I am disappointed in MVIS and in MicroVision because of what has and hasn’t happened so far in 2015. I am also somewhat encouraged in MicroVision and a bit less encouraged about MVIS because of their progress towards their potential. Within the world of personal finance and investing, plans rarely operate according to plan – which may also explain what’s happening within the company.
Depending on how you look at it, MVIS is either up about 40% from twelve months ago, down 40% from its 52-week high, or down about 99% from its all-time high.
The stock is up because the company has made significant progress since 2014. Celluon launched two variations of a pico-projector in the spring, and Sony launched a pico-projector in the fall. Both are commercial products in volume production. Both are receiving nice reviews. Both are earning money for the company. That’s a good reason for the stock to rise 40%.
The stock is down because many interpreted the company’s communications to suggest that there’d be “something to celebrate every quarter (or every month)”. A long list of possible products could become catalysts for the stock. Several large OEMs privately demonstrated products at last January’s CES event. Ford and another auto supplier were working on head up displays (HUDs). UPS was testing a prototype system to implement in their shipping centers. Celluon and Sony both alluded to the possibility of other products in 2015. The year isn’t over yet, but aside from a robotic mobile phone from Sharp (RoBoHoN) that won’t be available until mid-2016, nothing was announced. There were no products revealed prior to Thanksgiving, timed to capitalize on the shopping season. Announcements remain possible, but any sales have less time to reach significant volume, and any extra revenues for MicroVision won’t be recognized until 2016.
I’ve been tracking some of the catalysts for several months because it looked like there was about to be a lot more activity. If you’re going to get busy, get your tools in place early. As each month progressed I darkened it. The only real news to produce a change in the chart was the RoBoHoN announcement, and it shoved its line out into 2016. An innovative smartphone was suggested as a Christmas product years ago. If that’s the only one, then it will have to be for next Christmas, and for someone else.
The most recent conference call didn’t include positive surprises. Congratulations on finding errors in your process. Improved processes are good, but the errors suggest near term delays, increased costs, and lowered credibility. The stock which had been above $3 is now hovering at $2.50.
The company and the stock have a long history of expectations exceeding accomplishments. At the peak during the Internet Bubble, the stock was about $510. I know. I bought my first small holding in the company as it was rising. The future looked bright, and profitability was estimated to be reached by about 2003-2004. I bought at an effective price of $220. That was before the 1-for-8 split, so the price looked like a more reasonable $27.60 (and the peak was closer to $64). Fortunately, through many subsequent purchases my cost basis has dropped about 90%.
Long term buy and hold investing (LTBH) is an exercise in patience. The lack of a positive surprise followed by the silence of all of the prospective customers is disheartening. I continue to wait for the stock to recover a bit more so I can sell 5%-10% to reinvest in companies with more progress that are creating positive surprises.
I plan to continue to hold onto the remaining 90%-95% because I continue to be encouraged by the company’s potential. Revenues are up. Technological hurdles have been cleared, and have led to technological advancements. Name recognition within the industry seems to be improving. The number of suppliers is growing, and the potential number of customers is far more than Celluon, Sony, and Sharp. The need and desire for very small, portable projectors is also growing. A more impressive list of potential catalysts is on PetersMVISblog. Management alluded to eyewear and game controllers, again. Maybe this time they aren’t just talking about bench models or prototypes.
There is a distinction, though, between the company’s potential and the stock’s potential. I don’t have time to update the chart today, but previously I published a chart that shows how, even when the stock price is stagnant, the company’s value is increasing. That increase is a sign of corporate health. That stagnation is a sign of investor dilution. Management may be proud of the growing value of the company at the same time that the shareholders experience no change.
Investing in small, startup companies carries many risks. Product failures, competition, poor financing can all collapse a company. Even in companies that succeed in terms of revenues, employees, and recognition, the stocks may not reflect the success. The reason I have invested in such companies for decades is because the success can become significant, can overwhelm any maturation foibles, and can create a positive impact on the world, for the company, for the employees, and for the shareholders. (Case studies available in my book, Dream. Invest. Live.)
Emotions are not on/off circuits. Emotions don’t have to exist in solitude. My disappointment lives in the same space as my enthusiasm. In December I hope to revise my estimate of MVIS’ value. Dilution has reduced the potential for the stock price for a given company value; but the growing roster of committed and potential customers may be enough to compensate. It is easy to guess, but in investing I prefer to use math whenever I can. Objectively estimating a stock’s potential value seems to be an obvious thing to do, yet I am surprised at how many base their buys and sells on subjective assessments of what feels right. Passion and emotion can be what make personal finance personal; but they get to co-exist with math and logic. When they do, they can tell a powerful story. Currently, the emotions are making their case. Soon, the logic will make its case. Until then, I am disappointed and encouraged in MicroVision and MVIS.