Laser beam scanning (LBS) technology developer MicroVision (NASDAQ:MVIS) stock has so far had a bumpy ride in 2021. This year, MVIS stock is up over 170%. On Apr. 27, MVIS hit a multi-year high of $28. Now it is just shy of $15. The stock has been swinging between $6 and $28 in 2021.
But in May 2020, MicroVision’s shares were trading at 72 cents. Having lingered around $1.00-$2.00 for about six months, they started picking up steam in late 2020.
So those who invested in the shares 12 months ago are looking at returns of 1,500%. Put another way, $1,000 invested in MVIS stock then would now be worth around $15,000. It is hard to argue with that kind of success.
Following its most recent earnings report, Microvision’s shares came under pressure and lost nearly 30% of their value. I believe the shares are likely to stay under further pressure in the coming weeks. Therefore, investing in MVIS stock appears to be risky at this point.
Lidar Technology Is Emerging
Part of the reason for the recent rally of MVIS stock is the hype on social media about it. Most of the noise has been made on Reddit by traders who are trying to lift the shares.
But what has also caught the Street’s attention is the the company’s light detection and ranging (Lidar) technology, which “calculates how long it takes for beams of light to hit an object or surface and reflect back to the laser scanner.”
Lidar was first used in the 1960’s on airplanes, but it has recently received a large amount of attention. That’s because almost every self-driving car manufacturer uses Lidar, but Tesla (NASDAQ:TSLA) is one of the notable exceptions.
Apple’s (NASDAQ:AAPL) iPhone 12 is utilizing the technology. Lidar systems are also used to facilitate drones, robotics, and augmented reality. Over the next several years, the companies that advance this technology may grow immensely.
Statista expects the global Lidar market to have a compound annual growth rate of 24.1% between 2017 and 2024, reaching $5.8 billion in 2024. Similarly, IDTechEx predicts that the global market for 3D LiDAR in autonomous vehicles will grow to $5.4 billion by 2030.
Therefore, MicroVision stock has long-term potential. And investors are willing to bet that the company’s sensors can help improve vehicles’ autonomous driving capabilities. Indeed, a potential collaboration between MicroVision and one of the major automakers could send MVIS stock soaring. But the company’s recent Q1 results should make investors think twice about buying the shares.
Microvision’s Q1 Results
On April 29, MicroVision announced its first-quarter results. Its sales sank 67% year-over-year to $500,000, while its net loss climbed 27% YOY to $4.9 million.
The company ended Q1 with $75.3 million of cash and cash equivalents, compared to $16.9 million at the end of the prior quarter.
CEO Sumit Sharma commented, “We expect that a version of this first-generation long-range lidar sensor, after internal and external validation, reliability and compliance testing, could be available for sale, in initial quantities, in the third or fourth quarter of 2021 as we previously reported. Additionally, with the recent completion of two At-the-Market equity raises, we believe the Company is in a strong financial position which enhances our ability to negotiate with potential strategic partners.”
Despite the potential of the technology, Wall Street was not impressed with these metrics. The stock’s price-to-sales (P/S) and price-to-book (P/B) ratios are 986.25 and 32.77, showing how overvalued MVIS stock is. Unless MicroVision signs a large Lidar supply contract, these ratios cannot be justified.
Furthermore, in this sector, MicroVision is facing competition from other companies, including Velodyne (NASDAQ:VLDR), Ouster (NYSE:OUST) and Luminar (NASDAQ:LAZR), which has recently announced a partnership with Airbus UpNext, a subsidiary of Airbus (OTCMKTS:EADSY).
The Bottom Line on MVIS Stock
Despite its long history, laser technology company MicroVision does not yet have any significant commercial products. In other words, MVIS stock is a speculative play, riding on hopes of emerging technologies.
In the coming years, the shares could hit new record highs after making an automotive Lidar deal. However, the stock’s history of price swings should act as a warning to investors.
Additionally, the company’s recent social media fame has become a hurdle for the shares, as day traders are happily riding the shares up and down. Until the company announces additional news, I’d hold off on investing in these highly volatile and overvalued shares.
Finally, those investors who do not want to commit a great deal of capital to MVIS stock, but want exposure to the name, might consider buying an exchange-traded fund (ETF) that holds the shares.
Examples include the Avantis US Equity ETF (NYSEARCA:AVUS), the Direxion Moonshot Innovators ETF (NYSEARCA:MOON), the Invesco DWA Technology Momentum ETF (NASDAQ:PTF), the SPDR S&P Kensho New Economies Composite ETF (NYSEARCA:KOMP), and the Vanguard Total Stock Market Index Fund ETF Shares (NYSEARCA:VTI).
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Tezcan Gecgil, Ph.D., has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.