systems could be absolutely huge.
Roughly 15 million cars are sold each year in the U.S. All Ouster needs is to capture 10% of the market, and it’ll make $750 million in sales per year – and that’s in just one country.
China has an even bigger car market than the U.S. Sales hit 26.1 million vehicles in 2021. Even a 5% share of that market would give Ouster another $650 million in annual revenue.
Plus, Europe sells another 12 million cars per year. And if European automobile companies like Volvo and Daimler adapt this technology, that would bode well for Ouster’s prospects in this huge market too.
I haven’t even mentioned the company’s potential expansion into other (nonautomotive) markets…
Or a possible mega-partnership deal with Apple…
Pacala has a personal connection to Apple. He nearly went to manage Apple’s lidar division before starting Ouster! Pacala has stated that Apple has “realized digital sensors are the future.”
While it’s too early to determine whether the two companies will work together in the future, a potential tie-in with Apple could be a game changer for Ouster.
I wouldn’t be shocked to see a deal inked eventually…
My #1 Play – The Next Great American Stock
Ouster has developed what could become the best-in-class next generation of lidar technology…
However, Ouster is relatively unknown among investors; shares just started trading in March 2021.
That’s why you can still get in on the ground floor. The stock is trading for less than $5.
But Ouster won’t stay cheap for long… It’s disrupting industries worth $10 trillion.
Simply put, Ouster has the potential to see sales explode in the coming years. Ouster’s technology could change multiple industries… yet it’s only about a $500 million company today.
I suggest you buy shares before that potential’s realized and the stock skyrockets.
Analysts forecast Ouster’s share price could jump as much as 337% in the next 12 months.
But if Apple comes calling, throw those forecasts out… That number would be far too conservative.