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Why MicroVision Stock Dropped 13% This Morning

By Rich Smith – Jun 23, 2020 at 11:37AM

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What went up (yesterday) just came back down (today).

What happened

Investors in miniaturized digital imaging sensor-maker MicroVision (MVIS -6.33%) had a good day yesterday -- but are having a pretty bad day today. As of 12:15 p.m. EDT, MicroVision's share price has fallen 7.5%.

On Monday, MicroVision CEO Sumit Sharma was happy to announce that, with MicroVision's share price firmly back above the $1 level required to maintain a listing on the Nasdaq, MicroVision had "regained compliance" with the exchange's listing requirements and was no longer in any immediate danger of being delisted.  

Glowing red stock chart arrow trending down

Image source: Getty Images.

So what

That happy news helped to drive up MicroVision's stock price nearly 17% in Monday trading. But here's the thing:

The Nasdaq listing news was the only good news affecting MicroVision's stock price yesterday and, now that the initial wave of enthusiasm has passed, investors are taking a pause for a reality check. And they're rolling back the stock's share price. 

At a share price of just $1.61, MicroVision is now just $0.61 away from becoming an official penny stock once again, at which point the danger of being delisted will reemerge.

Now what

Planning ahead for that eventuality, management says it will "monitor the situation to determine if there is a need to effect a reverse stock split during the 90-day period authorized by shareholders on May 19, 2020." Should it be necessary to reverse split (i.e., to merge shares of a MicroVision trading for less than $1, so that the shares that remain carry a price tag of more than $1), investors will likely interpret that as meaning there's no hope of MicroVision earning a higher valuation.

Suffice it to say that lack of hope is not a good thing for a stock's price, and this is why MicroVision shares are declining today.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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MicroVision, Inc. Stock Quote
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MVIS
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