Shulou(Shulou.com)11/24 Report--

In the past few years, self-driving technology startups have become popular in the eyes of investors, scrambling to go public and attracting a lot of attention and venture capital support, according to news on Oct. 17. However, the direction of the wind seemed to change suddenly. Research shows that the share prices of these companies have fallen by more than 80 per cent on average since they went public.

A few years ago, many investors complained about the lack of opportunities to invest directly in technologies that affect the future, such as self-driving. But in 2020 and 2021, a large number of autopilot technology start-ups went public through special purpose acquisitions (SPAC) and IPO.

All of a sudden, start-ups that were once limited to the venture capital industry can be seen everywhere in the open market. Technology developers associated with self-driving cars are particularly representative, making their debut with initial valuations totaling more than $50 billion.

However, investor enthusiasm for the sector has not continued. An analysis of 14 self-driving car technology companies listed in the past few years by Crunchbase, an enterprise services database, shows that their share prices have fallen by an average of more than 80 per cent after listing.

The worst performers included self-driving truck developer Embark, lidar technology company Velodyne Lidar and QuanEnergy, whose shares fell more than 95 per cent. Among them, Quanery and Embark also completed a reverse stock split this year to reduce the risk of delisting, resulting in a further decline in market capitalization.

Valuation and current market capitalization of 14 ▲ companies at IPO

Venture capital firms are still investing, given the rapidly declining interest in self-driving technology in the public market, one might think that venture capitalists will stop participating in large round financing of self-driving technology start-ups. But this is not the case.

Crunchbase found that some companies still received large amounts of financing this year. London-based Wayve, for example, received $200m in round B financing for a total of $450 million. The company is committed to developing the next generation of self-driving car technology driven by machine learning.

Meanwhile, Cavnue, the developer of advanced navigation systems tailored to connected and self-driving cars, received $130 million in round A financing co-led with Ford in April. Several China-based companies have also received large amounts of financing, including self-driving car developer Wen Yuan Zhixing and Troian, which focuses on self-driving car safety features.

Nevertheless, financing in the field of self-driving technology has declined significantly compared with 2021, especially the lack of larger late-stage financing. Last year, Nuro received $600m in financing from D-round, which produces self-driving electric cars for local distribution. Obviously, considering the current state of the IPO market and the situation of the bank's already listed companies, several rounds of financing before the IPO of a number of companies have not taken place.

The collapse in share prices has nothing to do with profits. When we think about the reasons for the massive sell-off of lidar and self-driving car-related stocks in 2022, one possibility can be ruled out immediately. No one sold shares in these companies because of falling profits. After all, most of these companies are not yet profitable.

It is also unclear to what extent revenue may be the driver of the stock sell-off. Those companies that can already generate revenue are basically in the early stages of expansion, while others are still in the pre-revenue preparation stage. Such investments have never been bets on current gains, but on the future potential of large-scale technological change.

If we look at the valuations of the worst-performing companies on the list, most investors seem to have given up. Embark, for example, was valued at about $5.2 billion when it went public in November through a merger with SPAC. Tiger Global and Sequoia Capital are the main supporters of Embark, which raised $117 million as a private company and another $614 million when it went public.

However, only a year after listing, Embark's market capitalization has fallen below its cash reserves at the end of last quarter, and its share price has fallen 97 per cent since its debut.

For Embark, which has yet to achieve revenue, it is hard to say what caused its share price to fall so sharply. For the same reason, it is hard to guess what underpinned its valuation of $5.2 billion 11 months ago. Investors just don't pay the price as blindly as they used to. For now, it seems that all unicorns in the field of autopilot are going downhill.

Welcome to subscribe "Shulou Technology Information " to get latest news, interesting things and hot topics in the IT industry, and controls the hottest and latest Internet news, technology news and IT industry trends.