One stock that’s received a lot of attention this week is MicroVision (NASDAQ: MVIS). On Monday, it was the most discussed stock on Reddit’s WallStreetBets forum, according to SwaggyStocks, which tracks stock ticker mentions on the site. Some investors believe MVIS could be the next GameStop.
Is this a growth stock I should buy for my portfolio? Let’s take a look at the investment case.
MicroVision: business description
MicroVision is a US company that develops laser scanning technology. Its laser technology has applications in areas such as 3D sensing (autonomous vehicles), interactive displays, and projected displays. Currently, the company has a market capitalisation of around $2.8bn.
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Autonomous vehicle potential
One reason investors are excited about MicroVision is that the company recently announced it had completed the development of its long-range lidar sensor A-Sample hardware and development platform.
MicroVision believes its high-performance lidar sensor – which has an expected range of 250 meters and a field of view of 100 degrees horizontal by 30 degrees vertical – has the potential to advance autonomous driving and active safety systems. It says that a version of this lidar sensor could be available for sale, in initial quantities, in the third or fourth quarter of 2021.
Q1 results
After MicroVision’s share price spiked last week, it has pulled back this week on the back of the company’s first-quarter results. These results were not fantastic.
For the first quarter of 2021, revenue was $0.5m, compared to $1.5m in Q1 2020. Meanwhile, the company’s net loss for the period was $6.2m, or $0.04 per share, compared to a net loss of $4.9m, or $0.04 per share, for the first quarter of 2020.
On the positive side, the company said that it ended the quarter with $75.3m in cash, and cash equivalents, compared to $16.9m at the end of 2020.
Is MicroVision the next GameStop?
As for whether MVIS is the next GameStop (GME stock is up about 930% year to date after a massive short squeeze), I don’t think it’s likely to see the same kind of gains.
The reason GameStop had such a big short squeeze earlier in the year was that short interest was extremely high. In January, approximately 140% of GME’s public float had been sold short.
MVIS doesn’t have anywhere near the same level of short interest. According to 2iQ Research, which uses short-selling data from Astec, MicroVision’s short interest is currently around 25%. That level of short interest could result in a significant short squeeze. However, I don’t think it would be on the same level as the GME short squeeze.
Should I buy MVIS stock?
While MicroVision appears to have interesting technology, it’s not a stock I’d buy for my own portfolio. One reason is that it’s very much a speculative stock. Revenues are small and the company is generating losses.
Another reason is that the company’s valuation is very high. The market-cap of $2.8bn looks excessive, to my mind, given current revenues.
All things considered, I think there are much better stocks I could buy.
