Enlarge /. Austin Russell, CEO of Luminar.
Luminar founder Austin Russell has become one of the youngest self-made billionaires after his lidar company debuted in public markets Thursday. Russell, 25, was only 17 when he founded Luminar in 2012. Luminar's shares surged above $ 30 per share on Friday, a massive 43 percent daily gain, on top of Thursday's big gains.
Luminar has become one of the leaders in the fast growing lidar industry. Car manufacturers are expected to offer lidar as an advanced option for their vehicles in the next few years to enable better driver assistance technology. Lidar companies are currently vying for orders to supply these sensors.
Luminar had a huge hit in May when it signed a contract with Volvo to supply lidar sensors for vehicles from 2022. It was one of the first such stores in the industry.
More recently, Luminar has reached an agreement to supply lidar sensors to Mobileye, the Intel subsidiary that supplies many of the camera-based driver assistance systems in today's cars. Luminar supplies sensors for Mobileye's self-driving prototypes, not for production vehicles. So it wasn't a big deal in itself. However, if Mobileye builds its next-generation technology on top of Luminar's lidar – far from safe – it could lead to many luminar-lidar sales in the future.
While industry leader Velodyne traditionally makes 360-degree spinning units for sitting on a vehicle roof, Luminar's sensors are permanently attached and cover a horizontal field of view of 120 degrees in front of a vehicle.
The long range is seen as essential to advanced self-propelled systems, and Luminar claims that its lidar has an industry-leading range of 250 meters. One reason for this is that its lasers operate at an unusual frequency. Most lidar sensors operate at around 900 nm – mainly because lasers and silicon-based sensors work well at this frequency. However, 900 nm lasers are subject to strict performance limits as they can damage the human retina.
In contrast, Luminar works at 1,550 nm. The liquid in the human eye is opaque at this wavelength, which significantly reduces eye safety concerns. As a result, Luminar can pump much more power into its lasers and thus achieve a greater range. However, a major disadvantage of 1,550 nm lasers is that they have to use more exotic semiconductors such as indium gallium arsenide, which tend to be more expensive. But Luminar says it figured out how to sell its sensors for less than $ 1,000.
The big question for Luminar is whether it can achieve this goal. When Luminar released financial results ahead of the merger this week, it announced that it is expected to sell 0.1 thousand – around 100 – lidar sensors in the 2020 calendar year. To justify its multi-billion dollar valuation, the company needs to figure out how to produce tens of thousands of units while meeting its target price of less than $ 1,000.
SPACs have a moment in the EV and lidar sectors
Luminar went public through a merger with a Special Purpose Acquisition Company (SPAC) – a financial tool that allows startups to bypass the complexity and paperwork of a traditional IPO. Instead of offering its shares directly to the public, Luminar merged with a company called Gores Metropoulos, which had previously been set up to find a startup for the stock market.
This year there has been a boom in SPAC-based deals. Shining rival Velodyne went public in September via a SPAC. The company's share price has seen only modest gains since the deal was announced. Another lidar maker, Innoviz, is reportedly considering a SPAC merger.
A little-known electric vehicle maker, Lordstown Motors, went public on a SPAC in October and was enthusiastically received by investors. Another electric vehicle manufacturer, Fisker. Another EV company, Canoo, announced a SPAC deal in August.
Skeptics fear that this alternative process could allow companies to refuse due diligence to protect private investors from fraud.
Those concerns were underscored when aspiring hydrogen truck maker Nikola went public in June as part of a SPAC merger. A few months later, the public learned that the company's first product, a semi-trailer truck called the Nikola One, never worked, despite claims made by founder Trevor Milton to the contrary. Milton had to step down, and Nikola's value is well below the high it hit shortly after the company went public. Anyone who bought Nikola stock in the early days of trading has lost most of their money.