Investing in emerging technologies is always an exciting way to generate accelerated returns. While the self-driving space has attracted massive investments, it makes sense to consider ancillary companies part of the Lidar (Light detection and ranging) vertical. Here, we look at two such stocks,MicroVision (MVIS) and Aeva Technologies (AEVA), to see which is a better buy today.
MicroVision slumps post earnings
MicroVision develops lidar sensors that are used in automotive safety and autonomous driving applications. The company’s laser beam scanning technology is based on micro-electrical mechanical systems, laser diodes, electronics, optomechanics, algorithms, and software.
It also develops micro-display concepts and designs for AR (augmented reality) headsets and interactive display modules used in smart speakers and other devices. MicroVision primarily sells its products to original equipment manufacturers and original design manufacturers.
In the first quarter of 2021, the company’s sales were down 67% year over year at $500,000. It also reported a net loss of $6.2 million or $0.04 per share. In the prior-year period, its net loss was narrower at $4.9 million. Comparatively, analysts forecast the company to post revenue of $600,000 and a net loss of $0.03 per share in Q1. The company ended Q1 with $75 million in cash.
MVIS stock is down 30% from its record highs due to its poor earnings. However, it continues to trade at a steep multiple given its market cap of $2.94 billion. This indicates MicroVision is valued at a forward price to sales multiple of an astounding 714x. This is based on the estimate that MVIS will increase sales by 34% to $4.15 million in 2021.
Aeva operates as a machine vision company and is engaged in the development of optical-based sensors for the automotive industry.
In Q1 of 2021, Aeva reported sales of $300,000 compared to sales of $500,000 in the prior-year period. Its non-GAAP operating loss stood at $15.6 million, much higher than its loss in the prior-year period which was $6.1 million. However, Aeva’s cash balance at the end of the March quarter stood at $523 million, up from just $24.6 million in 2020.
While Aeva did not provide any guidance for the upcoming quarters, it outlined certain objectives that include the development of its lidar system by the end of 2021 as well as building its supply chain before producing its lidar units at scale. It is also looking to close deals with enterprise partners which will be a key driver of top-line growth going ahead.
What next for investors?
Both stocks carry massive risks given their negligible sales, widening losses, and billion-dollar valuations. The companies need to tick multiple boxes to gain investor confidence. Investors should brace for considerable volatility in these stocks especially if they miss revenue and earnings estimates or even provide less than impressive guidance.
While they have sufficient liquidity, MicroVision and Aeva will have to pump in millions of dollars in research and development given the disruptive nature of the Lidar industry. A lot depends on the management team’s ability to secure long-term deals with automotive companies and other enterprises in this space while building out a robust and efficient supply-chain system.
Therefore, my advice is to stay away from both stocks at this time. There are too many uncertainties surrounding both companies and valuations are sky-high.
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MVIS shares were trading at $19.05 per share on Wednesday afternoon, up $1.10 (+6.13%). Year-to-date, MVIS has gained 254.09%, versus a 12.81% rise in the benchmark S&P 500 index during the same period.
About the Author: Aditya Raghunath
Aditya Raghunath is a financial journalist who writes about business, public equities, and personal finance. His work has been published on several digital platforms in the U.S. and Canada, including The Motley Fool, Finscreener, and Market Realist. More...
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