Short selling data can provide investors with crucial insights. Typically, short sellers are well-informed, sophisticated traders. If they’re targeting a stock, it’s often a sign that there’s downside risk for that security.
In this report, we are going to highlight some interesting short-selling activity at MicroVision Inc (MVIS:US). MicroVision is a US company that develops laser scanning technology for projection, 3D sensing, and image capture. It is the creator of ‘PicoP’ scanning technology, a miniature laser sensing and projected display solution based on the laser beam scanning methodology pioneered by the group. The company is listed on the NASDAQ Global Market and currently has a market capitalization of $3.3 billion.
MicroVision: Short Selling Activity
Looking at the short-selling data on MicroVision, a few things stand out. The first is that short interest is very high at 26%, and rising. This is a red flag – it tells us that many professional investors expect the stock to fall. The table below shows the extent to which short interest has surged over the last six months.
Secondly, the utilization rate has shot up recently. Over the last few weeks, utilization has risen from around 80% to 95%. Utilization is essentially a ratio of demand to supply in the securities lending market. A high utilization rate tells us that there is a strong demand to short a company’s stock relative to the number of available shares. A ratio of 95% tells us that demand for the stock from short sellers is high at present.
MicroVision: The New Gamestop?
MicroVision stock appears to be the latest GameStop-type ‘meme stock.’ On Monday, MVIS was the most mentioned stock on WallStreetBets according to SwaggyStocks, a website that tracks stock-ticker mentions and sentiment on Reddit. In the 24 hours to 4 p.m. ET on Monday, the stock received roughly 3,500 mentions according to SwaggyStocks, roughly double the mentions of GameStop. Meanwhile, data from VandaTrack shows that MicroVision was the most bought stock by individual investors in the US on Monday, with $56 million worth of stock bought.
In terms of why investors are piling into MVIS, one reason is that the laser company has recently completed its Long-Range Lidar Sensor A-Sample Hardware and Development Platform. This should enable it to demonstrate the benefits of its long-range lidar sensor to prospective customers. The company believes the range and resolution of its lidar sensor, as well as its ability to work well in sunlight and near other sensors could help to make autonomous driving safer.
"I believe our differentiated, high-performance lidar sensor has the potential to advance autonomous driving and active safety systems beyond current sensors announced in the automotive market," CEO Sumit Sharma said in a press release. "I expect that a version of this lidar sensor could be available for sale, in initial quantities, in the third or fourth quarter of 2021," he added.
As for why short sellers are targeting the stock, it most likely comes down to the valuation. This year, analysts forecast sales of $3.1 million. That means the stock’s price-to-sales ratio is currently about 1,060. Given the high level of short selling activity here, we think caution is warranted towards MicroVision stock right now.