Weekly Investment Idea
A lot of the discussion around the Electronic Vehicle and Green-tech revolution has been around the advances in electric motor, and the need for commodities. We have seen massive rises in critical materials found within the EV’s and fundamental changes to incumbent manufacturers, as disruptive companies like Tesla push the boundaries.
There is another battle raging in the EV space and that is to do with the ‘eyes’ of the vehicle and how the vehicle can perceive the world around it.
Elon Musk famous for heading up Tesla and tweeting about Doge Coin, whilst building Mars-bound rockets, flame throwers, tunnels, and back in the day co-founding Paypal, thinks he is on the right path with the camera technology in the Tesla. Whereas other companies are going down the Light Detection And Ranging (LiDAR) route. Musk is famous for saying “LiDAR is a fool’s errand, and anyone going down that route is doomed”. On the basis that the sensors are expensive and unnecessary. Whereas Ai, neural networks and vision sensors will effectively mimic the human brain and then super-size it, or if Musk’s Neuralink has its way, just connect to it. One can only assume that this battle will end up like the Betamax v’s the VHS or actually become some sort of compromise, with manufacturers of EV and AVs using a combination of both.
There is one company in the news currently that is also being quite heavily pumped by the now infamous Reddit group r/wallstreetbets, who have a hand in some LiDAR technology but also the holography and augmented reality space.
Microvision Inc. (Nasdaq: MVIS) was incorporated in 1993 and spun out of the University of Washington (UW) HITL (Human Interface Technology Lab) to commercialize the patents for the VRD (Virtual Retinal Display). In a VRD there is no screen. The image is 'painted' directly onto the retina with point light sources, one pixel at a time. The effect is an extended reality, augmented with holograms. They market their technologies under the PicoP and PicoP scanning technology. But what we want them to do is produce the Princess Leia scene as she delivers her request via R2D2 in a holographic message. I have my fingers crossed.
MicroVision Inc., which has an after-market earnings call this Tuesday, has hardware that is making its way into some of the leading-edge 3rd party technologies to do with autonomous vehicles. They are also heavily associated with Microsoft and at one-point last year were rumored to being in takeover talks by Microsoft on the back of their involvement with Microsoft’s HoloLens and largely propagated by those posting on r/wallstreetbets. Wallstreetbets came to the fore with their Gamestop pump in the face of massive institutional shorting and was a turning point in the psyche of retail investors, who for the majority of the time are 80% losers. They effectively took down a hedge fund but have also proven that they can pick some decent macro fundamental themes.
Microsoft along with Apple and Amazon make up part of the FAAMG and equate to roughly a third of the Nasdaq 100 with Facebook and Google making that share up to more than 50% of the Nasdaq 100. Microsoft's price chart since the 2008 Great Financial Crash has been moving steadily higher and higher and currently trades around the $156.00 price level.
MicroVision Inc. who has benefitted from being part of the Microsoft HoloLens project currently trades at $21.73 but has recently broken higher out of their corrective pattern and looks to be heading back to the recent highs printed in February 2021.
Microsoft won a contract with the US Army to produce 120,000 headsets based on the HoloLens, which in Army procurement is now called the ‘Integrated Visual Augmentation System’. This contract alone is worth $21.9 billion over the next 10 years and where the armed forces lead, we civilians benefit eventually. In a YouTube breakdown of the Microsoft Hololens 2, the sensor integral to the goggles ability to augment the holograms was revealed to be designed and manufactured by MicroVision, which was the catalyst for the share price to jump 600% in the proceeding 5 days, but has now risen 7650% to date. Hololens 2 is a real-world example of VRD.
Some investors may have figured on this price rise equating to missing the boat, but in my opinion, the AR and LiDar story is still at the start of their story, and with Microsoft endorsing the tech from MicroVision this share price of $17 will be relatively cheap in several years. It seems that the world is moving away from the Virtual Reality themes and sees interacting with the real world through Augmented Reality as a more likely vision of the future. Couple that with Head-Up Displays in vehicles, LiDAR for mapping other planets, or large-scale projects here on earth, MicroVision is well placed to becoming more of our lived reality in the near future.
The Nasdaq is near all-time highs and with the likes of the MicroVision and Microsoft companies pushing higher, this trend in the use of visual aide tech in the future, is obviously not ending any time soon. For now, any pullbacks in the Microsoft share price have been bought into, most recently the share price dropped nearly 10% down to $150 but now looks set to trade back up above the recent high of $166 and maybe their earnings call on Tuesday plays a part in that.