MicroVision, Inc. (NASDAQ: MVIS) is quickly becoming a hot topic of conversation on Wall Street Bets and throughout other social communities online. The stock, being referred to as a “battleground” play, is riddled with short interest, and seems to be one of the main targets for the next big short squeeze.
Here’s what’s happening:
What Is MicroVision
MicroVision is ultimately a laser scanner company, which is becoming the hot topic of tech as of late. The company’s laser scanning products have applications in:
- Autonomous Vehicles. With the company’s technology, the area surrounding the vehicle can be scanned in real-time, creating a 3D, 360 degree image that the artificial intelligence that keeps the car on the road can read.
- Augmented Reality. The company’s scanners are also often seen in augmented reality. While multiple companies have jumped on this tech, its tech is most notably used by Microsoft, a company that many believe will eventually take MicroVision over.
- Touch & Gesture. The laser technology provides the technology to create touch and gesture opportunities. For example, if you own a camera that turns on when you give it the peace sign, there’s a possibility that the camera you own has MicroVision technology in it.
For some time now, there’s been quite a bit of discussion surrounding the potential takeover of MicroVision. In fact, last year, the company said it was actively exploring strategic alternatives, including the potential sale of the company.
While no takeover has happened quite yet, there’s a strong argument that big tech companies like Microsoft, Alphabet, Apple, and Facebook, could all benefit greatly from acquiring the company. So, many believe that a takeover might be around the corner.
A Big Short Squeeze Opportunity
While a potential takeover is exciting, there’s no telling when, or even if, that will happen. However, one thing that seems to be a bit more of a pressing matter is the potential for a short squeeze here.
For those of you who aren’t familiar with short squeezes, these are events that take place when heavily shorted stocks begin to find their way up in value. As they move up, those who hold short positions begin to lose money. Once the stock climbs too high, short sellers race to cover, which means they buy shares to return the borrowed shares for their short positions. This ultimately leads to tremendous gains in volume and significant price appreciation, and it could be the next stop for MVIS stock and its investors.
At the moment, MicroVision trades with a short interest of more than 30%. That’s incredibly high. In fact, when looking for short squeeze opportunities, I look for stocks trading with short interest of around 20%.
This massive short position is great news. At the end of the day, the larger the short position in a stock, the higher the stock has the potential to climb when the shorts are squeezed out of their positions as there are more shares that need to be purchased to cover those positions.
So, a massive short squeeze may be ahead.
More Evidence Of Something Big On The Horizon
Short squeezes are often fuelled by positive news, but as we’ve learned from the players on the Wall Street Bets message board, news isn’t always necessary. Sometimes, investors will make the decision to band together to squeeze shorts out of their positions and hand the losses to hedge funds that they’re so comfortable handing to retail investors on a regular basis, and it looks like investors are gearing up to do just that on MicroVision.
If you want to hit hedge funds hard, you have to hit them where it hurts. MVIS stock seems to be just that opportunity, and the conversation about the opportunity is heating up on Wall Street Bets and other social platforms across the web.
In fact, a post about Jim Cramer calling the stock a battleground stock and telling investors to stay away caused an uproar on the Reddit platform, and the retailers seem to be gearing up to join the battle.
All-told, this could become a short squeeze much like what we saw with GameStop just after Cramer called that a battleground. Essentially, retail investors are tired of hedge funds and what to show the world that when they work together, they own the battleground, and the war!
The Bottom Line
The bottom line here is simple. The small retail investor has been downtrodden, beaten, and bruised by hedge funds, and they’ve decided they’re not having it anymore. As a result, big short squeeze opportunities are starting to become the norm.
Considering the social conversation surrounding MicroVision, and the short interest on MVIS stock, there’s a strong chance that we’ve found where the next big battle between the bears and the bulls will take place, and in my view, the retailers have the clear upper hand.