Investors are bullish on autonomous driving technologies given the massive investments this sector has attracted in the past few years. So, it makes sense to look at companies part of this disruptive but high-growth sector.
Lidar, also known as light detection and ranging, is “a remote sensing method that uses light in the form of a pulsed laser to measure ranges (variable distances) to the Earth.”
Today I am going to analyze two lidar stocks, MicroVision (MVIS) and Ouster (OUST), to determine which stock is the better buy now.
MicroVision stock is up 294% year-to-date
In the last three weeks, retail traders on Reddit have driven shares of several stocks higher. These traders target companies with a high short interest ratio and buy these shares resulting in an uptick in stock prices. The short-sellers then have to cover their position and buy back the shares at a higher price which in turn pushes the stock price upwards.
MicroVision was also part of this short squeeze and the stock is up 70% in the last month taking year-to-date gains to 294%. MVIS is a company that develops lidar sensors that are used in autonomous driving applications. It provides laser beam scanning technology that is based on laser diodes, micro-electrical mechanical systems as well as algorithms and software. MicroVision also develops micro-display concepts and designs for AR or augmented reality headsets as well as interactive display modules used in smart speakers and other electronic devices.
MVIS stock is valued at a market cap of $3.57 billion. The company reported its Q1 results where sales fell 67% year over year to $500,000. Its net loss widened to $6.2 million or $0.04 per share compared to a net loss of $4.9 million in the year-ago period. Analysts tracking the stock expected MVIS to post sales of $600,000 and a net loss of $0.03 in Q1.
Wall Street expects the company to increase its sales by 34.3% to $4.15 million in 2021 which suggests the stock is trading at a sky-high price to sales multiple of 814x.
Ouster stock has a market cap of $2 billion
Ouster is a company that designs and manufactures digital lidar sensors for industrial automation, smart infrastructure, robotics, and automotive markets. In the first quarter of 2021, Ouster sales were $6.6 million, an increase of 187% year over year. It shipped 978 sensors, 240% higher compared to Q1 of 2020. The company also confirmed it has signed 40 strategic customer agreements to date and has $385 million in contracted revenue opportunity through 2025.
For 2021, Ouster has forecast sales between $33 million and $35 million with a gross margin between 25% and 27%. It suggests that Ouster stock has a forward price to sales multiple of 59x, given a market cap of $2.1 billion.
However, during its investor presentation, Ouster forecasted to reach $1.6 billion in sales with an operating income of $564 million by 2025. It continues to add customers rapidly and its client base stands at over 500 right now.
The final takeaway
We can see that both MicroVision and Ouster are trading at a premium. But Ouster stock is significantly cheaper compared to MVIS. Further, once normalcy returns after the short squeeze is over, MicroVision shares will decline to trade at a lower price, making Ouster the better bet right now. Additionally, Ouster has also provided investors with visibility into its revenue growth and order backlog, something that has been missing with MicroVision.
MVIS shares were trading at $21.30 per share on Friday afternoon, down $1.28 (-5.67%). Year-to-date, MVIS has gained 295.91%, versus a 13.55% rise in the benchmark S&P 500 index during the same period.
About the Author: Aditya Raghunath
Aditya Raghunath is a financial journalist who writes about business, public equities, and personal finance. His work has been published on several digital platforms in the U.S. and Canada, including The Motley Fool, Finscreener, and Market Realist.
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