Skip Foresight Autonomous Holdings Until the Price Comes Down or It Proves Its Technology

While the autonomous-vehicle technology of Israeli tech company Foresight Autonomous Holdings (NASDAQ:FRSX) sounds like it could become quite prevalent, I think that FRSX stock is rather risky at its current levels. Therefore, I recommend that investors avoid taking a position in the shares for now, but keep a watchful eye on the company and its activities.

A young woman reads a book while behind the wheel of a self-driving car.

Source: Shutterstock

According to InvestorPlace columnist Louis Navalier, the company’s “QuadSight” autonomous driving sensors may have an advantage, since they’re camera-based.

Foresight contends that the technology is better than lidar, which is becoming prevalent in autonomous vehicles (AVs), at identifying the nature of objects ahead of automobiles.

Foresight contends that once there are many AVs on the road, the lidar systems will interfere with each other. They claim any lidar-like technologies that use energy emitted by vehicles around them for navigation will have similar issues. Further, Foresight says that QuadSight is better than lidar at functioning in bad weather.

FRSX Stock Could Be a Huge Winner

Foresight’s claims sound plausible to me. Moreover, the company has said that a multi-billion-dollar Japanese automaker is evaluating its technology, so the latter company’s experts must think that Foresight’s systems have meaningful potential.

Over the last 20 years, Israel has produced some extremely successful technology.

For example, instant-messaging technology was developed by Israelis, and Israeli company Check Point (NASDAQ:CHKP) has become one of the world’s top IT security companies. Intel (NASDAQ:INTC) last year acquired Habana Labs, an Israel-based AI-forward processor maker for about $2 billion.

More pertinently, one of the foremost AV-technology developers, Mobileye, which was also later acquired by Intel, for $15 billion, got its start in the Middle Eastern nation.

Foresight currently has a market capitalization of $522 million. So if its technology eventually becomes widespread in AVs or it gets acquired for several billion dollars, those who buy FRSX stock now would realize big profits.

Why the Shares Are Very Risky

As I pointed out before, in an article about Kensington Capital, a SPAC which merged with electric-vehicle battery maker QuantumScape (NYSE:QS) new technologies can fail to pan out. Last week, QuantumScape came under fire after a report surfaced that their approach to solid-state batteries might be too difficult or even impossible.

Not surprisingly, in the last month, QS stock has tumbled, sinking from around $115 on Dec. 28 to about $43 today. I fear that a similar fate could possibly befall Foresight’s own unproven technology.

That’s especially the case because, as far as I can tell, no one has yet bought its AV systems, the company has generated no revenue in recent years, FRSX stock has a rather high market capitalization for a start-up, and it has reportedly received only $18.8 million of investments.

The Bottom Line on FRSX Stock

Foresight’s shares could easily jump 1000%, but given the uncertainty of its technology and its relatively high market capitalization, the stock also carries a great deal of risk at this point. Therefore, I advise investors to await further validation of its technology or a big pullback in the name before buying FRSX stock.

On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. 

Larry has conducted research and written articles on U.S. stocks for 13 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Among his highly successful contrarian picks have been solar stocks, Roku, and Snap. You can reach him on StockTwits at @larryramer. Larry began writing columns for InvestorPlace in 2015.

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