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Luminar: Huge Terminal Value Presents Buying Opportunity
Summary
- This article explores my discounted cash flow valuation for Luminar as of Nov. 18, 2021.
- I assume Luminar meets all of its projected revenue and EBITDA guidance from the Investor Day presentation in November 2020, followed by a slowing of growth reflecting its maturity.
- Luminar shares some growth and risk characteristics with those of semiconductors and auto parts companies.
- The intrinsic value I found for Luminar was $24.15 per share. This value has been adjusted by option values and risk of failure.
Hi there! I am a mentor for data science, machine learning, and self-driving car in Udacity, an online education company.My first introduction to the stock market was somewhat unconventional. The year was 2014, I have just finished the Machine Learning course from online videos by Andrew Ng. I then thought it would be fun to create a neural network to trade in the stock market. The model worked really well and I earned millions of dollars each week and I am basically retired. Except I was joking. It was a crash and burn and I could not get the model to work well outside of the training data.From then on, I kept doing what I did while reading the "essential" investing books on the side. You know, Benjamin Graham's and Warren Buffett's bios - To this day it still escapes me how can you learn how to value companies by reading someone's life from decades ago.By pure accident, I came across Damodaran's talk at Google HQ on Youtube. It instantly struck a chord and for the first time, I saw something that felt like a compass in this chaotic world of investing.In the spirit of keeping the feedback loop open and being transparently wrong, I share my market analyses here on Seeking Alpha. In my articles, you should expect to see how I came up with my assumptions and how I use these assumptions to convert all the qualitative characteristics into quantitative inputs for my valuations. If you found any baseless or unexplained assumptions, I'd love to hear your criticism in the comments.
Analyst’s Disclosure:I/we have a beneficial long position in the shares of LAZR either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
What good is valuation without execution? I fully intend to update my positions according to the outcome of my valuation above.
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