Then, the SPAC and IPO boom of 2020-2021 arrived. All of a sudden, companies in scores of sectors once confined to venture capital portfolios were widely available on public markets. Developers of technologies tied to self-driving vehicles were particularly well-represented, launching market debuts with collective initial valuations of over $50 billion.聽

But investors鈥� love affair with the space didn鈥檛 last. A SA国际传媒 analysis of 14 companies developing technologies tied to self-driving vehicles 1that went public in the past couple of years shows an average post-debut decline of more than 80%.

The worst performers鈥攁 list that includes autonomous truck developer and LiDAR technology companies and 鈥攁re down over 95% or more. Both Quanery and Embark also completed reverse stock splits this year to lower the danger of delisting, only to see further valuation declines.

For a full rundown of how these 14 companies have performed, we put together a chart, seen below, showing valuations at time of debut compared to now:

VCs are still investing

Given the public market鈥檚 rapidly decelerating interest in the space, one might expect to see venture investors put the brakes on big rounds for private companies tied to autonomous driving. That hasn鈥檛 entirely been the case.

We鈥檙e still seeing some big rounds this year. For instance, London-based , developer of what it describes as a 鈥渘ext generation鈥� autonomous vehicle technology driven by machine learning, pulled in $200 million in a Series B, bringing total investment to over $450 million. (It should be noted that this was in January, before public markets posted their most severe declines).

Meanwhile, , a developer of advanced roadways tailored for connected and autonomous vehicles, pulled in $130 million in an April Series A co-led by . Several China-based companies have also secured big rounds, including , a developer of autonomous vehicles, and , which focused on automating vehicle safety features.

Still, things are way down from 2021, particularly for large, later-stage rounds. We aren鈥檛 seeing financings similar in stage or size to last year鈥檚 biggest round in the space, a $600 million Series D for , which makes self-driving electric vehicles for local deliveries. Obviously, pre-IPO rounds aren鈥檛 happening either, given both the state of the IPO market and the condition of already public companies in this industry.

It鈥檚 not about profits

As we ponder the causes of the great 2022 sell-off of stocks related to LiDAR and self-driving vehicles, one possibility can immediately be stricken from the list.

No one is dumping shares in these companies because profits are down. They never had profits in the first place.聽

It鈥檚 also unclear to what extent revenues might be a driver. Those that have sales are by-and-large early in their scaling, while others are still pre-revenue. This was never a bet on present earnings but rather on the future potential of a massive technological shift.

If we look at valuations of the worst performers on our list, it appears investors have mostly given up.聽

Take Embark Technology, which develops software to power self-driving trucks. The San Francisco-based company was valued around $5.2 billion when it went public in November through a SPAC merger. It had raised over $117 million as a private company, pulled in another $614 million for its public offering, and counted and among its lead backers.

Just a year after its debut, Embark is valued at less than the cash reserves it had at the end of its last quarter. Shares are down a whopping 97% from their debut price.聽

So, just to put it in perspective: This would be like if the price of your $1 million California house went down in a few months to just $30,000. It鈥檚 pretty catastrophic.

For Embark, which is pre-revenue, it鈥檚 tough to say what could be the catalyst for such a cataclysmic decline. By the same token, it鈥檚 also difficult to surmise what supported that $5.2 billion valuation just 11 months ago. Investors just aren鈥檛 paying what they used to for this kind of thing.

In coming quarters, it鈥檒l be interesting to see which companies that went public during the 2020-21 window of opportunity have regained investors鈥� favor. For now, it鈥檚 looking like pretty much the whole autonomous driving unicorn herd has headed downhill fast.

Illustration:

There’s no shortage of car-selling websites and online services in the world. In America, CarGurus is a well-known entrant and member of the聽2017 IPO聽class. But while there’s 聽and even聽, there’s still a huge market to tackle, and thus lots of capital flowing into companies out to do just that.

China

The Chinese car market is massive. Despite hitting along with the broader Chinese economy, the figures concerning automobiles in China are nearly bonkers. The country had annual car sales in 2018, for example, compared to during the same period.

Strong national car sales mean lots of new cars on the market聽of course, but also lots of used cars. It appears that Chehaoduo targets both sides of the car market. The firm, now with ten-figures worth of cash on its balance sheet, operates two services including which targets new car sales, and Guazi, which seems to operate in selling used car.

In , SoftBank waxed excitedly about the Chinese used car market and thus the chances for its latest investment:

China’s聽used car market is growing rapidly but online penetration remains low and auto financing is underutilized compared to developed markets. In just three years, Chehaoduo Group, through the Guazi brand, has leveraged the latest innovations in data-driven technology to establish聽China’s聽leading car trading platform. The company has a bold vision with technology at its center to underpin an industry network that will support transformative growth of the market.

Even for tech that’s a bit air-filled, but I think the point is that Chehaoduo’s implied quick growth in a big market attracted Vision Fund dollars. In that sense, the deal matches what we’ve seen recently from the ever-active SoftBank-managed capital pool.

The Vision Fund doesn’t have infinite money (perhaps a few dozen billion dollars left), but until its monetary pool dries we’ll see this sort of capital injection continue. And given the revenue scale that聽Chehaoduo can likely find given its total addressable market (TAM, in venture parlance) and per-deal value (cars are expensive), perhaps this is one of SoftBank’s more reasonable disbursements.

Top Image Credit: .