A trait that’s sorely lacking in today’s society is the ability to accept that two ideas can be true at the same time. In the case of MicroVision (NASDAQ:MVIS), it’s true that the company may have game-changing light detection and ranging (lidar) technology for autonomous vehicles. But it’s also true that autonomous vehicles are years away. And you have to reconcile those two truths before you invest in MVIS stock.
Of course, the retail investors who drove MVIS stock up to a 52-week high of $28 per share didn’t necessarily accept the two sides of the stock. And with MVIS trading around $10 as of this writing, you may have made a lot of money. However, it’s also possible that you’re holding a heavy bag.
I can understand why investors want to hold onto the bullish side of the MicroVision story. But I think MVIS stock price appreciation that goes along with that narrative is years away. At least on a sustainable level.
Autonomous Driving Is Stuck in Neutral
I can’t say I blame MicroVision for making a pivot toward focusing on lidar that can be used in autonomous vehicles. In fact, that is likely what attracted retail investors to MVIS stock. However, the pandemic has brought the development of autonomous vehicles to a hard stop. There are a couple of reasons why that’s the case.
First, the technology is dependent on semiconductor chips which are in short supply. But second—and for this I’ll refer you to an article from InvestorPlace’s Josh Enomoto—automakers have a raft of problems. Developing, and more importantly, testing autonomous technology is not going to be high on the list of priorities.
Another problem that these delays are giving the competition time to catch up. Lidar technology is already in a race to the bottom as competitors are trying to see who can produce the lowest cost lidar system. And right now MicroVision may be the best, but it’s not the cheapest.
The delay in autonomous driving coming to market also means that if MicroVision really is for sale as the company has said they are, it may be difficult to find a buyer.
MVIS Stock Fundamentals Are Concerning
As of this writing, short interest on MVIS stock was over 17%. By itself, that isn’t too alarming. However, short interest is up about 8.5% in the last 30 days. And as I look around the chat rooms, I get the sense that some investors are watching to see if a short squeeze opportunity is coming into play.
And that’s what I mean about sustainability. On two different occasions in 2021, MVIS stock has gotten swept up in the meme stock mania. But that’s not a sustainable narrative for the stock.
I’ve also noticed that while MicroVision isn’t a pre-revenue company, it hasn’t always hit its revenue targets. Of course, that’s not something that a few more customers couldn’t change. But that’s another area where the company seems to be falling short.
Are Investors Looking At the Wrong Technology?
While investors continue to focus on autonomous driving, MicroVision’s real opportunity may be in augmented reality/mixed reality. This is another growing market and one where MicroVision holds key patents. To assist with augmented reality (AR), MicroVision has created a module that to help create stylish—and useful—AR glasses.
And in the mixed reality space, MicroVision is already used by Microsoft (NASDAQ:MSFT) as the main driver in their HoloLens 2.
MVIS Stock Is a Hold for Now
Lidar is going to play a significant role in the autonomous-driving economy. And MicroVision is delivering solutions that can potentially allow it to gain market share from multiple verticals that will need lidar technology. But the chip shortage is creating a significant roadblock. And since MicroVision is not yet profitable, there’s really no reason for investors to pay tomorrow’s price today.
With shares of MVIS stock trading around $10 a share as of this writing, there appears to be less risk of owning the stock. But it still doesn’t mean that MicroVision is a buy for anyone except speculative investors.
On the date of publication, Chris Markoch 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.
Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for InvestorPlace since 2019.