Microvision Insiders Don’t Have Nearly Enough Skin in the Game

 I’m on record saying it’s a really dumb idea to buy Microvision (NASDAQ:MVIS) stock in double digits.

That was in mid-May when MVIS stock was trading around $15. 

Now that I’ve had a chance to look at pg. 27 of the company’s 2020 proxy statement, I realize that the lidar business’s insiders don’t have nearly enough skin in the game. 

For this reason, I continue to recommend investors pass on this stock.  

In April, the InvestorPlace staff named the top four lidar stocks for 2021. In order of market capitalization from highest to lowest, they were Luminar Technologies (NASDAQ:LAZR), Velodyne Lidar (NASDAQ:VLDR), Ouster (NYSE:OUST), and Innoviz Technologies (NASDAQ:INVZ).   

A Closer Look at MVIS Stock

Microvision’s executive officers and directors as a group own 1.2% of MVIS stock, with Chief Executive Officer Sumit Sharma owning the most with 607,966 shares or 32% of the insider shareholdings. 

How do the other four lidar companies compare?

The first thing you’ll notice is that all four of the recommendations, which didn’t include MVIS, by the way, had a much bigger contribution from insiders, whether it be the CEO or others.   

According to the market caps, Microvision would have the second-largest at $2.7 billion as I write this. Yet, Luminar, with a market cap three times Microvision’s, has an insider contribution 21x larger.

From a price-to-sales perspective, LAZR currently trades at 536x sales compared to 1,204x for Microvision. So, for half the P/S multiple, you get a company in Luminar that has far more skin in the game. 

Forget the fact that 21.5% of MVIS’s float is currently short, and that’s despite Jefferies blocking short sales of MVIS stock.   

It’s Not the Favored Son

InvestorPlace’s Alex Sirois recently discussed how Tesla (NASDAQ:TSLA) used Luminar’s lidar sensors for testing in Florida. While lidar might have a future, investors shouldn’t assume Microvision will be in line to benefit.   

“Tesla’s choice of Luminar as a partner indicates Microvision is likely not the leader in the field many expected it to become,” Sirois wrote on June 23. “In fact, it’s much closer to a company that should trade in penny stock territory than one deserving of a $22 share price and $3.2 billion in market capitalization.”

My colleague finished his article by stating that it’s open to a sale or merger. That hardly sounds like a company that’s ready to tough it out for the next five years.

As for Luminar, investors got excellent news on June 24 when Volvo announced that its 2022 XC90 electric SUV would come with its lidar system. Volvo is the first automotive manufacturer to offer lidar as standard equipment on a passenger vehicle. 

“Volvo Cars is and always has been a leader in safety. It will now define the next level of car safety,” Volvo CEO Hakan Samuelsson said in a release. “By having this hardware as standard, we can continuously improve safety features over the air and introduce advanced autonomous drive systems, reinforcing our leadership in safety.”

Luminar CEO Austin Russell told CNBC that he could see “millions of vehicles out on the road with all of this.” 

In mid-January, I suggested that LAZR stock could be ready for a correction into the $20s. Over the next three months, it fell all the way to below $17 before bottoming out in April. It’s up approximately 50% in the two months since. 

The Bottom Line

Although my January article recommended investors consider investing in ARK Autonomous Technology & Robotics ETF (Cboe BZX:ARKQ) as a safer alternative, I believe a LAZR buy in the mid-$20s for patient investors will be rewarded in 18-24 months. 

In every way, LAZR is a superior stock to Microvision.    

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.