Parabola Hyperbola Hyperbole – MVIS

Whee!!! Whoa. Wha? MicroVision’s stock, MVIS, has been doing some crazy stuff, lately. MicroVision has always been a story stock, but usually there was only a small audience listening. Something changed.

A year ago it looked possible that a new pandemic interrupted their supply chain, dropping the stock to $0.15. (Coronavirus Implodes MicroVision

I didn’t follow the tip to buy more, and a few months later the stock hit $1.70. (Wither Or Whether MVIS

In July, $2.71, again without my sought-for “significant, positive, quantifiable” news. (No News Big Smiles MVIS

Sure, there were announcements of strategic positioning and favorable customer responses, but no real financial news. 

Same situation but the price rose to $4.01. (Lessons With LTBH Via MVIS

And then, Gamestop, or was it the anticipated delivery of a LiDAR component in April, or the anticipated buyout. And MVIS reached $7.37. (Gamestop And Moving Smaller Stocks)

Welcome to two weeks later. MVIS rose to over $15, and started sinking to $14 at the close of regular trading earlier this week. A few minutes, yes, minutes later the company released one of their first Press Releases in a long time. (MicroVision, Inc. Announces Progress on its Automotive Long Range Lidar A-Sample) The timing isn’t surprising. Most PRs are published after market close. But the After-Hours market was open, and followed by the Early Trading, today. MVIS jumped ~50%. Through today (Thursday, February 11, 2021) the stock has bounced between $17 and just under $22. All of that on news that the company; “…has received necessary components and equipment to meet its April milestone of completing A-Samples of its Long Range Lidar Sensor“. No sales, no projections, no commitments to analyze; and yet, good news because of the interest in autonomous vehicles and things like home security. Imagine what will happen when that news is announced, assuming it eventually happens. 

Google Finance

From $0.15 to over $15 in less than a year. I lamented some of the failings of my preferred Long Term Buy and Hold strategy because my losses from those first shares were so large. I’m celebrating that same strategy now because I haven’t missed out by trying to time the market. As a group, all of my current MVIS holdings are now profitable, something I didn’t expect to see this time last year. Individually, some of those shares won’t be profitable until $155. But now I am hearing fresh voices calculating those same valuations other long term shareholders like me arrived at years ago for different reasons. 

There’s a battle between logic and emotion.

Logically, IF MicroVision succeeds in the LiDAR industry, and in the Augmented/Virtual Reality industry, and in the display industry, THEN valuations in the billions become reasonable. One benchmark has been buyouts of similar companies for billions of dollars.

Emotionally, MicroVision and MVIS probably just experienced an extraordinarily long bout of irrational pessimism, which was understandable because they haven’t been profitable. Emotions can swing faster than fundamentals, which may mean MVIS’ rise MAY be at least partly irrational optimism. 

Wasn’t it Warren Buffett who said something like; “Buy when folks are pessimistic so you can sell when they are optimistic.” Ah, here’s the quote; “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.

What to do? What to do?

I’ve lived through this before. A stock rises without regard to news or conventional expectations. I wish I’d chronicled it but, I can recall one of my stocks rising 240% in one day, and several rising 140% in a day. Historical annual averages of 7% are well-grounded, but the average does not describe all of reality. A lot can happen in a day, or a few hours.

When to sell? 

It took me a few years to realize that the largest losses in my investing career weren’t from selling for much less than I paid. The largest losses were from selling instead of holding. The simplest story is when I sold Apple stock (AAPL) in protest because they fired Steve Jobs. This is only approximate, but AAPL has risen about 120,000% since then. The most it is possible to lose is 100%. +120,000% versus -100%. Silly me.

Google Finance

When to sell? 

Every situation is different. Apple was a leading-edge technology company developing innovative electronics for an unproven market and was about to encounter financial difficulties for several years. MicroVision is… Hello, a moment of honesty. I hadn’t intended to make this comparison as I started writing this post. That’s the nature of writing. I just gave myself something else to think about. Before I go much further, though; the investing decisions I made in my twenties are different than the ones I make in my sixties. There are forty fewer years of lifespan to work with. Hmm. 

I’m not the only one trying to decide what to do with MVIS. I’m familiar enough with the long-term MVIS shareholder crowd that many of us know each other. The last twelve months have seen an influx of individual investors that seem to have quadrupled the number of voices on the most active board I track, reddit. Their enthusiasm is so energetic that I’m mostly holding back and letting them run the conversation. Besides, I don’t think they want to hear from an old guy who has seen the downs as well as the ups. 

Much of the new crowd is emotional. Except for a few detractors, many are very optimistic. Almost all are just learning about the company, now. That’s natural. That’s how I started, too. (re: selling AAPL in the mid-80s as a protest)

Where will it go? Of course, none of us knows and all of us are guessing.

One fresh shareholder optimistically wrote about the stock going parabolic. Hear my sigh as the aerospace engineer kicks in. Yes, a parabola can point up, but the most frequent use of a parabolic trajectory is in ballistics; as in, something rises at high speed and then crashes back to create a crater. That is a possibility. The handy thing about investing is you don’t have to stay for the entire ride.

While in aerospace mode I thought about a curve I prefer, the hyperbola. Rise, rise, rise, and escape. That’s a model trajectory for satellites that escape Earth’s orbit.

Ah, but stocks can’t rise forever. They are limited by the wealth of the economy.

A more common curve sounds somewhat scatalogical for some: the Sigmoid Curve. A stock starts low, rises quickly, approaches a new and higher level, then levels off; possibly repeating.

wikipedia

All of the mathematics are fun for me to play with, but what are the numbers to attach to decision points? The mathematician in me says there are too many unknowns and I probably don’t know all of the equations. MVIS is in the midst of an emotional, subjective, speculative phase with the promise of near-term objective news. 

One of the advantages of investing on the Internet is the availability of many voices. From various discussion boards, private messages, social media, and analysts’ videos it’s obvious that there is no agreement. Up, is popular. Whether that stops here, or at $33, or at $100, or higher is being debated. A few point at zero, or close to it. The market will tell us, but we have to wait, and we have to decide to act or not.

I could use some money. Balancing tax losses and gains makes that a bit more difficult. (Waiting for $155 would normally seem ridiculous or take too long, but in this market sentiment – shrug.) I also don’t need the money – right now. My style of investing doesn’t require checking on the stock every day. (see my book: Dream. Invest. Live.) I do so mostly for entertainment, but when it might be time to act, I check for real. I intend to hold because I endured decades of pessimism and am willing to endure a long spell of optimism. I will sell if I need to, especially because of the pandemic and its effect on the economy. Holding can be difficult as it rises from $18, just as it was somewhat difficult to believe it could rise to $18 from $0.15. I’ll be watching intently because until significant, positive, (financially) quantifiable news is released it will be difficult to tell the difference between a hyperbolic trajectory and hyperbole.

About Tom Trimbath

real estate broker / consultant / entrepreneur / writer / photographer / speaker / aerospace engineer / semi-semi-retired More info at: https://trimbathcreative.net/about/ and at my amazon author page: http://www.amazon.com/-/e/B0035XVXAA
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2 Responses to Parabola Hyperbola Hyperbole – MVIS

  1. greenspirit says:

    Eight or 9 years ago I started reading your posts on SI. I never bought because the fundaments were poor. When the Wuhan virus hit, I looked around for bargains and learned MVIS was up for sale. I bought alot of shares, largely because of your posts. Thank You!

  2. Tom Trimbath says:

    Glad to hear it worked for you; but it also sounds like you did the real work that mattered. Good luck to both of us.

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