MicroVision: Will the volatility continue?

• MicroVision Inc (Nasdaq: MVIS) share price shoots up to US$15.40 per share
• The stock’s volatility gained pace after a short-seller’s bet and disappointing earnings
• The company’s net loss worsened to US$6.2 million for the first quarter
• Buy and sell MicroVision shares with an IG account

MicroVision stock claws back some losses

Shares of MicroVision - which develops laser-scanning technology for automotive lidar sensors and augmented reality - rebounded on Tuesday (04 May 2021), rising 11.1% day-on-day to close at US$15.40 on a volume of 69.6 million shares.

The MVIS stock had plummeted 34% after reporting lower-than-expected quarterly results last Thursday (29 April 2021).

Before the slide, MicroVision shares had spiked as much as 170% since 20 April 2021. And as recently as June 2020, they were trading below US$1.

The volatility has put the spotlight back on the tussle between individual retail investors and short-sellers, Reuters noted.

Both analysts covering MVIS shares recommended ‘neutral’, but did not provide target prices, Bloomberg data showed.

What’s driving the volatility in MicroVision shares?

The laser manufacturer, dubbed a ‘meme stock’, has been attracting keen attention from investors on social media. MicroVision is a popular pick in the WallStreetBets trader forum on Reddit, for instance.

It also drew interest from users on trading-focused social media site Stocktwits, where MicroVision-related message volume surged 17% late last week, with sentiment slowly turning negative, Reuters reported.

On 22 December 2020, short-seller Hindenburg Research said it was betting against MicroVision’s stock. But the shares went on to nearly triple, hitting a peak of US$26.44 on 26 April 2021.

Reuters said this illustrated the ‘potential dangers’ that bearish investors could face when positioning against so-called ‘meme stocks’, as some of the volatility could have been triggered by a smaller-scale face-off between retail investors and short-sellers.

MicroVision’s share price posted wild swings in April. Per Stirling Capital Management’s Robert Phipps observed ‘some return of interest to those Reddit-type stocks, but not with the same pace and fervour we saw before’.

In a basket of 50 stocks with market capitalisation of under US$100 billion that Vanda Research monitors, the average short interest recently jumped to levels last seen in January. At the same time, cash equity purchases and the premium spent on call options for MicroVision climbed, indicating retail investors’ buying activity, said Vanda analysts.

Disappointing earnings, upcoming lidar sensor

Last Thursday, the laser beam sensing technology developer reported that its first-quarter net loss deepened to US$6.2 million or US$0.04 per share, from a US$4.9 million loss in the year-ago period. Revenue sank 67% year-on-year to US$479,000.

The results missed analysts’ expectations of a US$0.03 net loss per share and US$600,000 revenue, according to Bloomberg data.

Separately, MicroVision announced it had completed a long-range lidar technology demonstration and that a product could go on the market soon.

MicroVision CEO Sumit Sharma said a version of this lidar sensor could become available for sale, in initial quantities, in the third or fourth quarter this year.

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