As frequent InvestorPlace readers know, I’ve spent a lot of time covering the lidar space as part of my Behind the Wall series. As such, Microvision (NASDAQ:MVIS) — a key player in the world of lidar — has had a large role in my conversations about, and analyses of, lidar stocks.
So, when the lidar upstart recently reported Q3 results, I shared my honest take on the company and its prospects. Some of our readers responded with their own take on the company’s future.
As ever, I am grateful to our readers, whose thoughtful commentary makes for a richer conversation. Throughout, I’ll aim to expand upon the ongoing conversation about MVIS stock.
A Quick Look At the Strong Feelings About MVIS Stock
Investor feedback has largely focused on two key points.
First, for MVIS longs, the post-Q3 selloff was unwarranted. After all, automakers are still in the early stages of selecting lidar technology suppliers. There’s plenty of time for Microvision to take a piece of this market.
Second, there’s a lot of consternation over Microvision’s primary competitor in lidar: Luminar Technologies (NASDAQ:LAZR). Many observers have chided the large form factor of Luminar’s Iris sensor, viewing it as unsightly — particularly for luxury car buyers where looks really do matter.
As with any speculative growth stock, there are plenty of opinions. So, let’s dive in. Here’s what some readers had to say about MVIS stock.
The Long View
“Hope you are doing well. I wanted to provide some feedback on your recent coverage of MVIS.
Regarding your interview with Sumit Sharma, I thought it was excellent. Good questions, well prepared and well presented. Thank you for that. However, your follow up article ‘Microvision Q3 Earnings Show That MVIS Stock is Dead Money…For Now‘ unfortunately missed the mark.
The observation that the Q3 earnings call was ‘more death soliloquy than lidar victory’ had no basis. To the contrary, Sharma’s statement was ‘OEMs tell us that our sensor … demonstrates best-in-class cost advantages, size, key features, and demonstrable scalability for production and quality requirements.’
Using cherry-picked Reddit posts as a way to gauge investor sentiment feels lazy. Anonymous posters on a message board of a highly shorted stock can have any agenda rather than being true examples of investor sentiment.
The statement ‘Even for long-term investors, that’s a long wait [Q4 2022]’ seemed a self-contradiction. Are there many long-term investors with a time horizon of less than one year?
The reality of the situation is that MVIS has the right technology and product for a massive market in automotive lidar and it is aggressively pressing its hardware advantage by developing embedded lidar software algorithms that will reside within its silicon. Your article did not contain one reference to MVIS’ embedded software plans despite Sharma repeatedly emphasizing its importance:
I hope this feedback helps you in your analysis of the company for future articles.”
Too Much, Too Soon
Here’s my response to this feedback:
Thank you so much for your detailed comments and feedback. The bottom line for me is this: While I don’t think Microvision’s OEM strategy (direct to automakers) is impossible, I do think it will be difficult given how vertically integrated the automotive industry is. While you are correct, a year’s wait may not be too long for long-term investors, I believe very strongly that the expectation built into the stock was for some material revenues (or an announcement) sooner.
The Reddit posts of course are not meant to capture every investor sentiment — but they summarized very effectively what I viewed as mounting impatience and the desire for demonstrable evidence of lidar traction.
As for the whipsaw performance of the stock, your observation is indeed correct: MVIS stock has rebounded nicely after a roughly 20% post-earnings selloff. That’s a perfect indicator of long-term investor support. My view on the stock, however, remains unchanged. I continue to think that Microvision has as good a shot as anyone in the lidar space. And, to be clear, the company does appear to have some key technical advantages in its software and form factor. However, I see little in the way of a fundamental catalyst to drive the shares higher in the short term. Patience is required.
I will continue to follow this space closely and I appreciate your support and valuable feedback.
“Would you personally buy a car that has such superstructures on the roof (see photo of Luminar-equipped Volvo)? My girlfriend never. And especially women pay attention — not always, but often — to the appearance of a car. Can you imagine a Mercedes, a BMW, or a Volkswagen with such roofs? Even Toyota (NYSE:TM) will probably have a hard time with it. One could imagine it — if there were no alternative. It’s just that almost all Luminar competitors offer smaller systems that can be seamlessly integrated into existing and proper designs, or at least hardly stand out at all.
If you now state in [your] article on Microvision that Luminar has Volvo (OTCMKTS:VLVLY) as a partner, the question becomes even more pressing. Because the new electric model will probably cost around $100,000. The higher the price, the higher the standards for appearance/design and workmanship. But who will spend $100,000 on a car (there’s a nice-looking Mercedes or Porsche for that, too) that looks more like a cab and isn’t beautiful?
The obvious is often overlooked. Therefore, I really can’t imagine car manufacturers putting Luminar lidar systems on their car roofs when they have comparable or better solutions that can be integrated much smaller and invisible, allowing for more beautiful cars.
If you then also state that Tesla (NASDAQ:TSLA) cars have been sighted with lidar systems from Luminar, this does not take into account that Tesla does everything to have the lowest drag coefficient of all suppliers. It seems impossible to me to achieve comparable drag coefficient values with such roof structures as without them. Higher drag coefficient values necessarily mean lower range, and range is the decisive criterion for buyers of electric cars, at least in Europe.
With smartphones, appearance is often the deciding factor. The same applies to cars.”
Luminar: In the Catbird Seat?
Here’s my response to this feedback:
Thank you for pointing out the important difference in form factor among lidar suppliers. And I agree, size does matter when it comes to lidar. Critics say that Luminar can’t downsize their lidar system much either because of its internal mechanical design.
Sumit Sharma, Microvision’s CEO, has reminded investors that many competitors have a lidar system the size of a VHS recorder, while Microvision’s lidar system is only equivalent to that of a VHS cassette. Additionally, many engineers have noted that Microvision’s lidar can be made even smaller by ASICs.
For its part, Luminar has engaged a design firm to explore the creation of new car roofs that better incorporate their lidar “box.” My take is that roof-mounted systems will be perceived as unsightly and the form factor must come down considerably. Time will tell.
Your comments and feedback are always welcome. Let’s continue the discussion. Email me at email@example.com.
On the date of publication, Joanna Makris 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.
Joanna Makris is a Market Analyst at InvestorPlace.com. A strategic thinker and fundamental public equity investor, Joanna leverages over 20 years of experience on Wall Street covering various segments of the Technology, Media and Telecom sectors at several global investment banks, including Mizuho Securities and Canaccord Genuity.
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