Look at that smile. He bought his first shares of MVIS within the last year or so. It’s his first stock. He has the best possible track record. Within the last year or so, MicroVision has announced accomplishments that some shareholders have been anticipating for decades, and buying in at prices far above today’s price, even after the rise. Today’s rise happened after the company announced a $14.5M order for components. Add that to the previous announcement for $8M of services and get a number that possibly exceeds expenses, with the possibility of more announcements before the end of 2015. Yeah. He’s smiling. I’m smiling too, but I’m a far way from profit, but I think I can see it from here.
If you want to catch up on MVIS quickly, you can start with two of my recent posts: $8M licensing, and the PicoAir.
Let’s pull apart and parse out the words they released.
MicroVision, Inc. (MVIS) – has received orders totaling $14.5 million for components for its Fortune Global 100 customer.
That’s a real number, not speculation, but it is for orders so the money probably hasn’t shifted accounts yet. That, plus the $8M are greater than the revenues from 2011 + 2012 + 2013 (+2014 I believe).
plans to begin shipment of components – in the second half of 2015
The announcement preceded the shipment. If the revenues follow the deliveries, then the money may not arrive until 2H15 or 1H16.
expects fulfillment to continue into 2016
For whatever reason, supply or demand, this deal probably extends into 2016, which also draws out the funds.
The components MicroVision is selling – are expected to be incorporated into display modules
MicroVision’s technology is also about image capture, but these modules are more likely to be part of Sony’s Life Space UX. That’s assuming the Fortune 100 company is Sony, which is almost certain. I’m waiting for someone to buy a Sony product, break it down into components, and see a MicroVision or PicoP label inside.
MicroVision will also be entitled to royalty payments upon any sales
This is a bonus because, if the products sell well, then MicroVision makes more money.
By the end of the day, MVIS had traded up about 25% but closed up about 14.6%. Good, and yet I expected more; but I’m an optimist. The trading volume was about 30 times normal, and was more than a quarter of the outstanding shares. All of that combined made MVIS one of the busiest stocks on NASDAQ. The stock finally caught a lot of attention. The traders’ twitter feed ($MVIS) was busy, with lots of people jumping in and out. There was a lot of excitement, but much of it was about the stock, not the company. I’m excited about the company. Lots of long term shareholders are excited about it too, and they probably weren’t selling. The price is far lower than it was for years. The volume may have been a quarter of the outstanding shares, but it was probably a much smaller fraction that happened to be traded around an amazing number of times.
About the company. This is champagne news, or at least making sure there’s a bottle in the fridge. This year has already set records for accomplishments in development, manufacturing, operations, sales, and financing. And, it isn’t even spring yet.
The list of potential catalysts is fluid, but today I reminded myself that:
- Celluon has already released the PicoAir, should be releasing the PicoPro soon, and was enthused enough to suggest releasing more products later this year.
- The Fortune 100 company (Sony) is keeping MicroVision busy, will generate publicity when they launch their products, and by reaching this milestone allows MicroVision to shift staff to develop other customers.
- A Fortune 500 company is supposedly launching a cell phone related product in the second half of 2015, which may be a slide from a summer launch, but is still probably within the next 8 months.
- UPS has been testing a product, and could scale up its implementation this year.
- A car company and a major supplier have been developing head up displays (HUDs) which could be announced this year.
- And I keep the door open for the unknowns that haven’t leaked, just like the surprise announcement from Celluon.
As I’ve described before, my rule of thumb for estimating the value of a deal is a price to sales ratio of 6. Based on that, MicroVision’s market cap should be worth an extra $87M; which would have been about an 85% increase in MVIS. Adding in the previous $8M deal and the market cap is $135M, about 10% below the closing market cap. That valuation assumes zero value from any of the other possibilities. I don’t place a zero value on those possibilities.
There isn’t much more data to work with outside this deal, so I reached back to touch on another benchmark. Five years ago, MicroVision seemed to be on the cusp of success. The company is in far better position now. It would be reasonable for the stock to therefore be worth more now than then (allowing for dilution.) Five years ago, MVIS was trading at over $20 based on its potential. Its potential is being realized. I expect the stock will eventually reflect that reality.
The smiling shareholder I mentioned bought in near the stock’s low. He bought more shares than me, and for far less money. Smart man there. I look for good ideas, buy when I can because timing stocks in startups is more chance than skill, then hold on as long as it makes sense to. (Want details? Buy my book, Dream. Invest. Live.) My style does not produce the best returns; but until the Great Recession, it did well enough. I hope that record returns. If it does, I suspect I’ll never see him again because he, the company, the stock, and a lot of other shareholders will be off on a long, fine adventure.
Dreams aside, MVIS closed trading at $3.14. That’s enough to wink at the champagne, and enjoy a beer, and get back to work.
PS MVIS may have hit the spotlight today, but in the last five days, one of my other stocks has done even better. AST is up 33% and is trading at 6.34 times its low. There are always more stories out there, more overlooked stocks, and more reasons to look around.
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I enjoy your blog Tim; I’ve been long MVIS for seven years and I too am smiling at being in the black on this bet after many years of patience, looking forward to seeing the catalysts you’ve identified play out (or not). Being a data-driven engineer I would love to see a pound for pound deep technical analysis of the hardware from the major players (MEMS and otherwise) with per-datapoint comparison spreadsheet style. Experience with PicoAir etc seems excellent but thats always a subjective comparison.