The return of Microvision (NASDAQ:mvis) in 2021 may surprise some. After all, the company suffered a near delisting in 2019 and a failed takeover attempt last year. But, despite the odds, MVIS stock is now trading at a market cap of over $ 2 billion, up more than 198% since the start of the year. The reason for its new success? Claims of a new autonomous driving technology that could make it a leader in the field. As exciting as it all sounds, investors should always beware of the hype.
To quote an age-old adage, if history never repeats itself, it often rhymes. Despite the promise of revolutionary autonomous driving technology and discussions about a potential buyout, Microvision could easily cross another cliff. (He has done this in the past.)
Here is an overview of the reasons why the MVIS stock is to be avoided.
Not the first rodeo
What many people don’t realize is that this is Microvision’s second attempt at potentially revolutionary technology. The first time, during the tech bubble of early 2000, the company’s PicoP laser scanning and detection engine promised to revolutionize cell phones.
That was not the case.
About the size of a business card and only a few millimeters thick, PicoP fits into any small mobile device, allowing it to project high-quality images onto any device. what a flat surface. If the idea of integrating a projector into a mobile device sounded very good at first, it quickly became irrelevant with the birth of the smartphone. Despite management’s evangelization, most other uses of projection technology – smart glasses, virtual restaurant menus, interactive displays, and home automation – have proven to be too geeky and impractical for actual commercial use.
Today, although MVIS is a 28-year-old company with a portfolio of over 500 patents, it hasn’t converted any of those IPs into licensing revenue. Nor was it able to secure a direct purchase from a tech or industrial company.
In fact, Microvision recorded revenue of $ 395,000 in the fourth quarter. This is the lowest number reported by the company in the past 10 years. By adding salt to the wound, MVIS declared zero on balance sheet inventory for its entire 2020 fiscal year.
MVIS Stock: a road to nowhere?
Twenty years after its first disaster, Microvision is back with its latest moonshot. The company feels especially confident about its latest hardware release focused on the automotive safety market. This time around, the business is in the right place at the right time.
But I’m still not convinced he has the goods.
Expected this month, Microvision’s latest long-range LiDAR sensor (LRL sensor) is the culmination of more than two years of product development. LRL uses a pulsed laser to detect distance, speed and angle with high precision. In practice, LiDAR (Light Sensing and Telemetry) technology allows vehicles to scan the road for pedestrians, obstacles and other potential hazards nearby. There is no doubt that this is a massive addressable market, supported by deployments of autonomous vehicles by all of the major automakers.
If Microvision’s latest claims are true (we’re waiting for the actual data), its LiDAR technology would be the best and cheapest on the market. Management boasted of the industry’s longest projection range (over 250 meters), higher resolution (around 7x its competitors), low latency and reduced interference from light. sun and other LiDARs. Plus, he says he can price his technology for less than $ 1,000 per vehicle.
With all this cutting edge technology, management didn’t hesitate to tell investors that it was considering strategic options – either to license its intellectual property or to attract a buyer.
We have already seen this story
On the surface, things at Microvision are sounding pretty good this time around. And that is exactly the reason to avoid stock MVIS. Remember? History often rhymes.
There is a big difference between marketing a technology and delivering it. Microvision’s success depends on whether its LiDAR technology is truly real and ready for prime time. If you are careful, you will see that there are two big risks here.
First, even if the company’s technical claims are true – that’s a big if, given that they didn’t actually show the product or the detailed specifications – they won’t be much better than the functionality of ” active safety ”already on the market. So, although the technology may avoid large objects, such as cars, it will not guarantee safe and reliable detection of small obstacles. Obtaining these next-level security solutions is still years away and requires a considerable amount of hardware and software development.
In addition, Microvision is not the only LiDAR reader not yet offering a higher level solution. In fact, no company has all the enchilada: the right combination of distance, form factor, resolution, field of view, power consumption and cost. This could explain why MVIS, like all other players in LiDAR technology, tends to “pick” its best specs instead of disclosing its performance on all key metrics.
Even if the specs promised by Microvision are real, there is little chance that they will be next level.
Everything counts in large quantities
Second, with over 100 long-range LiDAR sensor companies in the market, including significantly larger and better capitalized players, there is no evidence that Microvision is the winner here.
Since announcing its LiDAR growth opportunity in 2016, MVIS has spent approximately $ 70 million on R&D (across all of its product lines, not just LiDAR). While not exactly a pocket change, companies such as Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), Tesla (NASDAQ:TSLA) and Uber (NYSE:UBER) have collectively invested hundreds of millions of dollars in the development and improvement of autonomous driving technology.
There are also more concentrated and vertically integrated automotive technology companies in the market. This includes companies like Veoneer (NYSE:VNE), Aptiv Plc (NYSE:APTV), Luminaire Technologies (NASDAQ:LAZR) and Velodyne Lidar (NASDAQ:VLDR). All of these competitors have closer ties to automakers than Microvision.
Let’s be realistic
Right now, the hype around MVIS is about two things. First, there is no doubt that collision avoidance technology has an important role to play in the automotive industry. Second, with so many players touting solutions, the market is likely to consolidate. That said, MVIS stock is a highly speculative name.
There is simply no evidence that this business has anything other than a good marketing history. With short interest of around 15% of the shares outstanding, market nervousness will continue to make this situation a bumpy ride.
Better to avoid the crash.
As of the publication date, Joanna Makris does not hold (neither directly nor indirectly) any position in the securities mentioned in this article.
Joanna Makris is a Market Analyst at InvestorPlace.com. Strategic thinker and fundamental investor in public equities, Joanna draws on over 20 years of Wall Street experience in various segments of the technology, media and telecommunications industries at several global investment banks including Mizuho Securities and Canaccord Genuity.