To sleep, perchance to dream. But sleeping is a bad investing strategy. With a stock like MVIS it is possible to be completely awake and watch emotions run from fear to greed, wonder and hope, with a very large helping of what the…? Dreams come and go, which may be the history for many MVIS speculators this year. Reality has been going on for decades, and isn’t over, yet.
How many companies have stories like Google asking to be bought out for a fraction of today’s value, or Netflix offering itself to Blockbuster? MicroVision may have seen something similar happen within the last two years. How many companies were being courted to buy MicroVision when MVIS was under $1? Two years ago, before MVIS hit bottom at $0.15, the company was valued at $0.085B, or $85.0M, or slightly more than the price of the most expensive house for sale in the US in 2021. As I type, the company’s market cap is $960M, up more than ten-fold from the end of 2019, and down from ~$29 in the middle of 2021 to a whimpering price of $5.85. Eep. Or is it, yay!?
For over a decade, maybe two, I conduct an exercise of reviewing the stocks that I own, and why I own them. Simply because life is hectic, I tend to begin writing a synopsis for each stock sometime in mid-December. Limiting MVIS to a synopsis has become more of a struggle than any other company I own stock in. Considering the ride the stock and its shareholders have been on for the last two years, I decided to dedicate a post to MicroVision and its stock, MVIS. Check back again on New Years Eve to see if the synopsis is any shorter or is simply a pointer back to this post with some updated prices.
2020 and 2021 were the era when MVIS became a meme stock. I’ve always thought of MicroVision as a story stock, a company with a story about an impressive potential, and hence a stock that was attractive to me. Their struggle has been grueling to long term shareholders who held but didn’t trade. Suddenly, a new force entered the investing environment that cared more about the stock, the shorts that were influencing it, and whether a concerted community effort could deliver their version of justice by buying up the stock, trapping the shorts, and benefiting from costing the shorts lots of money while holding on long enough to sell at overly optimistic prices. Concerted community efforts are difficult to sustain, while professional shorts have the resources and organizations to hopefully survive the siege, at least this time. Hence, the stock rose from $0.15 to ~$29.
At the same time, a new CEO saw the company as drastically undervalued, and worked hard at simultaneously developing products while shopping some or all of the company to various possible buyers. $85M for a potentially industry changing technology? That’s a cheap acquisition when measured against the time and money necessary to defend against the tech. Playing catchup can put an entrenched or developing product line at risk. As months progressed, encouraging words suggested (forward looking statements, etc.) that many significant buyers were seriously interested. Expectations of a full or partial buyout within a few more months were high. That didn’t happen.
My speculation (Speculation! Guessing! Just me thinking about my investments! I’m not a investing professional, just an independent shareholder attempting to understand my investments!) I digress. My speculation was that if things went well, the anti-shorts could help drive the potential buyout buyers into an auction as various competing mega-corps kept their competitors from gaining an advantage.
Note: If, Could, Expectations, Encouraging, = nothing definite. But nothing is completely knowable, there are always risks, and MicroVision has certainly been risky – and hence, possibly rewarding. Or not.
Another of my speculations. Prudent companies interested in buying the company necessarily take time and work with caution before making a decision and acting on it. They have shareholders to answer to and careers to guard. While MVIS may have seemed like a bargain at the beginning, at some price point it would no longer be a bargain, at a higher price point it might only make sense on a strategic level, and eventually become too expensive to make sense for them – especially if none of the other bidders were committing to a purchase. The stock loses some support, the price drops. As the anti-shorts don’t drive the shorts into a squeeze, their support weakens, the shorts strengthen, and the price drops more.
Again, this is one of many possible scenarios. I doubt even the CEO knows the entire story because looking inside a mega-corp could be considered illegal, trying to track the shorts seems fruitless to other CEOs I know, and the anti-shorts community it so fractured that only pieces can be seen.
So, time for one set of perspectives. MVIS is at under $6, started the year at a similar level, wandered through some exciting spikes, all of which looked phenomenally fine after the April 2019 low of $0.15. Which perspective is yours? Whether you own the stock or not, is there a level that you identify with: irrational optimism, irrational pessimism, or your perfectly rational perspective?
So, time for a different set of perspectives. (See why this doesn’t fit into a synopsis?)
I invest in companies by buying their stock.
I bought my first shares of MVIS when I saw a TV news broadcast that included one of the anchors putting on a pair of glasses that had a miniature TV display superimposed on his vision. The broadcaster couldn’t replicate his experience, and it looked somewhat uncomfortably staged, but I could see (no pun intended) the potential. That was during the irrational exuberance (the Fed chairman’s phrase) of the Internet Bubble when valuations were testing new territories. (Another hint about the era was that I was actually watching broadcast TV for news.)
But, I’d seen the technology advances from punch cards to keyboards, from mainframes to mini-computers to PCs to laptops, from reading printers to CRTs to LCDs/LEDs and saw the natural progression from fragile flat panels to virtual imaging. Why mine massive materials to ship to massive factories to build ever bigger screens that include large warehouses filled with enormous boxes that would require bigger trucks to deliver big boxes to stores where customers would drive to them to buy then load those boxes into their cars to get them into their houses and then hook up the device while the packing material heads to the landfill? The MicroVision display unit might only be as large as a pair of ski goggles, and would inevitably get smaller.
By the time I started attending stockholders meetings the company was also developing a cell phone (not a smartphone, yet) that projected a video call’s content directly onto a user’s retina. Not even any need for the glasses. Daylight readable. A short while later they were developing a Head Up Display unit for mechanics and construction workers. (Hello, Hololens fifteen years early.) Then, HUDs for cars. Then, miniature medical cameras, high-speed barcode scanners for industrial applications, and maybe even miniature display projectors.
The miniature display projectors progressed from the size of two smartphones (because it was now that era) down to projectors that fit inside the phone. Along the way, the projectors actually hit the market, including one in a robot. (That’s a story, too.)
Bored by all the side stories? They are the stories that didn’t promise but were massively encouraging to shareholders who were watching profitability advance from 2-3 years from now, to 1.5-2 years, to 9-18 months, to 6-9 months. Do the math. Those original profitability dates were off by a factor of ten. The progress has not been gradually improving; there have been many ebbs and flows, but progress.
For investors with patience, and an appreciation of the potential, it was easier to hold on.
Within the last two years the company has been helping develop consumer displays, interactive touchless displays, home sensors, augmented reality devices, and laser imaging devices for autonomous vehicles. That’s a much broader product line. Surely something will succeed.
And something did, sort of. Hololens. Microsoft’s augmented reality display includes MicroVision projectors. (By the way, keeping track of which ‘Micro’ to keep track of isn’t easy for some. Don’t be surprised if you get confused.) Hope rose significantly, particularly because that news hit about the same time as the buyout prospects and the anti-shorts crowd arrived. Layer all three into a composite structure and the future looked fun and profitable.
And then the shrinkage began as described above. Other product lines didn’t gain commitments, or experienced postponements. The company seems to be relying on Hololens and whatever will happen with LiDAR, the sensors for autonomous vehicles and more.
Throughout, the company has survived by diluting the stock. They aren’t in debt, but without significant revenues, the company was always having to deal with potential bankruptcy (from my perspective). The current management team was wise enough that during the price spike, they sold stock and raised so much cash that any buyout can be considered optional, for a while. Not being bought out means they are more in control. Instead of the profits being absorbed into a mega-corp, those profits can create significant wealth for the company and its shareholders – but it may take a year or two.
MicroVision’s story is not just about memes. It isn’t just about MVIS. The story is deep enough to warrant a book, which I might write, but I’m writing two or three others currently. Others know the story better. All of us are hampered by the company’s reliance or restrictions or both on Non-Disclosure Agreements which have limited what the management can or want to tell us. (To the extent that news about Holoens may have only been revealed because a shareholder bought one of the multi-thousand dollar units and dismantled it so see if there was MicroVision Inside.)
I continue to hold because I return to the fundamentals of the technology. Whether MicroVision develops it or not, I have literally seen what I think is the next generation in human-computer interfaces, and how that is extending into automation industries. If MicroVision gains even a small market share and remains independent, I might be able to re-retire. I hoped, expected, and actually began to plan for that as MVIS rose through $20. MVIS has now fallen through $6. I will not ignore that emotional price. I hold, however, because MicroVision, the company, the employees, the technology, the markets, and the industry continue to impress me with the positive, disruptive, innovative potential that I am invested in.
While I wait I dream about what will happen next.
Great write up! Still holding long and strong since April 2019.
Thank you, The history of this company is so important to truly appreciate where future success may take us. Looking forward to next week, maybe our time is finally near?