Introduction and Disclaimers
I want to be clear that I am not a stock analyst or expert, and nothing in this article is meant to constitute stock advice. I currently hold stock in Microvision (laser scanning microdisplays) and eMagin (OLED microdisplays), which are discussed in this article (more on that later). I hold positions in these stocks, not because I necessarily believe in the technology behind these products, but rather because I thought people would be buying these stocks. I do not have any positions in Vuzix or Kopin, and I have never shorted a stock.
I saw both my positions in Microvision and Emagin jump since December 10th, 2020, and that led me to check out other (mostly) “pure-play” AR stocks, namely Kopin (LCOS and OLED microdisplays) and Vuzix (AR headsets).
I then decided to compare these four AR stocks against the much talked about GameStop (GME) for fun. Guess what? In the last year, two of the AR stocks have beat GameStop as of today. Yes, it helps that GameStop has retreated from its astronomical highs, but it is still up over 15x in the last year. Furthermore, while GameStop appears to be on the way down, the AR stocks are still heading upwards.
AR Stocks vs. The Nasdaq Composite
First, let’s look at the four AR stocks versus the Nasdaq Composite since December 10th, 2020. The Nasdaq was up a very strong 14% over a little less than two months. But Kopin was up 341% (3.41x), Microvision 321%, while Vuzix was up “only” 202%, and eMagin 151%.
Then let’s look at the last year for the four AR companies versus the Nasdaq. Once again, Nasdaq had a good year growing 24% (the Nasdaq has averaged about 3% per year for the last 10 years0, but Kopin is up 1,807% (>18x), Microvision 1,786%, Vuzix 605%, and eMagin 497%.
Something else to note in the chart below is how the four AR companies tend to go up and down simultaneously, suggesting significant market space momentum is at play.
Digging a little deeper. Microvision’s 52 week low was $0.15 back in March 2020, and it is up an astounding 77x from that point in less than 1 year. Back on May 5th, 2020, I wrote about what seemed like Microvision’s meteoric climb to $1.10/share in Microvision Worth More Dead Than Alive – Stock Jumps 147% in a Day, and it is now up over 10X from that point.
Comparing AR Stocks to GameStop Stock
The rise in the AR Stocks got me wondering, how did they compare to the now-famous/infamous GameStop stock? It turns out that as of today, both Kopin and Microvision have a greater 1-year percentage gain than GameStop. Ok, it does help that GameStop has been falling, but it is still up over 15x in one year. Then again, if you look at the charts, the AR stocks still seem to be going up, while GameStop seems to be on the way down.
For reference, I have included a chart comparison of the AR stocks since December 10th, 2020, to Gamestop. In this period, GameStop barely edges out Kopin and Microvision.
Why I Bought Microvision and eMagin
Anyone that regularly reads this blog knows I have not liked Microvision’s laser beam scanning technology. In fact, the day I bought Microvision’s stock, I wrote on Feb. 22, 2019, in Hololens 2 is Likely Using Laser Beam Scanning Display: Bad Combined with Worse:
I bought some (a very small percentage of my holdings) Microvision stock based on the rumors. I expect the stock to go up in spite of my analysis below and I will likely sell after I think it peaks. I saw this behavior when I was the first to report that Himax was in Google Glass, the stock when crazy even though any rational person should have known that it would have a trivial business effect on Himax.
Similarly in 2016 in Magic Leap – The Display Technology Used in their Videos I wrote:
The last time I played this game of “what’s inside” I was the first to identify that a Himax LCOS panel was inside Google Glass which resulted in their market cap going up almost $100M in a couple of hours. I had zero shares of Hixmax when this happened, my technical conclusion now as it was then was based on what I saw.
Unlike my call on Himax in Google Glass I have no idea which company make the device Magic Leap appears to using nor if Magic Leap will change technologies for their production device. I have zero inside information and am basing this entirely on the information I have given above (you have been warned). Not only is the information public, but it is based on videos that are many months old.
The technology that Magic Leap used in their demos was, almost certainly, OLEDs and not the field sequential LCOS used in the Magic Leap One product. Thus, the Magic Leap “through the optics” videos were, at best, deceptive. Interestingly, Magic Leap later sued NReal, which was making a headset with MicroLED Microdisplays.
Conclusion – There is Nothing Rational About the Stock Market or AR
Generally, when it comes to stocks, I am “old school.” I want to believe in the product(s) and the ability to make revenue. Similarly, I want to believe in the underlying technology in startups and how they will address real customer needs.
Unfortunately, too much big money in the AR market has flowed to hucksters while the good startups go begging. As I wrote in May 2020, Magic Leap Starts to Auger-In with ~3.7X the Money as Theranos – I Tried to Warn Everyone.
A lot of people in the industry think that the valuation of AR companies became heavily depressed after the Magic Leap fiasco. Similarly, today AR company values seem to be up with all the rumors about Apple getting into AR (Apple rumors are a topic for another day – hint, hint).