Imagine a future where self-driving cars solve day-to-day issues like long commutes, traffic jams, and roadway dangers. Before that future can become a reality, companies need to build systems that will allow self-driving vehicles to fully operate. At the heart of many of those systems are vision-based light detection and ranging (lidar) sensors that provide a comprehensive 360-degree map of their environment. The technology could play a crucial role in developing safe and reliable self-driving cars capable of accurately identifying and locating the objects around them.

Luminar Technologies(NASDAQ: LAZR) is developing such a technology, and it could help reshape the automotive industry if it's successful. Company management projects that its market opportunity could be a staggering $150 billion annually. However, based on Luminar's stock price steadily declining since the company's IPO in December 2020, there is reason to believe investors aren't yet convinced the company will fulfill its potential.

With the stock currently trading below $11 per share (down about 99% from its all-time high in late 2020), should more investors take this opportunity to buy into what Luminar is selling?

Luminar's lidar technology could help power autonomous vehicles

Luminar Technologies is a leading developer in the field of vision-based lidar sensors and machine perception technologies, with a strong focus on the autonomous vehicle sector. Its sensors are intended to enhance vehicle safety and facilitate autonomous driving by delivering detection capabilities over extended distances and at higher speeds. With the rapid advancement of self-driving technologies, Luminar is looking to capitalize on the growing demand for safe and reliable autonomous solutions by developing perception and decision-making software and high-definition 3D mapping.Image source: Getty Images.

The company has partnered with several major automakers, including Volvo (owned by Chinese automaker Geely), Mercedes-Benz, and Daimler Truck AG. However, its 2023 annual financial report filing notes that "substantially all of our software product had not achieved technological feasibility."

Keep an eye on its finances

Most of Luminar's revenue comes from its autonomy solutions segment, which includes designing and manufacturing lidar sensors that it sells to original equipment manufacturers (OEMs) in the automobile, commercial vehicle, robotaxi, and similar industries. It earns fees from engineering services provided to customers and for licensing certain information.

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Last year, Luminar earned $69.8 million in revenue, but its cost of sales was significantly higher, at $142.5 million, resulting in a gross loss of $72.7 million. When you add in operating expenses of $490.6 million, which include massive research and development expenditures and general and administrative costs, it lost $563.3 billion from operations.

In the third quarter, its loss from operations was still a staggering $116 million. Although that was a slight improvement from a year earlier, when it lost $129 million, the company is still struggling to grow and generate a profit.LAZR Revenue (TTM) data by YCharts.

The company has taken action to rein in costs and has undergone a restructuring that included reductions in its non-technical workforce. It expects that restructuring to result in annual savings of $80 million on a run-rate basis.

What's next for Luminar?

Early last year, Luminar began shipping lidar sensors to Volvo as the automaker began production on its EX90 EV. In a press release, Luminar said the EX90 is the "first global consumer vehicle to standardize this technology."

Those EVs are now being shipped to customers, and Luminar was recently selected to provide its sensors as standard equipment on an additional model in the Volvo line-up -- a positive sign as Volvo expands on their partnership.

Is Luminar stock a buy?

Luminar is making progress, but it still has work to do. With losses continuing to pile up, its restructuring could augur good things for its bottom line. Investors will get a better idea of how much the company is saving thanks to those cuts when it reports fourth-quarter results around Feb. 25.

Right now, Luminar is an intriguing company working on interesting technology. However, I'd like to see better expense management, an improving bottom line, and wider adoption of its lidar technology before buying the stock.

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Courtney Carlsen 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.

Should You Buy Luminar Technologies Stock While It's Below $11? was originally published by The Motley Fool

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