The MicroVision Stock Forecast You’re Looking For
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There’s a common misconception among Twitter critics – most of whom haven’t accomplished squat – that what’s keeping back would-be entrepreneurs from becoming billionaires is funding. They’ll posit it’s because some venture capitalists look the same, or dare ask critical questions of a business model with no regard for someone’s feelings. The truth is that throwing money at a good idea, spearheaded by someone who is mediocre at execution, won’t result in anything positive happening. We see this in the stock market as well.
In our previous piece on Vuzix, we noted that their inflated share price led to the company raising capital which should help them survive for quite a while. At least they have a hardware product that’s showing signs of life. But what happens when you throw loads of money at a stock that appears to be slowly dying? One such company is MicroVision (MVIS).
About MicroVision Stock
In the same way you might look at a candidate’s resume, let’s put aside the cacophony of drivel being posted on Reddit and focus on what this company has been able to accomplish over the past decade. The answer is, not much.
In 2018, the company said their revenues were derived “from development contracts and from license and royalty fees for PicoP® scanning technology.” In 2020, one customer represented 97% of their total revenue. Having a single customer is a huge risk, and that’s a showstopper for us.
If a given technology shows signs of traction, and then withers away, it typically means they didn’t nail product-market fit. In MicroVision’s latest 10-K, there’s a realization things haven’t panned out after burning through nearly $600 million trying to commercialize their technology. They reflect on their past goals of trying to commercialize augmented reality (AR) hardware and consumer LiDAR:
For the past few years, our strategy has been to sell AR displays or components, Interactive Displays, or Consumer Lidars to original equipment manufacturers (OEMs) and original design manufacturers (ODMs) for incorporation into their products.
Credit: MicroVision 2020 10-K
They admit their shortcomings:
While we do have a well-known customer for one of these products which generates royalty income, the volume of sales and resulting royalties from that product are not significant, and we have been unable to secure additional customers to launch one of our products.
Credit: MicroVision 2020 10-K
And then they announce the “strategic alternatives” kiss of death, what amounts to conceding defeat:
As a result, since February 2020, we have focused our attention on strategic alternatives, including a potential sale or merger of the Company, sale of part of the Company, strategic minority investment, as well as licensing and other transactions.
Credit: MicroVision 2020 10-K
Then, they became a meme stock. Or did they?
Is MicroVision a Meme Stock?
In the past year, the stock price skyrocketed over +890% compared to a Nasdaq return of +58% over the same time frame. The same dire outlook hasn’t changed. Some say what changed was that Reddit manipulators got ahold of MVIS stock and decided to make it a pump-and-dump a meme stock. Others argue the stock has always had a strong base of supporters on Reddit for a long time, and that only now are (wait for it) people starting to realize the potential of this company. Well, everyone except the company itself, which recently admitted to exploring strategic alternatives because they have little to show for after burning through nearly $600 million.
Debating whether MicroVision is a meme stock or not keeps people from focusing on what matters most. MicroVision is grasping at straws in an attempt to have a product to sell (they’re currently not manufacturing any products) and a customer to buy it.
MicroVision’s Q2-2021 Earnings Call
The first several pages of the call you can skip because they contain little substance. Yes, you’re testing products and trying to sell them to people, Yes, automotive LiDAR is a massive opportunity. Yep, that whole pandemic thing sure is a doozy. What really matters is how much revenues were realized. That number amounts to a paltry $746,000 that consisted solely of revenues from the April 2017 customer that suddenly they’ve decided to name – Microsoft (MSFT). Those royalties were credited against a “non-refundable prepayment” from Microsoft that took place in 2017, of which the balance currently sits at $6.5 million.
There’s a temptation to start asking questions around this mysterious royalty stream. For example, when do royalties accrue? What are they based on? Is there a time limit to these royalties, or a contract limit? None of the analysts on the call raise these questions, one of whom happens to be the brokerage firm that’s helping MicroVision raise up to $140 million from future bag holders investors with a very high tolerance for risk.
One cannot fault MicroVision for raising money in their at-the-market ATM offering. Instead of issuing a batch of new shares and selling them for a fixed price, they’re working with a broker who takes their newly issued shares and sells them directly to the market, hopefully at the highest possible prices (shares of MicroVision briefly eclipsed $26 a share in April 2021). In the past quarter, they sold shares at an average price of around $17 a share.
In the second quarter we issued 4 million shares and raised $67.8 million in net proceeds.
Credit: MicroVision 10-Q
As of just days ago, MicroVision had $135 million in cash and $72.2 million left they could raise from their ATM offering. When companies issue shares and sell them, they dilute existing shareholders, but retail investors never seem to monitor that. Just FYI.
The latest call talks about MicroVision’s sole focus on automotive LiDAR. Talk about a cramped space to squeeze into with a load of well-funded competitors. If we wanted to invest in cash-rich LiDAR companies that are publicly traded, we have plenty to choose from as covered in our piece on Four LiDAR Stocks That Debuted in 2020.
An MVIS Stock Forecast
How this company manages to have a $2.44 billion market cap is beyond us. Our simple valuation ratio is simply off the charts for MicroVision.
- $2,440 million market cap / annualized revenues of 3 million = 813
To put that number in perspective, the highest value we ever recorded was 100 for Desktop Metal. We won’t touch a stock with a valuation ratio over 40, nor will we touch a stock that’s being manipulated on Reddit. As of last year, this company was admittedly in an absolute world of hurt. Now that they’re able to raise money on the back of Reddit promoters investors, they’re planning to have another go at becoming something great. Good for them, but we wouldn’t touch this story stock with a ten-foot pole.
A year ago, MicroVision traded at $1.50 per share. They’ve managed to raise some cash, but little else has transpired. Their investor deck is probably one of the most dreadful things we’ve seen in a while. Once the Reddit manipulators have unloaded all their shares, there will be little to support inflated stock prices which will quickly revert back to the mean. Plenty of bag holders will continue to hang on hoping that eventually the ship will be righted. We’ve seen this happen far too many times, and the outcome is always the same.
Wall Street analysts often try and set a future price target which is all but useless. A simple forecast for MVIS stock is that shares will trade for substantially less than today’s price of around $15 a share. While short term volatility may move MVIS shares all over the place, in the long run, shares will return to their true value. That’s the beauty of the efficient market hypothesis.
Why Not Short MicroVision?
It’s clear from where we’re sitting that this stock is going nowhere fast. If that’s the case, then why don’t we short it? Because the irrationality of the herd will always exceed your margin limits. Or in the words of someone on Reddit, “we can stay retarded longer than you can stay solvent.” There’s absolutely no way we’re shorting a meme stock. Ever. Sure, we could buy put leaps, but there’s also no way of telling how long this rollercoaster of manipulation will continue to run. Any attempt at trying to bet on when this absolute mess reverts to the mean is solely speculation. We’re investors, not speculators.
You may have bought this stock because some morons on Reddit told you it was the opportunity of a lifetime, and now you’ve been caught holding the bag. The same morons are now telling you to have “diamond hands” as they offload their shares, all while coming up with the same worn-out stories about how some conspiracy explains away your concerns.
If you’re holding shares of MicroVision right now, sell them and move on with your life. What you’re engaged in is speculation. It’s highly unlikely that a lack of capital is what’s holding this company back from success. The management team is fighting to do the single most important thing that any company can do – survive – and we wish them the best in that pursuit.
Conclusion
In yesterday’s piece on Robinhood Stock – An Expensive Free Trading App, we talked about how attention-driven trading results in negative returns as investors chase performance. Newbie investors often confuse share price movements born from manipulation as validation that a company has potential. In the case of MicroVision, we could care less what their share price does. It will eventually revert back to the mean, plenty of investors will be caught holding the bag, and we will have long moved on to researching bigger and better things.
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It is amazing how lost you are. The same was said for years about Tesla, but history puts people on their place.
With Microvision we are talking about the next Intel of the AR and LIDAR industries, please invest a bit more time in analysing the global current situation, the markets of biggest growth forecast in the next decade and beyond, and the overall strength of Microvision in these areas compared to their competitors.
Until you do, then share your advise, because that is a very tendentious comment, unless you are shorting this stock, possibly heavily shorting it..!
It’s amazing how predictable these comments are. You completely ignore all the points of contention we’ve raised and move directly into the “you just don’t recognize how amazing this Tesla-like opportunity is” claim which is precisely what we see over on Reddit. Your comment serves to strengthen our thesis, not weaken it. Then, you end your comment with what might be the most predictable accusation ever – that we’re stupid enough to short some crappy meme stock. We literally spelled out in the article – which you probably didn’t even read – that we would never short any stock EVER because it amounts to speculation. And as our regular readers know (one of which you are clearly not), we are investors, not speculators. Read the piece and you’ll see how risk averse tech investors – of which there seem to be very few these days – approach volatile stocks that admittedly can’t get their technology off the ground. Please take the time to formulate a more insightful response to what we’ve posted so that it adds value to the conversation.
No mention of the $22b contract MSFT signed with the military. $30k per unit, with MVIS receiving royalties for each unit (exact revenue per unit unknown). Or any mention of the Hololens 2, based off the same MVIS VRD technology, which is soon going to be used by Ford, Boeing, and many other companies to provide augmented reality information to engineers in manufacturing facilities. No mention of the numerous patent filings from the likes of Microsoft, Google, Bosch, Facebook, Intel, Apple, STMicroelectronics etc. referencing MVIS’s own patents. No mention of the patents referencing MVIS technology to be used in surgeries to display virtual models of patients, display accurately located organs and body parts, and replace the screens they now use, in which the surgeon must be constantly looking away from the patient. No mention of the 56 (possibly more by now) patent references to MVIS technology by Magna for use in automotive HUD’s and LiDAR sensors. No mention of MVIS’s constant trading of employees through the years with Google, Microsoft, Ford and more. Or the CEO signing an agreement to be paid in shares of MVIS for the next few years, as well as numerous MVIS employees adding shares of their own in the past year or two. No mention of the recent hiring of Dr. Thomas Luce, CEO of Optoflux GMBH, a highly accomplished company in the design and manufacture of plastic mold-injected light guides, a perfect fit for use in LiDAR, virtual HUD’s etc. Now why the hell would the CEO of a successful company suddenly join a company like what you are trying to describe MVIS as? No mention of MVIS new office in germany, or the fact that they have a booth at the upcoming IAA mobility conference in Berlin, where they will showcase their technology both publicly and privately to potential future MVIS customers. The AR industry has been ramping up in the past several years but still has very limited usage, and MVIS VRD is simply the best technology out there in AR. The US Army would not be using it if there was a better option out there. The Microsoft Hololens 2 is absolutely one of the most futuristic and useful technologies out there right now. You acknowledged the LiDAR market so I’ll skip that. The automotive virtual HUD market is also ramping up, with companies like BMW already implementing tech similar to MVIS’s in certain models. Magna has a heavy interest in MVIS’s MicroHUD. Say goodbye to mechanical speedometers and hello to HUD’s. The State of Michigan has significant holdings in MVIS, and is also where Magna is headquartered, and where Ford and Bosch are currently testing self-parking vehicles. Now I admit that is some SERIOUS speculation, but I think it’s still something to consider. If you fail to see the reason they have very low earnings currently and will ramp up earnings in the next several years, then you clearly are just looking at the front-page numbers and dismissing MVIS after that. Every market they are involved in has very limited usage currently. But all the top tech companies are racing to get patents for the same technology MVIS has been working on for years and holds an extensive patent portfolio on. MVIS are the pioneers of VRD and LBS. MVIS has a highly accomplished BOD including former high-ranking members of some of the largest companies in the world. Their IP portfolio was previously placed in the IEEE top 20 most valuable IP portfolios in the tech sector. This entire article is the same as every other MVIS FUD article. “Blah blah no earnings and only one major customer. Sinking ship. Corporate husk. Overvalued meme stock.” No other comments other than lazily contrived, surface-level “research”. If you’re only capable of looking at earnings and inventories when looking for stocks with good potential, you might as well just put all your money in QQQ and call it a day.
You may want to make your comments more verbose or nobody is going to read them.
Contracts mean nothing unless we see revenues. Lots of SPACs should have shown that contracts mean eff all. Patents? Everyone has them. That’s naïve to hang your hat on a company’s patents. They did some hiring? Awesome. Why do people join companies? No idea. Everyone has their own reasons. You’re doing some SERIOUS speculation you say? Great. We’re investors, not speculators.
In your page-long diatribe, you never addressed any of our points of contention and simply acted like a cheerleader. Any comments why this company went nowhere for a decade and admitted they couldn’t commercialize their tech? You want to just ignore that, do you?
Next time, don’t just regurgitate all the company’s talking points or we’re going to delete your comment. People already know the great story the company is telling everyone. We’re here to talk about the bear case.
Comments like this one are just another red flag.
Also, I’d like to remind you that making a good investment is about figuring out which companies will do well in the future- you don’t profit off of last year’s earnings. Making the most of your investments is all about finding the companies that will do better than people expect, and to get in before the big wave. And it’s clear to me that MVIS has a lot of doubt surrounding it, and an enormous amount of potential. Even though earnings are generally the best indicator of a company’s future success, it is plain stupid to assert that just because a company has low earnings that they won’t perform well in the future. Many tech companies start out with low earnings, lots of doubters, and some cool patents in a small or even nonexistent market.
This sort of banter is precisely why we’re signing up paid subscribers hand over fist. People are sick and tired of hearing this Foolish babble about “getting in before the big wave.” Take that shite somewhere else mate. And try to read the article before you offer some generic shoot-from-the-hip commentary. We don’t focus on earnings AT ALL. We focus on revenues.
Here’s some light reading for you about how we approach investing in tech stocks: https://nanalyze.com/nanalyze-premium-articles/
If you want to have a mature conversation that addresses the points of contention we’ve raised about MVIS, then do that. You seem perfectly capable of articulating yourself. If you want to parrot the same rubbish all the other meme stock cheerleaders do, go back to Reddit. That stuff isn’t welcome here.
Actually, I thought it might be obvious why they haven’t been profitable for the past decade so I only briefly made a point about that. Someone who literally makes a living researching and writing about this stuff should be able to recognize that, even if this kind of speculative investing isn’t your specialty. No intelligent MVIS investor cares much about their past revenues because honestly no one should’ve been expecting them to have good revenues. And by the way, I completely understand why you wouldn’t recommend this stock to your subscribers. I am not expecting any investment advisor to recommend MVIS until they start mass producing and getting more customers. I even feel reluctant talking to my friends about MVIS because it just looks like a sinking ship, barely being kept afloat by some borderline conspiracy theorists and inexperienced hype chasers. And maybe that’s not far off from the truth. I found MVIS while researching LiDAR stocks and reading about their hardware specs, not through Reddit. I have started using the subreddit but only because that’s the fastest and most reliable place to get news. I am aware that many of the people there have no clue what’s going on and are just following the hype.
I never really addressed your points against MVIS because I genuinely think they are irrelevant for the time being. You made plenty of good points, many of which I really can’t refute, but I was bothered by the fact that your analysis was only surface-level and ignored literally all of the positive things about MVIS that people like myself are focused on. This is an incredibly easy company to explain in a negative way. I have seen essentially this same article posted several times before on various websites similar to this one, and not one of them ever acknowledges MVIS’s unique and groundbreaking technology, or how it has been used in the past and present. They all just act like MVIS has zero products and no IP. Sure, googling Microvision products doesn’t show anything particularly exciting apart from their interactive projection displays, but that’s the least interesting of their technology to me. I simply do not care at all about their past revenues or limited customer base.
We asked you to take the cheerleading elsewhere, then you went and posted another page of it. So, we edited that out for you. Our readers aren’t here for that.
EVERY intelligent investor cares about revenues. Revenues prove there is product-market fit. We have seen countless mountains of IP with great stories go the way of the dodo. IPs and someone’s great idea won’t get you a cup of coffee at Starbucks these days. MVIS needs to show meaningful revenues. Until they do, we’re not interested at all.
We don’t recommend stocks to our subscribers. Recommending stocks is a Foolish thing to do when 95% of those who do can’t beat a market benchmark over the long run.
You should feel reluctant touting this half-baked meme stock. We don’t try to explain away red flags, we walk the eff away. If you think all the red flags we raised are irrelevant, then this site probably isn’t for you.
So, your last comment was deleted entirely because you seem more interested in creating drama than adding value to this conversation. We only delete comments when they don’t add value to our large audience of investors, and you just crossed that line. Again, you blabbered on about some mythical future for a company that spent the last decade failing to commercialize their technology and admitting as much. We all understand the bullish story just fine. It’s the red flags that can’t be explained away that we’re focusing on here. If you want a pulpit to speak from, go build one. This platform is clearly not for you.
In the early days in the late 90’s this was supposed to be a technology to project moving images like movies and videos on a flat surface. I saw the stuff in action at an investor meeting in NYC. It was so bad I couldn’t believe that it could have been more overhyped. Exited thankfully not long after but have followed for that long. Nothing but one hyped story and allusions to big companies like BMW for instance that never amounted to anything. All of these so called opportunities just faded away without explanation. The company has been a serial diluter constantly selling stock to keep operating and generating more unkept promises. It is still amazing how they could find more uneducated folks with money to keep afloat who had no idea of their sorry track record. It was nothing more than a scheme to generate funds to finance their employment. The actual top price was about 425 adjusted for the reverse splits back in 2000. Wish I had shorted this scam all the way down to .50 cents!!!!!!!!!!!!!!!
As they teach you in bee school, the number one goal of any business is to survive. That may be the case, but we’re not subsidizing the salaries of a bunch of people who admittedly can’t get their technology off the ground. The term you use is great in general – a scheme to generate funds to finance employment – and we’re seeing that with a lot of companies these days because the Robinhood ilk invest in stories, “aping” into whatever stock some schmuck on Reddit tells them to.