When I first got the editorial nod to discuss MicroVision (NASDAQ:MVIS), I initially thought that this was my first time writing about the company. Turns out, I had mentioned MVIS stock as one of the top micro-capitalization plays for 2017.
Yes, those were some good times. Back when I first wrote about the laser scanning technology specialist, its shares could be had for just a penny over a dollar.
Today? Not so much. At the close of the first session of March 2021, MVIS stock was priced at $17.59. If you’re keeping count, that’s a blistering 1,642% profit from the time of my original article. Therefore, you’re not quite getting a deal if you jump aboard the bandwagon now.
That said, the market priced MicroVision into the stratosphere back during the 2000 tech bubble.
MVIS Stock, Then and Now
How then should investors approach MVIS stock now? After having dropped nearly 26% from this year’s peak and taking into context MicroVision’s propensity to attract speculators, there’s good reason for optimism.
But the narrative for MVIS stock isn’t just based on technical momentum. Indeed, the underlying fundamentals are what drew in many of the early speculators. As our own William White pointed out, MicroVision’s main product is the PicoP, which is an “ultra-miniature sensing and laser projection solution” utilizing laser beam scanning methodology that the company pioneered.
As you might assume, MicroVision’s pipeline has significant implications for lidar (light detection and ranging) and the broader push for fully autonomous vehicles. As well, the company offers augment reality (AR) and virtual reality (VR) applications, providing ample ways to harness the digitalization of everything economy.
Back when I first wrote about the tech firm, Sony (NYSE:SNE) took an interest in the PicoP display technology. Therefore, MVIS stock isn’t just pegged to any one solution. Rather, the underlying company provides relevant applications toward any platform that can benefit from the blending of artificial intelligence and automated equipment and devices.
Why You Should Be Cautious About MVIS Stock
Although the tech underpinning MVIS stock is certainly attractive, conservative investors may want to look at opposing factors before deciding whether to take a position.
First, I can’t help but notice that the revenue trajectory for MicroVision isn’t all that impressive. Back in 2005, the company rang up $14.75 million in top-line sales. In 2019, it posted just under $9 million. Granted, I get that MVIS stock is an aspirational investment. But at some point, aspirations must translate into meaningful results.
And this segues into my second point: With the rise of electric vehicles and AI-integrated transportation platforms, the concept of autonomous driving is steadily moving away from the exclusive domain of science fiction and toward science fact. However, progress and achievement are two different topics.
Assessing Lidar Ambitions
This brings me to MicroVision’s lidar ambitions. Another dynamic I can’t help but notice is the competition. No, it’s not that MicroVision has plenty of it, although that is a distraction for MVIS stock, let’s be real. Rather, it’s that lidar names haven’t been performing well recently.
Over the trailing month, Velodyne Lidar (NASDAQ:VLDR) has shed nearly 27% of market value. During the same period, rival Luminar Technologies (NASDAQ:LAZR) dropped over 11% — better but still a double-digit percentage loss.
In principle, this may be due to growing skepticism regarding a possible autonomous vehicle rollout. According to the news website of the American Association of State Highway and Transportation Officials:
Fully autonomous cars, trucks, and buses that are able to operate across wide geographical areas without drivers, would “revolutionize ground transportation,” according to a new 34-page research brief issued by the Massachusetts Institute of Technology. But deployment of fully autonomous vehicles (AVs) in significant numbers won’t occur for at least another 10 years, it said.
That’s a projection from MIT, not some random person on YouTube. With such a time frame, you can see why many investors are shying away from lidar-based investments.
Patience Is Not a Virtue in This Ecosystem
Of course, the counterargument is that another social media-driven rally can boost MVIS stock again, just as it’s been doing for other assets. Combine that with a strong case of FOMO, or fear of missing out, and you have a sizable base willing to buy a ticket for this circus again.
That’s all fine and well. However, the problem with this thesis is that such rallies are driven largely by the pursuit of riches over the shortest period of time possible. In other words, we’re talking about 10 days, not 10 years. If what MIT is suggesting above is close to accurate, MVIS and related trades run counter to prevailing sentiment.
Above all else, you’ll want to perform your due diligence and make sure you’re getting into MicroVision for the right reasons. If you want my take on it, I think there are too many questions to make MVIS a comfortable buy at this price.
On the date of publication, Josh Enomoto held a long position in SNE.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
