Microvision: Buyout or Strategic Investment?

Microvision is a stock that we first covered in June when shares traded below $1. We said at the time that an investment in Microvision is like buying a winning lottery ticket. You buy it and one day and you wake up and you hit the jackpot.While the jackpot most are thinking of is a buyout, we are having second thoughts on that scenario. Not that it isn't highly likely, but rather we are afraid shareholders might be getting shortchanged if a buyout were to occur. We certainly don't want one of the five market-defining players in mobile AR: Facebook, Apple, Amazon, Google, and Microsoft buying Microvision on the cheap.Why?The global augmented reality (AR) market is projected to reach $3.664 billion by 2026, from $849 million in 2019, at a CAGR of 27.6% during 2020-2026. It is in this space that Microvision has the best technology. Google, Facebook, Amazon, Apple, Microsoft, and many, many other companies need to strengthen their AR capabilities.[embed]https://www.youtube.com/watch?v=OvHN_bypoNE&t[/embed]With the AR market expected to grow almost 5x over the next six years, a sale of Microvision today could see shareholders of Microvision leaving a lot of money on the table. This is what a strategic investment from Google, Facebook, Amazon, Apple, Microsoft, or another big tech player might make the most sense.In this article, we take a look at Microvision and discuss how we think things will play out for MVIS and its shareholders. Microvision Daily Chart

Microvision

First up, here’s a little background info for those that are not familiar with Microvision stock. MicroVision is the creator of PicoP® scanning technology, ultra-miniature sensing, and projection solution based on the laser beam scanning methodology pioneered by the Company. MicroVision’s platform approach for this sensing and display solution means that its technology can be adapted to a wide array of applications and form factors.

MicroVision has a substantial portfolio of patents relating to laser beam scanning projection and sensing. MicroVision’s industry-leading technology is a result of its extensive research and development. The Company is based in Redmond, Washington, which is also the headquarters of Microsoft.

Microsoft

After Microsoft purchased Bethesda, we at Insider Financial speculated that MVIS might be next for Microsoft. You see, Microsoft is a long-standing customer for Augmented Reality modules from Microvision. For example, Microsoft HoloLens 2 uses projectors from Microvision. Also, many former Microvision employees now work for Microsoft.Microsoft might be interested in Microvision’s AR division for new versions of HoloLens and launching Surface Glasses as a natural evolution of HoloLens.MVIS is the only manufacturer to offer a LiDAR system that offers a very high resolution of 15.5 million dots per second (optionally up to 20 million dots per second). In addition, it is both small and inexpensive (estimated at $50), making it an ideal accessory for the Xbox.

LiDar

Besides AR, Microvision is also a market leader when it comes to LiDAR technology. LiDAR technology uses shorter wavelengths that allow it to detect minuscule objects with a high degree of accuracy while developing an exact 3D monochromatic model of the object. The LiDAR market is poised to rise from USD 1 billion in 2018 to over USD 10 billion by 2025, according to a 2019 Global Market Insights, Inc. report.[embed]https://www.youtube.com/watch?v=R4kxuqy-1Bo&feature=emb_title[/embed]We believe this market can be even bigger when you consider the potential for autonomous driving. Have a look at the technology developed by Microvision.[embed]https://www.youtube.com/watch?v=XwiI1-rSgq0&t=13s[/embed]

Microvision Bottom Line

Microvision has 60 million shares authorized to do a deal. MVIS can sell a piece of the company in exchange for a large infusion of cash that can be used to bring Microvision products to market. This scenario would be a win-win for all parties. Microvision shareholders that have been in the stock for a long, long time can reap the rewards as a large tech company helps take Microvision across the finish line. Once Microvision is fully capitalized and booking revenues and profits from its IP portfolio, then a sale of the company makes sense.Overall, Microvision remains the best way for investors to play the enormous opportunity in the LiDAR/AR/VR space. Chances are that any company that has developed technology surrounding this space is relying on technology licensed from Microvision or infringing on one of its 450 patents. With tech wars likely over IP, it makes sense for the big technology companies to secure as much IP as possible. A strategic investment or buyout of Microvision is one way to secure critical IP.Either way, we see MVIS shares continuing to move higher. With almost 13% of the float short, the coming short squeeze is going to be epic.As always, good luck to all (except the shorts)!

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Disclosure: We have no position in NASDAQ:MVIS or any of the securities mentioned. We wrote this article ourselves and it expresses our own opinions. We are not receiving compensation for it. We have no business relationship with any company whose stock is mentioned in this article. Insider Financial is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This article is not a solicitation or recommendation to buy, sell, or hold securities. This article is meant for informational and educational purposes only and does not provide investment advice.Image by Tumisu from Pixabay