Having analyzed my fellow InvestorPlace colleagues’ work, I like to think I have a decent sense of their writing style, enough so that I can identify the author without knowing their name. So, when I discovered that one of the more popular write-ups for MicroVision (NASDAQ:MVIS) featured a blunt title, I had a sinking feeling it was Will Ashworth. Only he had the gall to take down MVIS stock so viciously.
Sure enough, it was Ashworth that warned readers that buying MicroVision shares was akin to giving a non-zero valuation to canine waste products. Borrowing a line from Forrest Gump, he remarked that stupid is as stupid does.
Tell us how you really feel, Will.
I admire his audacity. Years ago, I mentioned a publicly traded company and the Titanic in the same sentence. That didn’t go over well. Today, I prefer more diplomatic headlines, such as Tezcan Gecgil’s take on MVIS stock, where she stated that MicroVision will remain volatile for some time.
In my view, both of my colleagues are correct. When I assessed the company on March 3 of this year, MVIS stock closed at $15.36. At time of writing, shares finished the session at $15.19, so not much changed from that perspective. But between then and now, shareholders saw paper losses of 32% and paper gains of 72%.
Which is to say, if you’ve got a crystal ball that tells you when MVIS stock is in a good mood and when it’s not, you can exploit this ebb and flow and accrue tremendous profitability over a short time frame. But what Ashworth is alluding to in his inimitable brashness is that attempting to craft such a crystal ball is a fool’s errand.
From the looks of it, MicroVision has a mind of its own, making it treacherous for normal buy-and-hold investors.
The Fundamentals Are Even More Questionable for MVIS Stock
Despite the wildness of MVIS stock, the underlying company isn’t completely speculative. As I mentioned in my March article, MicroVision is taking its laser-scanning acumen and redirecting it to the lidar industry. On the surface, this makes sense as lidar fuels the race for a viable autonomous driving technology.
But even here, I think the narrative for MVIS stock is incredibly risky. Primarily, you have massive competition in the lidar space, including much-anticipated public debutantes Velodyne Lidar (NASDAQ:VLDR) and Luminar Technologies (NASDAQ:LAZR). Both are dedicated lidar firms with serious inroads with the automotive industry.
Yet even with their expertise and connections, both VLDR and LAZR have disappointed shareholders. And we’re not just talking recent shareholders but longtime ones as well. The latter declined 47% from its peak price while the former is dangerous close to falling below its initial offering price of $10.
It’s fair to point out that both went public via special purpose acquisition companies or SPACs. Therefore, their volatility could be due to their SPAC structure rather than just the underlying business. Still, if the underlying business was so compelling, you’d have to wonder why the entire sector is tanking.
The negativity could be related to what Scientific American reported as the nonrecurrent engineering problem of artificial-intelligence-based platforms. Long story short, AI works for narrowly defined environments, such as a chess game, where all possible variables are accounted for. It’s a different story in dynamic environments where truly anything can happen.
For decades, futurists declared that machines would take over everything. In reality, we are nowhere near close to where machines can perform a minimum-wage job. I mean, how many times do you find yourself screaming “Representative!” on your phone?
The point is, if the best and brightest can’t figure out lidar and integrate it with a credible autonomous system, there’s little chance that MicroVision will. And that really hurts MVIS stock.
Volatility Is the Only Asset
This brings me back to my colleagues’ argument and how both are correct. Gecgil argued that MVIS stock will remain volatile. I’d go the extra step and say that volatility is the only “asset” that MicroVision has. It’s a faith-based exercise where buyers assume that MVIS has the magic key to unlock autonomous driving and other AI-based innovations.
You get enough people to believe and good things can happen.
But the problem is that no one has truly figured out a comprehensive AI solution, not to the degree that most people think about when they hear the term artificial intelligence. And that’s why Ashworth thinks MVIS stock is a stupid idea. It’s highly improbable that MicroVision can succeed where everyone else has failed.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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.
