“Meme stock” madness continues to affect Microvision (NASDAQ:MVIS). Its pivot toward becoming a provider of lidar self-driving technology may have been what sparked renewed interest starting late last year. Yet, it’s been chatter from online speculators — like those active in Reddit’s r/WallStreetBets community — that’s been the driving force behind MVIS stock’s rollercoaster ride.
From December to February, shares soared from around $2.50 per share to around $24. Then, pulling back towards $10 as the mania behind meme stocks faded, MVIS stock made another parabolic run in April — this time to prices above $25 per share.
As of late, the stock has experienced a sharp slide, declining some 50% from its recent highs. So, will this continue, marking the end of MVIS’s incredible run?
Yes and no. On one hand, there’s little indication that the company’s budding lidar platform will become a smashing success. This points to the stock eventually tumbling back to prior price levels on disappointment.
However, Microvision’s moving into a fast-growing space that’s still in its early stages. If, in the coming months, it announces more news — such as a partnership with a major end-user — the stock could go parabolic again. That said, this stock is more of a gamble than anything else. As such, most investors should steer clear and focus on less chancy opportunities.
MVIS Stock and Its Less-Than-Stellar Quarterly Results
Is Microvision merely an over-hyped meme stock? Or, does it have big potential with its move into the lidar space? At first glance, it seems like the former will prove true. It will be years before lidar starts to have an impact on the company’s top and bottom lines. That’s clear from the company’s recent earnings report, which reported less-than-stellar results for the quarter ending Mar. 31. Sales dropped by two-thirds, from $1.5 million to just $500,000. Plus, losses per share (4 cents) were at levels seen in the prior-year quarter but wider than analyst consensus.
The aforementioned sharp slide in MVIS stock started several days before these results hit the street. Yet, it certainly didn’t help soften the blow. However, while weak earnings numbers have taken some of its wind, I wouldn’t rule out MVIS’s chances of finding success in the lidar space.
Why? The company’s lidar ambitions “remain on track.” As CEO Sumit Sharma discussed in the earnings release, Microvision recently completed building its A-Sample lidar platform. Staying on schedule, Sharma believes the company can bring it to market this year, either in the third or fourth quarter.
Yes, this major development has done nothing to put MVIS stock back on an upwards trajectory. But, more positive news could be just around the corner. With this, shorting the stock at today’s prices — around $14.50 — may not be worth the risk.
Still Too Risky to Short at Today’s Prices
With its second large-scale pullback in three months, investors may believe the party’s finally over for MVIS stock. Short sellers — although still gun-shy from last winter’s squeezes — have bet big on this stock going lower. Around 20% of its outstanding float has been sold short.
After the slide, some betting against it may have covered their positions. But, many are likely still staying short, betting on an eventual move back to $2.50 per share. Will they prevail? If they hold on long enough without getting squeezed, it’s possible.
Microvision may be making progress with its lidar offering. However, it’s not as if it’s the only company out there going after this fast-growing industry. You may have heard of this company’s more high-profile rivals, such as Luminar (NASDAQ:LAZR) and Velodyne Lidar (NASDAQ:VLDR). Both have a first-mover advantage on their side. This points to MVIS winding up as an “also ran,” falling short of the expectations still being priced into MVIS stock.
Yet, even if its odds of long-term success remain slim, shares could still pop once more in the short-term. Given the speculation still surrounding it and the stock’s high volatility, it won’t take much to send Microvision back toward $25. So, the risk of short-squeeze losses may also outweigh the potential profits from going short here.
Bottom Line: Little Reason to Go Long (or Short)
Valued almost entirely on its possible lidar catalyst — the details of which are still fuzzy — going long on this name now is more of a gamble than an investment. Yet, given the potential for shares to go parabolic on just a breadcrumb of positive news, going short doesn’t look worth it either.
So, what’s the best move with MVIS stock? Hold off from buying and from betting against it. With more certain opportunities out there, there’s little reason to roll the dice.
On the date of publication, Thomas Niel did not (either directly or indirectly) hold any positions in the securities mentioned in this article.
Thomas Niel, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.