Autonomous Vehicle and Machine Vision Companies are Disrupting Global Transportation Infrastructure
The growing need for autonomous transportation solutions has become increasingly evident in recent years. As urban populations mushroom and global supply chains struggle to keep up with rising demand, autonomously driving vehicles–from private automobiles to public buses and industrial rail systems–are increasingly being seen as a safe, reliable, and cost-effective option for optimizing transportation infrastructure.
The rapid development of autonomously-driving vehicles and computer vision technologies over the past decades coincides with a renewed focus on public infrastructure investment in the USA, Europe, APAC, and beyond. For instance, the White House’s 2021 Bipartisan Infrastructure Law directs some $50bn towards the revamping of American roads and rail, and it specifically identifies creating more resilient and technologically advanced infrastructure as a core objective.
As covered by McKinsey, the European Union is also observing a surge in passenger and freight traffic on its extensive railway network as member states increasingly incentivize public transportation over less sustainable options such as private cars and passenger airlines. Meanwhile in APAC, transport-related M&A deal value hit new highs in 2022 as population growth and fast-paced economic development underscore the need for more efficient and safe transportation infrastructure.
The convergence of these technological, political, and economic trends is creating an increasingly optimistic outlook regarding the prospects of autonomous transportation solution providers over a long-term horizon. Here are three disruptive stocks that are aggressively positioned to leverage increased capital inflows, consumer demand, public sector support for autonomous vehicle and transportation solutions.
Mobileye (NASDAQ: MBLY)
Mobileye is a blue chip player in the autonomous vehicles market that was acquired by Intel in 2017 and recently went public again in October 2022 in an IPO that raised $861m. MBLY’s core technologies revolve around advanced driver assistance systems (ADSs), which incorporate cutting-edge computer vision and AI technology to make transportation safer, smarter, and more efficient.
Notwithstanding a bearish macroeconomic climate, Mobileye share price has increased >50% since its October 26th NASDAQ listing. The company’s recently announced Q3 ’22 financials likewise defied expectations, with 38% revenue growth for a total of $450m compared to a forecast $457M. Given its enterprise value of ±$28bn, strong earnings, as well as access to Intel’s shareholder base and computing expertise, Mobileye’s first-mover advantage in the autonomous transportation solution market is currently in the spotlight.
Luminar Technologies (NASDAQ: LAZR)
Luminar Technologies was founded in 2012, emerged from stealth mode in 2017 on the heels of a $36M series A funding round, and went public in December 2020 via SPAC. Luminar focuses on the development of vision-based lidar technologies and software for passenger cars and commercial trucks in North America, Europe, APAC, and MENA. It has secured high-profile deals with automatic manufacturers like Volvo and Nissan, and has even inked a 2020 deal with Mobileye for the provision of lidar tech to its fleet of autonomous vehicles.
Luminar share price has underperformed in 2022, and is down by 56% YTD compared to S&P 500’s 17% losses. Its Q3 ’22 financials paint a mixed picture; though revenue ($12.8m) up 60% relative to Q3 ’21 net losses ($117.6m) widened by 129% from Q3 ’21 and EPS off the analysts’ consensus by 26%. Notwithstanding a challenging year for LAZR shareholders, the company’s robust intellectual property portfolio and deal flow with leading automotive manufacturers both suggest significant upside on a multiyear horizon.
Rail Vision (NASDAQ: RVSN)
Rail Vision is a development-stage technology company that designs machine vision solutions for autonomous and smart railway systems. Notwithstanding a March 2022 listing date, Rail Vision counts leading players in the global autonomous vehicle and railway tech industries such as Foresight Autonomous (NASDAQ: FRSX) and Knorr-Bremse (ETR: KBX) as strategic investors, who held 15% and 31% of post-IPO shares (as of April ‘22), respectively.
In its Q3 ’22 financial results and highlights, Rail Vision announced successful completion of AutoHaul, a pilot program for the world’s first autonomous, long-distance industrial rail system that was conducted in collaboration with global mining giant Rio Tinto Iron Ore (NYSE: RIO). Rail Vision’s strategic investments from industry leaders and the promising long-term project with Rio Tinto are grounds for optimism, and on this basis Aegis Capital Corp has issued a BUY rating for RVSN accompanied by a 12-month price target of $7.
Conclusion
Technological advances in the field of autonomous vehicles/machine vision as well as increasing public and private sector interest support for autonomous vehicles and transportation infrastructure development has opened a window of opportunity for strategic long-term investors. Companies such as Mobileye, Luminar, and Rail Vision are aggressively poised to seize on this emerging macro trend as they transition from development-stage disruptors to profitable market leaders.
