Shares of Microvision (NASDAQ:MVIS) opened higher by about 5% on no company-specific news. A quick scan of the company’s filings and press releases shows no recent updates. Meanwhile, shares of MVIS stock are up by over 180% this month. The stock received a boost after the company reported its first-quarter earnings on May 9. Microvision operates as a lidar company with a focus on the automotive market for advanced driver-assistance systems (ADAS). The company also engages in lidar technology for other uses, such as for robots, industrial, and smart infrastructure.
Meanwhile, the cost to borrow (CTB) fee for MVIS has risen to 63.74%, compared to a value of 59.47% yesterday and 48.55% as of June 1. This fee is unusually high, as the average CTB fee for stocks ranges between 0.3% and 3%.
MVIS Stock Sees Rising CTB Fee
A rising or high CTB indicates strong short seller demand, while a falling or low CTB fee points to weak short seller demand. As demand rises, available shares to short becomes more scarce, which means that a higher fee is necessary. Therefore, investors could conclude that short seller demand for MVIS is elevated.
However, a high CTB fee could convey another message. As the fee rises to high levels, short sellers may cover their position by buying shares of the underlying stock in an attempt to escape the elevated fee. In other words, a higher fee reduces the chances that a short trade will emerge profitable. If this occurs, the price of the underlying stock could actually increase as short sellers cover.
Based on the latest available data, there were 47.64 million shares of MVIS sold short with a value of $134.82 million as of May 15. That’s equivalent to a short interest as a percentage of float of 27.26%. In general, a short interest above 10% is perceived as high, while a short interest above 20% is perceived as very high.
As mentioned earlier, the run-up in MVIS began about the same time that the company reported its earnings. For the quarter, revenue was $0.8 million, up from $0.4 million year-over-year. Still, profitability remains a major goal for Microvision, as it reported a net loss of $19 million or an EPS loss of 11 cents per share.
On the date of publication, Eddie Pan did not hold (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.
