Naughty Flicks

Skip NavigationMarketsBusinessInvestingTechPolitics & PolicyVideoWatchlistInvesting ClubPROLivestreamMenuI like to look for asymmetric opportunities, where I believe the potential payoff is far greater than the amount I could lose. I see that in Aurora Innovation . The Pittsburgh-based autonomous trucking company has developed technology that allows big rigs to haul freight without a human driver behind the wheel. Unlike a lot of emerging technology stories, this one is already operating commercially. Key points Aurora has a bullish plan to rapidly scale its driverless trucking business. The company is already hauling freight without a driver and generating revenue. Starting in 2027, Aurora plans to have fleet operators pay for the trucks while it provides its autonomous-driving technology. Aurora is trying to turn years of investment in autonomous trucking into a much larger commercial business. Its investor day last week gave investors a clearer picture of how management plans to get there. The market wasn’t impressed. Shares sold off around the event and have continued to fall since then. I see that pullback as an opportunity. Why I’m buying There’s finally a real roadmap to scale Aurora recently had roughly 20 to 25 driverless trucks in operation. It expects that number to reach 200 by the end of 2026, more than 1,000 by the end of 2027 and more than 30,000 by 2030. At that scale, Aurora is targeting more than $5 billion in annual revenue by 2030, with gross margins of roughly 60%. The trucks are already hauling freight Aurora commercially launched its trucking service in 2025 and has now logged more than 500,000 driverless miles. Its trucks are hauling freight for customers including McLane and Werner. That’s a big distinction for me because Aurora is already generating revenue from those operations. It’s also adding routes and customers as it scales. The business gets even better in 2027 Right now, Aurora owns and operates trucks through what it calls Transportation as a Service. Beginning in 2027, it expects to increasingly shift toward Driver as a Service, where fleet operators own the trucks and pay Aurora to use its autonomous-driving technology. This allows Aurora to grow without having to put up the capital for tens of thousands of trucks. AUR YTD mountain Aurora Innovation Inc, YTD Why now? Shares closed at $6.46 the day before the Sept. 23 investor day and at $5.39 on Sept. 29, a decline of roughly 17%. I see the sell-off as an opportunity to buy just as Aurora is putting more concrete numbers behind its long-term growth plans. The upside could be significant if Aurora delivers. Morgan Stanley has a Wall Street-high $18 price target, but I think Aurora could ultimately have 300% to 400% upside. That kind of potential comes with significant risk, including the possibility of a 40% drawdown. That’s why I would use a stop to limit your losses. Bottom line Aurora is still burning a lot of cash (about $250 million per quarter), which means it may need to raise additional capital and dilute existing shareholders. But that risk is part of what makes this an asymmetric opportunity. The company has moved beyond testing and is hauling freight without a driver while generating revenue. It now has a defined roadmap to scale that fleet dramatically. I’m willing to accept the volatility for the upside I see if Aurora can execute. Steven Grasso is the CEO of Grasso Global Inc. He began his finance career in 1993 on the trading floor of the NYSE, rising to Executive Floor Official and Governor. Disclosures: Grasso owns personally. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. This content is provided as part of our editorial output for informational purposes only and does not constitute financial, investment, tax or legal advice or a recommendation to buy any security or other financial asset. The content is general in nature and does not reflect any individual’s unique personal circumstances. The above content might not be suitable for your particular circumstances. Before making any financial decisions, you should strongly consider seeking advice from your own financial or investment advisor. THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.Read More