What happened
Shares of lidar technology company MicroVision (MVIS -2.99%) were skyrocketing on Tuesday, up more than 30% as of 12:35 p.m. ET.
MicroVision is a small-cap stock that makes almost no revenue and generates losses, but due to its relatively high short interest, it has become a meme stock pushed on the Reddit message board wallstreetbets.
With meme stocks, any small announcement can generate a huge amount of buying power, and there was actually some positive news for MicroVision today, although its ultimate importance is hard to determine.
So what
On Tuesday morning, MicroVision was granted a patent for "Alteration of resonant mode frequency response in mechanically resonant device" by the U.S. Patent and Trademark Office. According to the patent documentation, this application was first filed in February of 2019 and granted today. News of the patent grant was posted on wallstreetbets, likely fueling the stock surge.
It's pretty unclear what significance this patent has, but the wallstreetbets crowd seems to appreciate the news, with the stock up so much. Of course, that move, as is the case with most meme stocks, is likely fueled in large part by short covering. As of March 15, over 23% of MicroVision's stock was held by short-sellers, which is a high ratio.
With short interest that high, any kind of positive news can fuel the Reddit crowd to buy and force short-sellers to cover. It looks like that's what's happening today.
Image source: Getty Images.
Now what
As is the case with all meme stocks, MicroVision is highly risky with dubious fundamentals, which often attracts short-sellers. However, these stocks are also prone to massive moves, should any breaking news fuel buying from Reddit message boards.
Still, it's pretty unclear what this patent means for MicroVision from a long-term perspective. The lidar field is crowded, with many technology companies -- including very large companies with lots of resources -- innovating in an attempt to get an edge in the autonomous-vehicle space. From my own scan of the wallstreetbets message boards, it doesn't appear most of today's buyers really know how significant this patent is to the company's long-term competitive edge.
MicroVision now has a market cap around $900 million after today's move, but the company only made $600,000 in revenue with net losses of $12.6 million in 2021, and it only has 97 employees as of year-end. So while today's move is exciting, the stock is entirely speculative, and only appropriate for gamblers and meme-stock chasers, not long-term investors.
