MicroVision (NASDAQ:MVIS) is a company seeking to commercialize light detection and ranging (lidar) technology. The company has been in business since the 1990s and has little to show for it. MVIS stock peaked around $500/share during the 2000 dot-com bubble, and trades at a tiny fraction of that today.
That said, MicroVision has been a penny stock for most of the past decade. So its surge up to $28 earlier this year was certainly noteworthy. However, shares are once again in steep decline. And, as a deeper look at the company will show, traders are making a sound assessment of the situation by unloading their holdings.
MicroVision’s Nano-Scale Business
The company’s name is apt in at least one way: This is a tiny operation. The company had just 52 employees as of year-end 2020. Over the past decade, the company’s single most successful year was 2018, when it generated $18 million in revenues. However, that modicum of momentum was fleeting; revenues have since collapsed to a small fraction of that figure. Needless to say, the company generates large and consistent operating losses.
As of December 2020, MicroVision has run up an accumulated shareholder deficit of $568.2 million. Despite burning through more than half a billion dollars of investor funds over the decades, MicroVision generated a grand total of just $3 million in revenue in 2020. That’s truly woeful levels of return on investment right there.
Even with its many long years in the technology industry, MicroVision has failed to launch any meaningfully successful products. It keeps telling shareholders that something it tries will succeed. And it has some patents, so that gives a reason for hope. But at some point, investors should look at the dismal track record and strongly reconsider whether MVIS stock has any merit at all.
Interactive Displays Dramatically Underwhelmed
MicroVision bulls are excited because the company is supposedly at the cusp of meaningful production for its automotive lidar product. Any quarter now, it’s all going to start happening.
We’ve heard this story before. Back in 2019, for example, MicroVision’s former CEO Perry Mulligan was telling shareholders that the company’s interactive display product was about to hit it bigtime. “Consequently, we now expect Display-only and Interactive Display products could launch in mid-2020, with first revenue to us likely starting in Q2 2020 and the potential for profitability, depending on volumes and product mix considerations, one quarter later,” Mulligan said in July 2019.
Feel free to review MicroVision’s financial statements to see how well that prediction played out. Mid-2020 came and went, and there was virtually nothing in the way of revenues. The idea of profits seems even more fanciful; the firm instead lost $14 million in 2020. Ultimately, MicroVision has backpedaled from this product, instead turning its attention to automotive lidar.
Hilariously, Mulligan described the interactive displays product as MicroVision’s “high-water mark” in its ability to execute. The high-water mark barely made a ripple. Mulligan had also suggested that MicroVision could sell one to three million units of that product line in the first 12 to 24 months of production. Not even close.
MVIS Stock and the Lidar SPACs
For awhile, MicroVision was alone in the public markets lidar space. That changed in a big way with the special purpose acquisition company (SPAC) boom, though.
Over the past year, we’ve seen at least three lidar-focused firms come to the stock market via SPACs. Luminar (NASDAQ:LAZR) is the most-well known and successful of these offerings so far. Despite brutal conditions for SPACs, Luminar is still trading around $16, well above its initial $10 SPAC price.
For those looking for a discount, there’s also Velodyne Lidar (NASDAQ:VLDR), which is trading around $6, and AEye (NASDAQ:LIDR), which is going for $4.50 per share. All of these are aiming to bring lidar to electric vehicles (EVs). One or two of these is likely to be quite a winner, but not every player is going to succeed. And with all this new money chasing these lidar firms, it threatens to leave MicroVision in the dust.
Some of these firms have strong partners, too. Luminar, for example, will be the technology provider for Volvo’s (OTCMKTS:VLVLY) next-generation vehicles. Luminar has demonstrated it can build a product and find top-tier customers for it. MicroVision, despite spending many years in the industry, has not achieved a similar feat.
MVIS Stock Verdict
MicroVision shares previously may have had some scarcity value as one of the only pure-plays in the lidar space. Now, however, far more promising and better-funded competition has arrived on Wall Street. As such, there’s no reason to be holding onto MVIS stock anymore. Arguably there was some hope of a short squeeze, but even that is starting to flicker as the hype dies down.
Lidar will likely end up being a key piece of the electric vehicle industry. There’s a far lower probability that MicroVision will end up securing much of the eventual revenues from that development, however. An investment in a more credible rival such as Luminar or Velodyne seems to make far more sense at this time.
On the date of publication, Ian Bezek 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.
Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.