By 2030, the autonomous driving market size is projected to reach $2.3 trillion from $200 billion this year, according to a market forecast by Next Move Strategy Consulting.
Numerous technology companies are racing to get a piece of this trillion dollars market, and smart growth investors are backing these companies early for a share of the generational wealth minting.
Just like Tesla was not generating revenue for years before the mass production of the Tesla Roadster and Model 3, there are self-driving stocks of pre-revenue/pre-earning companies that investors can buy now before their big break.
A lot of the big money and life-changing returns made buying shares of companies are made by early investors who takes the risks of investing in pre-revenue/pre-earning companies with the promise of significantly higher ROI.
Some of these pre-revenue/pre-earning autonomous driving companies are currently listed in the stock market at downbeat valuations, giving retail investors a rare chance to play VC.
The potential upsides for these names when pieces fall in place are insane, 10x – 40x within the next five to ten years. I’m not sugarcoating this, it’s hard to say for sure which of these companies can survive the autonomous driving winter.
Most of these companies (especially the pre-revenue ones) are in the public market to raise capital, there’s a high-risk of them running out of capital to keep innovating. Many privately-held autonomous driving companies, like Argo AI, with huge promise shutdown for the lack of capital.
But the ones that make it, will be the NextGen Apple, Amazon, Tesla and Google, companies that can turn $10,000 initial investment to millions of dollars in a couple of years.
What are Pre-revenue Stocks?
Pre-revenue Stocks are publicly listed shares of companies that are not generating any sales (revenue), mostly because they are still developing their product/service, getting it ready for mass rollout.
These companies usually go public to raise the capital required to bring a competitive product to the market as fast as practically possible.
Quantumscape (QS) is a good example of a pre-revenue stock, the company is currently developing solid state battery technology, a battery technology that is poised to revolutionise the battery tech for electric vehicles and IoT devices.
The company is expected to begin its pre-pilot production line in 2023 and begin mass-production by 2025.
What are Pre-earning Stocks?
Pre-earning Stocks are shares of publicly listed companies that are delaying the gratification of being profitable in order to accelerate growth, i.e develop new product/service, increase production capacity or both.
Amazon was famously known for reinvesting earnings into new businesses to produce an acceleration in the company’s growth. By doing this, the company was able to record massive revenue growth year after year, and no or little recorded profits. UNTIL, it started recording insane profits.
Many technology companies are adopting the Amazon strategy and are prioritising revenue growth at the expense of earnings. This strategy is appreciated mostly by growth investors who think long-term.
3 Promising Autonomous Driving Stocks
We’ve carefully handpicked some autonomous driving stocks with this potential, these names can easily 40x within a few years, a kind of return that is practically impossible investing in established companies like Apple today.
1. Mobileye Group (NASDAQ: MBLY)
Mobileye is the leader in computer vision for advanced driver-assistance systems (ADAS) and a major player taking part in the autonomous driving revolution.
The company’s rise to prominence came with its revolutional mono-vision (single camera) ADAS technology. This enabled it bring it’s cheaper and more effective ADAS technology at scale to the mass market.
Today, Mobileye is an established leader in the ADAS market and is leveraging its experience with ADAS technology to develop fully autonomous driving technology.
The autonomous driving (AD) technology that Mobileye is developing relies on a 360-degree camera and lidar sensor system and has led to the commercial deployment of level 4 robotaxi service in Germany and Israel.
Mobileye’s latest version of its ADAS platform, Supervision, is comparable to Tesla’s Autopilot.
And its level 5 AV platform, Chauffeur, a hand-off and eyes-off autonomous driving platform is scheduled to hit the market by 2025.
The company also designs its system on chips (SOCs), EyeQ, that powers Its ADAS/AV systems.
Mobileye is not one of those companies hoping on being able to cash out from the autonomous driving revolution beginning sometime in the future. The company is already generating billions in dollars of revenue from their ADAS/AD systems.
The company’s revenue has been growing rapidly for years, from $880 million in 2019 to $1.9 billion in 2022, more than doubling in just three years.
However, in pursuit of growth, the company’s earning growth us declining from -8.6% last year to a projected rate of -19.79% this year.
That not withstanding, over the next seven five years, the company’s earnings is expected to pick up, growing at an impressive rate of 25% year over year.
2. Aurora Innovation (NASDAQ: AUR)
Aurora is a self-driving technology company that is currently developing an autonomous driving platform, Aurora Driver, that can operate multiple vehicle types, from robotaxi to cargo trucks.
The company is currently working on bringing its first commercial product to the market, a self-driving truck, by 2024.
Aurora has partnerships with with PACCAR, Volvo Group, Werner, Xpress and Schneider to develop commercial self-driving trucks.
The company also has partnerships with Toyota and Denso to develop robotaxis, and deals with Volkswagen and Hyundai to develop self-driving technology for their vehicles.
Aurora is a pre-revenue company that has been raising capital, since going public in 2021 as a SPAC, to help fund its commercial launch of self-driving trucks by 2024.
It recently raised $820 million from a public and concurrent private offering of its stock. The $820 million is expected to see the company through its commercial launch in 2024 and well into 2025.
In 2019, the company’s operating expenses was $133 million, $218 million in 2020, $813 million in 2021 and $806 million last year. For a company generating no sales and no commercial product, these are huge numbers.
That notwithstanding, the company’s stock is up 85% YTD, this is largely due to investors’ trust in the ability of their management team to deliver.
Aurora was founded by industry veterans, Chris Urmston, the former CTO of Google’s self-driving unit, Drew Bagnell, the former head of Uber Autonomy and Perception Team, and Sterling Anderson, the former head of Tesla’s Autopilot.
When it comes to Leadership and Talents, Aurora has the best minds running their show as much as anyone else in the industry.
Companies like Aurora can easily become the next Tesla if they keep receiving the needed capital to continue to innovate.
They can pull full self-driving (level 5) and growth investors get to invest in them before the magic happens.
3. Luminar Technologies (NASDAQ: LAZR)
Luminar is an automotive technology company that is developing NextGen Lidar sensors for self-driving vehicles.
Lidar sensors in cars used laser-based radar to generate a 3-D map of the surroundings around a car in real-time.
Most self-driving startups/companies rely on lidar technology to help their autonomous vehicles virtualize their surrounding, enabling them make real-time driving decisions.
The rush by major automakers towards full self-driving is expected to result in a demand boom for advanced lidar sensors and that’s why companies like Luminar that stood out as potential market leaders are on the radar of smart growth investors.
Luminar’s revenue has been growing impressively from $12.6 million in 2019 to 40.6 million in 2022, more than 3x revenue growth in three years.
However, the company is burning cash, last year alone, its operating income was -$442 million, the year before that it recorded a loss of $215 million.
The company’s lidar technology is planned to be used on over 20 production vehicle models, this will drive revenue growth rate by at triple-digit every year for the next five years according to the company.
If Luminar’s revenue grows at that rate (at least doubling every year), by 2028 the company’s revenue will be about $2 billion. Crazy! The company believes it can generate about $5 billion in revenue by 2030.
It is growth like this that emboldens growth investors to take a chance at pre-revenue companies like Luminar.
NOTE: The stocks listed in this article are not part of our 22 highest-conviction growth stocks that are disrupting markets. For that you will need to check out our Market Disruptors.
In the past five years, our flagship service, Market Disruptors, that relies on a long-term growth strategy, has produced an impressive return of 190.86%, which is 4 times what the S&P 500 returned.
If you’re interested in investing in innovative companies check out our Market Disruptors.
Henry John is a Stock Portfolio Manager that focuses on companies developing cutting-edge technologies.
Keeping track of cutting-edge techs, companies and stocks is what I do almost everyday. And I love it. Whether it’s artificial intelligence, 5g, or autonomous vehicles; I’m all in.
I’m a self-made millionaire who made most of his money investing in technology companies while working in finance.
Henry John is a Stock Portfolio Manager that focuses on companies developing cutting-edge technologies.
Keeping track of cutting-edge techs, companies and stocks is what I do almost everyday. And I love it. Whether it’s artificial intelligence, 5g, or autonomous vehicles; I’m all in.
I'm a self-made millionaire who made most of his money investing in technology companies while working in finance.
Yes! I owe it all to tech and finance.
