Microvision (MVIS) Stock Gains Ahead Of Earnings

Microvision MVIS Stock News

Microvision, Inc. (NASDAQ: MVIS) had a strong day in the market yesterday, gaining more than 13% by the close. Today, the stock is in the green yet again, but there has been no news.

While the company hasn’t provided a date for its financial results, most financial media are reporting that the company will issue its earnings report today, July 16, 2020. The gains seem to be the result of anticipation of these reults. Nonetheless, in my view, the financial data like revenue and earnings isn’t what investors are looking for. Here’s what’s going on:

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MVIS Stock Heads Up Ahead Of Earnings

As mentioned above, Microvision is expected to report its financial results for the second quarter today. Given the fact that it’s not out as of 8:35, chances are that it will not be released premarket, so a release after the close is likely.

Nonetheless, when the report does surface, investors won’t be as interested in revenue and earnings as is the case in most financial reports. Instead, investors will be looking for updates with regard to the company’s progress in exploring strategic alternatives.

Since MVIS announced that it would be exploring alternatives, including, but not limited to, mergers and acquisitions, there’s been quite a bit of conversation about a potential takeover. So, investors will be looking for some form of update that lets them know where in the process the company stands.

Since the strategic options exploration announcement, there has been quite a bit of speculation that Microsoft would take the company over, and it’s a strong argument. The fact of the matter is that one of Microsoft’s most important new products, and a research agreement with the United States Army, depends on Microvision technology.

Therefore, it would be quite a costly mistake if Microsft allowed Microvision to falter.

Moreover, Microvision recently announced that one of its larger customers has stepped in and taken over component production. At the same time, evidence started to surface that Microvision employees were jumping ship, finding their way to work for Microsoft.

While the customer that took over production has not yet been named, there’s a clear indication that this customer is Microsoft, which bodes well for the takeover speculation.

The idea here is simple. First, MVIS said that it is exploring strategic alternatives, including potential M&A transactions. Around the same time, evidence emerged that Microsoft has taken over key component production and brought previous Microvision employees onto its team. With a vested interest in the technology and the fact that Microvision is struggling and cheap atthe moment, Microsoft stands to gain quite a bit by acquiring the company.

So, when the quarterly report is released, investors will be looking hints with regard to how the process to explore strategic alternatives is going. In my view, this information will have a much larger impact on the stock price following the release than data like revenue and earnings.

In terms of revenue, Wall Street is expecting a steep decline at $0.6 million. From an EPS standpoint, analysts are expecting to see -$0.01 reported. If these figures are hit, it will show an interesting trend. While revenue would be down more than 50%, earnings would be a vast improvement year over year from -$0.08.

Final Thoughts

When it comes to the Microvision financial results, the financial data will be important. If the company exceeds expectations, the stock may even find its way upward. However, that’s not what investors will be watching for.

Instead, investors want to know more about the company’s strategic alternatives exploration. Any news on this topic could send the stock flying. So, make sure to watch closely.

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