MicroVision, Inc. (NASDAQ: MVIS) is screaming for the top in the market this morning, following up on the strong gains seen from the stock yesterday. Today’s gains seem to be the result of a widely held investor belief that the company will make a deal with Apple Inc. (NASDAQ: AAPL).
Here’s what’s going on:
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- Will MVIS & AAPL Make a Deal?
- MicroVision Has Nothing Holding It Back
- Why a Deal Is So Appealing
- Risks to Consider Before Buying MVIS Stock
- Final Thoughts
Will MVIS & AAPL Make a Deal?
As mentioned above, MicroVision stock is headed up in the market this morning. The company hasn’t issued any news, but a quick search across message boards and social media will tell you that there’s quite a bit of talk surrounding a potential deal between the company and Apple.
We know that MVIS is looking for strategic alternatives. Of course, one of these alternatives would be selling itself. Now, investors believe that Apple makes a great suitor, and even if an acquisition doesn’t take place, the company may enter into a partnership with MicroVision.
It all started yesterday, when Apple announced the coming launch of the eCar. However, Apple also made it clear that they’re looking for help.
In particular, Apple, one of the world’s largest tech companies, will be looking for a partner surrounding a strong LIDAR design. That’s exactly what MVIS is known for, with one of the best LIDAR systems available today.
Of course, Apple has very deep pockets, and has plenty to gain from a potential acquisition of MicroVision. Considering that MVIS is in the process of a strategic alternatives exploration, it seems like a match made in heaven.
MicroVision Has Nothing Holding It Back
At the beginning of the company’s strategic alternatives exploration, MicroVision was held back by covenants in a financing agreement. The company recently announced that it has restructured its financing and, not only is it debt free, it has no covenants holding it back from making a deal.
That’s great news.
First and foremost, if investors are correct and Apple sees value in MVIS, the company may be acquired relatively quickly. After all, the company has absolutely no debt, making it more appealing to a suitor, should that be Apple, Microsoft, Ford, or any other company, and nothing holding it back from signing an agreement.
Why a Deal Is So Appealing
Whether it be an acquisition, or a partnership, a deal with Apple is a very appealing concept for MVIS inventors.
If an acquisition takes place, it will likely happen at a strong premium. So, upon the closing of the deal, an immediate return of value will be provided to investors.
If a partnership takes place, the long-term value may be stronger than the immediate value offered up by an acquisition. Think about it, Apple is likely to be a major driver in the transformation from traditional cars to eCars. Wouldn’t it be great to have a component in the car Apple creates?
A partnership would lead to a massive increase in demand for the LIDAR products MVIS has to offer, ultimately resulting in a significant increase in revenue and an opportunity to reach profitability.
So, no matter which way this goes, if MVIS and AAPL pin down an agreement, it will be a great thing for the company.
Risks to Consider Before Buying MVIS Stock
If you’re making an investment, you’re accepting risk, it’s all part of the dance. This fact is true with any investment you make, including one in MVIS stock. Before risking your first dime, you should consider the following risks:
- The Company Doesn’t Make Any Money. Sure, MicroVision does generate revenue through the sale of products. However, it spends far more money than it makes, meaning that it operates at a loss. Unfortunately, if the cash in the bank isn’t enough to cover those losses, the company will likely raise funds through the sale of newly-issued shares, diluting value held by existing shareholders.
- Highly Speculative. An investment in MVIS stock is a highly speculative play. If the company’s technologies aren’t enough to attract a suitor, or a partner, they may not be enough to penetrate the market in a way that will allow the company ever to reach profitability. Should this be the case, significant losses are likely ahead.
- Penny Stock Risks. MicroVision stock is a penny stock. This means that when you buy the stock, your profile is exposed to the additional risks associated with penny stocks. That means high volatility, a lack of history, and a relatively unproven business model should all be accounted for before making an investment.
Ultimately, there are risks with any stock you purchase. While buying MVIS will come with risks, the potential rewards are hard to ignore. Should the company find a suitor, which there are many options, or ink a deal with Apple surrounding a LIDAR partnership, the stock will see significant gains.
With cutting edge technology, a debt free standing, and nothing holding it back from signing on the dotted line, a deal is likely in store for MVIS, making the stock one to watch closely.