MicroVision, Inc. (NASDAQ: MVIS) had an incredible day in the market yesterday, gaining nearly 50% by the time the closing bell rang, and minting millionaires in the process. In fact, across the Wall Street Bets Reddit, we’re seeing messages like the one below:
Now, many are wondering what’s next for the stock.
How MVIS Stock Made Millionaires
For some time now, Wall Street Bets members have been handing short squeeze after short squeeze to the hedge funds that make profits when stocks are falling due to their short positions. Ultimately, this process is transferring wealth away from these funds, which many believe are acting in unsavory ways, and into the pockets of retail investors.
As a heavily shorted stock ticks up, those who have short positions are forced to buy shares in order to cut the bleeding. After all, to close their positions, they have to buy shares at the current market price in order to return them when their short positions are over.
This buying has led to a dramatic rise in the price of the stock in a short squeeze, a squeeze that I predicted would happen in a post last week.
The Stock Is Falling Today… Should You Be Worried?
MicroVision isn’t having the best of starts to the trading session this morning. In fact, it’s down around five percent in the premarket hours today.
As a result, many are wondering if they should be concerned.
The fact of the matter is that the downward move is to be expected. Any time a stock experiences significant gains, like the gains seen in MicroVision stock over the past few trading sessions, investors will take profits at the top.
That profit taking seems to be the driving force behind the downward movement we’re seeing today.
However, history tells us that profit taking is a normal activity, and that following profit taking after tremendous gains, the stock is likely to continue on an upward trend. I don’t expect anything different from MicroVision ahead.
There Are Catalysts Ahead
Ultimately, there are multiple catalysts that investors have to look forward to with regard to MVIS stock ahead.
First and foremost, we’re just two days away from the company’s financial results, which will be released Thursday, April 29, 2021. At the moment, Wall Street expects that the company will produce a loss of $0.02 per share. If that’s the case, it will be the fourth consecutive quarter in which a loss of $0.02 has been reported.
On the other hand, if the company beats expectations, the floodgates will open and retail investors will likely dive in, causing yet another significant short squeeze.
After all, even after yesterday’s squeeze, there are still plenty of shorts holding onto their positions. In fact, at the moment, the stock is trading with about 19% of its float being sold short.
Any positive news has the potential to push these shorts out of their positions and result in gains that would make yesterday’s movement look minimal.
Is An Acquisition Ahead
Another catalyst that may be just around the corner is the potential acquisition of the company. This has been a topic of discussion for some time now after the company started a strategic options exploration last year.
Of course, during that exploration, the company said it would be looking for potential suitors in a takeover offer.
We haven’t heard much about the goal of finding a suitor, but that may all change soon. Ultimately, there are plenty of big tech companies that would benefit greatly from a takeover of the company, and if one happens, it will likely happen at a premium, resulting in a significant return of value to investors.
The Bottom Line
MVIS is a stock to watch incredibly closely. While there are plenty of naysayers, there always will be, that’s why the stock market is considered to be the great battle between the bears and the bulls.
All-told today’s declines are profit taking, which is to be expected after a run like what we saw yesterday. Nonetheless, there’s still room for significant growth in the value of MicroVision stock ahead.