Sad MVIS has continued to fall, and with it, the emotions of MVIS shareholders. Since MicroVision announced 164% increase in revenues, its stock, MVIS, has fallen 26%. Evidently, expectations were high, and the expressed reality is low. While investing is supposedly just about the numbers, individual investors are people and therefore emotional. Since the earnings report under-delivered, the discussion boards have been busy parsing the news, trying to understand the lack of news, and acting as an unofficial support group. The private communication channels are busier, too. To paraphrase one rhetorical question, have we all been proven to be fools?
Aside from some eternal optimists, the general sentiment is disappointment. There is even a thread of perceived betrayal, or at least considerations of insufficient competence. Emotions affect the demand for a stock. Depressed emotions depress stock price. Whether through investors selling or fewer investors buying, the price drops regardless of the value of the company. If it drops enough, the distinction turns from academic to financial. When a stock’s price drops too far, it is difficult for the company to borrow money, convince customers of viability, and remain listed on the stock markets. Today MVIS closed low enough that MicroVision’s market cap was less than $100M.
The financial implications are too familiar. If you want to learn more, browse back through my previous posts because MVIS has been here before, particularly when the company conducted a reverse split.
Sentiment, expectations, and perceived promises can be created by official statements; but with a company as news-shy as MicroVision, random comments from management, quick glimpses of powerpoint slides, and seemingly logical inferences can encourage investors to buy and hold a stock.
One phrase from last year’s stockholder’s meeting echoes this year. Some recall hearing one of the top officials assure the shareholders that (paraphrased) Every quarter the shareholders will have something to be pleased about. I can be convinced that I heard the same thing, but can’t find the quote in my notes, which suggests it was not part of the formal meeting nor part of the business presentation, but may have been a comment made while mingling.
The eternal optimists find something to be pleased about every day. In terms of quantifiable news, however, there’s been very little pleasure. The simplest way to meet that goal would be for increasing revenues, even if the increase was small. Quarterly revenues were down then up then down. Another simple way to meet the goal was to announce eventual product releases every quarter, but those news items have been in the control of the customers. The best source so far has been individual shareholders like Peter Jungmann visiting the company’s booth at events like CES. A simple recital by the company of the company’s booth was in their control, and yet lacking until after others had done so.
A 164% increase in revenue is worth celebrating, but it is treated as dismal news because it didn’t include new customers, new orders, significant increases in backlog, and guidance that was conventionally impressive but too low to dissuade notions of debt or dilution. By the end of the call, and after the shareholder community had analyzed the news, the realization was that this conference call was largely like many before. One investor on Investor Village described it succinctly, and agreed to let me share it here.
This quarterly/annual earnings conference call sounded like all 72 previous ones. The names of the officers, products, and potential customers have changed, but the dialog is all the same.
“We didn’t achieve our hopes for last year that we previously alluded to, because of external factors we had no control over.”
“We have great hopes and dreams for next year because there are several companies out in the world that might use our technology.”
“Oh by the way we lost money again and diluted your shares again.”
“But things might, may, can be different next year because several unnamed companies might, may, could order something from us.” – hentied on InvestorVillage.com
Investing in stocks can be difficult. While it is easy to point to the numbers and say that it was difficult to lose money on a stock; the real pain can sometimes be an emotional response to a perceived betrayal. If hopes were too high, was it because management suggested the possibility, or because the investor let optimism take over? As another private conversation asked, Were we fools for believing, were we fooled into believing, or would we be foolish for leaving – and then finding that all we required was a bit more painful patience? Unfortunately, there’s no way to know.
I’ve only experienced this level of regret once before, which unfortunately happened at the worst possible time. Even now, I believe that Dendreon‘s cancer vaccine was an impressive success and a milestone in the War Against Cancer; and yet, DNDN went bankrupt (which continues to energize possibly valid conspiracy theories.) Even if eventually the technology, conspiracies, and health improvements prove to be correct, it won’t affect my portfolio. Sadly, being proved right is not the same as being proved profitable.
I feel sorry for and sorrow with MVIS shareholders, even the eternal optimists. We aren’t the ones doing the work. We didn’t start the company. We did, however, trust the system, the company, the management, and each other. As long as the stock is down, it will be easy to feel foolish or fooled. If the stock ever attains the valuations so many of us have calculated, we’ll laugh at how foolish it was to feel this way. If only we knew that we’d get to see that day.
In the meantime, as for feeling happy every quarter, well, I do still appreciate that value of twenty five cents. If you put eight of them plus a dime and a penny together you can buy one share of MVIS.
(Assuming no transaction fees. Brokerage fees may be much more expensive than one share of MVIS.