Some MicroVision, Inc. (NASDAQ: MVIS) Shareholders are probably rather worried that the stock price has fallen 54% in the past three months. But that does not replace its brilliant performance over three years. The longer term view reveals that the stock price rose 857% during this time. So you could argue that the recent drop in the stock price is not noticeable in light of longer term performance. The thing to consider is whether there is still too much excitement surrounding the prospects for the company. We are really delighted to see such a performance of the stock price for investors.
While the past week has hurt the company’s three-year performance, let’s take a look at recent trends in underlying activity and see if the gains have aligned.
See our latest review for MicroVision
MicroVision has not been profitable over the past twelve months, we are unlikely to see a strong correlation between its share price and its earnings per share (EPS). Arguably income is our next best option. Shareholders of unprofitable companies generally expect strong revenue growth. As you can imagine, rapid revenue growth, when sustained, often leads to rapid profit growth.
Over the past 3 years, MicroVision has seen its revenues decline by 66% per year. So it is quite astonishing to see that the stock price rose 112% per year during this period. This obvious lack of correlation between revenue and share price is surprising to see in a company that is losing money. At the risk of upsetting holders, this suggests that hope for a better future plays an important role in the development of stock prices.
The image below shows how revenue and income have tracked over time (if you click on the image you can see more details).
It’s probably worth noting that CEOs are paid less than the median in companies of similar size. But while CEO compensation is still worth checking out, the really important question is whether the company can increase profits in the future. If you are thinking of buying or selling MicroVision shares, you should check this out free report showing analysts’ earnings forecasts.
A different perspective
MicroVision shareholders received 17% year-over-year returns, which is not far from the overall market return. Note here that the five-year TSR is more impressive, at 37% per year. Although growth in stock prices has slowed, longer-term history points to a company worth watching. It is always interesting to follow the evolution of stock prices over the long term. But to better understand MicroVision, there are many other factors that we need to consider. Even so, be aware that MicroVision displays 5 warning signs in our investment analysis , and 1 of them is a bit disturbing …
If you would rather consult with another company – one with potentially superior finances – then don’t miss this free list of companies that have proven that they can increase their profits.
Please note that the market returns quoted in this article reflect the market-weighted average returns of stocks that currently trade on the US stock exchanges.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.