MicroVision (NASDAQ:MVIS) stock is more compelling now as a short squeeze target than as a lidar-focused company. The truth is that there are multiple other lidar stocks equally worthy of consideration at this point.
MicroVision was much more attractive in the first half of the year. Back then MVIS stock reached highs approaching $30 as there was simply more conversation around autonomous vehicle technology. These days MVIS shares have dipped below $10. There’s reason to believe they have farther to fall.
I’ll start by noting that MicroVision shares aren’t a particularly compelling short squeeze target overall. Short interest currently sits at a shade under 18%. That’s close to the traditional short squeeze threshold of 20%.
On the other hand, it doesn’t place MicroVision among the top 40 most heavily shorted equities at present.
While I began this article by noting that MVIS stock was more compelling as a short squeeze than anything else, I don’t believe it will get squeezed. After all, there’s at least 40 other more attractive targets to consider right now.
That also means I don’t think MVIS stock is compelling as an investment otherwise.
The reason is simple.
Hasn’t Done Much
MicroVision hasn’t accomplished much. I’m not disparaging it as a technology company. Rather, when I say it hasn’t accomplished much, I mean that from the perspective of investment worthiness.
Essentially, MicroVision doesn’t have a lot of demand for its products. The company recorded $700,000 of revenue in Q2. That’s up from $600,000 a year earlier. Although that represents 17% growth, it’s negligible in reality as nothing has really changed.
MicroVision isn’t selling its lidar technology. In fact, it looks like the last time the company recorded product revenue was all the way back in Q1 of 2020. At that time, it posted $1.247 million in product revenues. Since then the company has been relying on license and royalty revenue to prop up its total revenue sources.
The news there isn’t great either. The company saw revenues decrease 40.42% through the first half of 2021 compared to 2020 levels. That too was a negligible decline in reality as the company only recorded $2 million in revenue in the first half of 2021.
I’d argue that the lone bright spot in MicroVision’s recent earnings report wasn’t much of a bright spot at all.
Increased Cash Position
That lone bright spot I alluded to was the company’s cash and cash equivalent position. That increased from $16.862 million to $135.288 million in the first six months of 2021.
That’s a positive considering that MicroVision burned through $14.954 million in operating expenses in Q2 alone. So, in other words, the company has enough liquidity to operate without a deficit which is a positive sign.
But it still lacks what investors really expect from the company, which is customers.
MicroVision’s customer base includes the autonomous vehicle market and the augmented reality market.
Superficially that sounds compelling enough. The self-driving vehicle sector has been earmarked as one with tremendous growth potential. The same is true of augmented reality.
And if we focus on vehicle autonomy it’s easy to see why investors are attracted: Compound annual growth is expected at 20.8% through 2028 in the market.
But that’s the conundrum that MVIS stock presents. Nothing has happened yet. And even if it does, there’s nothing indicating MicroVision will emerge as a winner within the sector.
Takeaway on MVIS Stock
MicroVision simply needs to find customers for its technology. That’s clearly not as easy a proposition as it seemed when EV mania was at its height.
And until MicroVision sells it is bound to stagnate as a stock. The single analyst who has made a prediction for 2022 believes MicroVision will produce $300 million in revenues next year. That is pure speculation. If it materializes, sure, MVIS goes skyward. But for now, it’s rooted in pure speculation.
On the date of publication, Alex Sirois 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.