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Why AEye Stock Exploded Higher on Tuesday

By Danny Vena – Updated Oct 26, 2021 at 1:23PM

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The maker of AI-based LiDAR systems for self-driving cars got some love from Wall Street.

What happened

Shares of AEye (LIDR 5.01%) surged sharply higher Tuesday, skyrocketing as much as 106.5%. As of 11:15 a.m. EDT, the stock was up 38.2%.

The catalyst that sent the maker of light detection and ranging (LiDAR) systems and advanced driver-assist systems exploding higher was bullish commentary issued by a Wall Street analyst who began covering the stock.

So what

Roth Capital analyst Suji Desilva initiated coverage on AEye with a buy rating, while also issuing a price target of $15. His new estimate would represent potential gains for investors of more than 237% over the coming year, compared with the stock's closing price on Monday.

A person relaxing and drinking coffee in a self-driving car.

Image source: Getty Images.

AEye creates advanced LiDAR systems that use pulses of light and radar and measure the distance to objects. This technology has become a staple in the pursuit of self-driving technology and the emergence of autonomous vehicles.

Desilva posited that AEye's advanced Intelligent Detection and Ranging (iDAR) system is a "differentiated" LiDAR solution, giving AEye an advantage in the rapidly growing demand for autonomous and advanced driver-assist technology. Furthermore, Desilva expects the company's system to be a top choice for makers of high-end L3, L4, and L5 models, as well as advanced driver-assistance platforms. 

The analyst also believes AEye will reveal a partnership with Tier-1 automotive supplier Continental, which would be a huge vote of confidence for the company's self-driving systems.

Now what

AEye recently went public via a special purpose acquisition company (SPAC), completing its merger with CF Finance Acquisition Corp. III in mid-August, so it's still in its early days.

For the year ended Dec. 31, 2020, the company generated revenue of just $1.58 million, while generating a loss of more than $26 million. For the first six months of this year, revenue climbed to $1.08 million, up 560%, while its net loss of $22.6 million worsened by 65%. 

While the opportunity is vast, AEye has yet to grow into its potential, something investors should consider before staking a claim in this highflier.

Danny Vena has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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