MicroVision stock has been on a very profitable roller coaster this year. It's up over 1,000% since this time last year and up 182% in 2021 alone. It's also seen three plunges over 40% since February.
It's down 44% from its all-time high right now, and that has investors wondering if MVIS is a buy right now. If it follows the same trend, a leap higher could be next.
Before you open a position, here's what you need to know about this tech stock...
Why MicroVision Stock Is Dropping Now
Microvision Inc. (NASDAQ: MVIS) is developing a LIDAR (Light Detection and Ranging) technology for autonomous vehicles. The excitement around this tech has made this a very news and announcement-driven speculative stock since December of last year.
Hopes that its technology will work well enough to get it a partnership with a much larger company have attracted traders looking to get in on the first wave of the self-driving car boom.
As the shares moved higher this year, the company began to attract the eyes of short-sellers who think the stock is overpriced for what it's delivered so far.
It has one customer that uses a technology it developed a few years ago and pays a royalty, but that only produces about a little less than $500,000 a year in revenue.
As the market cap went over $1 billion and then even $2 billion, short-sellers were naturally attracted to the stock. That's created some downward pressure as bears tend to scare off more aggressive buying.
Until it decided to build the latest and greatest version of Lidar for the autonomous vehicle market, Microvision has worked on developing Augmented Reality displays or components, Interactive Displays, and Consumer Lidar product.
All of these sound cool, but with the exception of the one customer, it has not sold enough of anything to matter very much. At least not yet.
The hope now seems to be that someone likes the Lidar technology enough to buy the company.
Microvision does appear to be making some progress with its laser beam scanning Lidar product. It's said it will be ready to demo the product soon and hopes to have units to sell sometime later this year.
It has taken advantage of the speculative price increase this year to do two at-the-money equity sales, so it is flush with cash right now.
This tension between a potentially promising product and very little track record in sales is creating the roller coaster in share prices. The optimists bid MicroVision stock higher, while the pessimists tamp it back down. Aiding the optimists is the short squeeze that propelled GameStop Corp. (NYSE: GME) into front-page news. They might be hoping a similar thing happens here.
No matter who is ultimately right nor not, there is opportunity here...
Should You Buy MicroVision Stock Now?
If you think you can move faster than the social media crowd that pushed GameStop to its meteoric rise, then have at it. Traders love volatility, and this stock can give you plenty of that on a day-to-day basis.
The near-term options contracts have unusually high open interest for a company no one cared about less than a year ago; it looks like the WallStreetBets folks put the squeeze on the shorts and the options market makers as they did with GameStop.
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Will it work?
We have no idea. Sometimes the social media-induced squeeze works, and sometimes it fails to gain enough believers and falls flat.
When it falls flat, the price of the target stock plummets back to earth quickly.
With the hoped-for success of its Lidar technology, is the stock a long-term buy on dips?
Not unless it dips back to the $1.55 level the stock traded at last year.
Even then, it would be a highly speculative bet.
Lidar is a crowded field right now. There are way too many companies trying to develop the next big thing in autonomous car navigation.
There will be a handful of winners.
There will be a lot of losers as well.
Unless Microvision can find someone who believes in its technology enough to buy the company, it will likely fall into the latter group.
Even the most optimistic buyer will not pay the almost $2.6 billion price tag that the company trades for right now.
The stock trades at 34 times sales and 31 times book value. It is not even vaguely rational to think the stock is actually worth anything near the current stock price.
It is all speculation, supported only by air.
If the short squeeze fails, the stock will come crashing back down to reality.
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