Microvision (NASDAQ:MVIS) specializes in providing a technology known as lidar, or light detection and ranging. There’s currently only a handful of ways to invest directly in the lidar market, and MVIS stock is one of them.
Just to give you a quick primer, lidar systems use laser beams to form a three-dimensional image of the surveyed surroundings. This process creates a real-time map of the environment.
Then, onboard computers can use this information to help navigate self-driving vehicles, for example. It’s an intriguing business to be in, but MVIS stock just took a dive and you deserve to know why.
So, let’s hop on the pain train and plumb the depths of the damage done. Maybe there will be a bright spot or two amid the wreckage. More likely, though, it’s just wishful thinking at this point.
A Closer Look at MVIS Stock
Folks who invested in MicroVision at the beginning of 2021, actually aren’t doing too badly.
MVIS stock started off 2021 barely above $5. Since that time, the stock has tested the $25 resistance level on three separate occasions: in February, April and June.
So, we have a very optimistic goal to shoot for. Someday, perhaps the Microvision share price will revisit $25. For the time being, though, we have to be more realistic. After topping out in June, MVIS stock has been on a steady decline, even falling below $10 by October.
Now, after a disappointing event, the Microvision bulls may even have difficulty reclaiming $10, not to mention $25. Who knows – maybe the Reddit short-squeeze crowd will rescue the investors from financial ruin.
Yet, praying for a massive short squeeze isn’t really much of an investment strategy.
A more sensible approach would involve performing a checkup on MicroVision’s financials, though I have a funny feeling you won’t like the latest batch of fiscal stats.
No Home Run Today
On the afternoon of Oct. 29, MVIS stock was down 17% and was trading at around $7.47.
That’s brutal, wouldn’t you agree? Don’t worry – the global demand for lidar systems didn’t collapse or anything like that. Rather, the issues appear to be specific to MicroVision, which is bad news for the shareholders.
As the company reported its third-quarter 2021 financial results, there was a general sense that MicroVision really needed to hit a home run. After all, the company’s second-quarter 2021 results left a lot to be desired.
During that quarter, the company generated $0.7 million in revenues but managed to incur a net earnings loss of $15 million. That’s significantly worse than the net earnings loss of $2.3 million reported in the year-earlier quarter.
Fast-forward to the third quarter, and once again MicroVision took in revenues of $0.7 million. This time around, the company’s net earnings loss totaled $9.4 million – a quarter-over-quarter improvement, I suppose, but nothing to celebrate, either.
On the Right Path?
These results, by the way, apparently fell short of what Wall Street’s experts had anticipated. To that point, Zacks observed that over the last four quarters, MicroVision has beaten neither the consensus revenue estimates nor the consensus earnings-per-share (EPS) estimates.
To be more precise, MicroVision posted a quarterly earnings loss of 6 cents per share, thereby underperforming the Zacks Consensus Estimate of a 4-cents-per-share loss.
Given those dismal figures, MicroVision CEO Sumit Sharma had some ‘splaining to do: How can MicroVision reduce its expenditures? What’s the specific action plan to achieve bottom-line profitability?
Sharma did offer up a dose of optimism, saying, “Following our participation in the IAA Mobility Show in Munich, Germany last month, I remain confident that we are on the right path.”
With that, Sharma cited “very encouraging feedback from potential customers.” That’s all fine and good, but the price action of MVIS stock indicates that the investors want a road map to better fiscal results.
The Bottom Line
Life is too short to wait around for Reddit users to save MicroVision’s shareholders from further price declines. At the same time, the investors will only tolerate underwhelming financial results for so long.
If there is to be change, it has to come from the top. MicroVision’s CEO should map out a specific strategy to translate the company’s innovative lidar technology into tangible bottom-line results.
This needs to happen sooner rather than later. Otherwise, it will be difficult to maintain any optimism with MicroVision, not to mention a stock position.
On the date of publication, David Moadel 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.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.