What happened
MicroVision (MVIS 5.63%) shareholders continue to see elevated volatility in their portfolios. The computer vision tech specialist's shares were down by 23% as of 10:45 a.m. Wednesday, reversing some of the big gains that investors enjoyed last week. But MicroVision is still up by more than 100% so far in 2023, compared to a 14% rally in the S&P 500.
Wednesday's drop came after the company announced a new public stock offering in a bid to capitalize on its recent share price rally.
So what
The offering aims to raise as much as $75 million for the business. In part thanks to a short squeeze, shares jumped by nearly 50% last week, so any public offering now is likely to more easily raise cash.
The tiny company, which sells lidar tech with applications in both automotive and non-automotive segments, recently reported solid first-quarter growth, although its revenue remained low at less than $1 million for the period. MicroVision is also generating losses, with $19 million in red ink this past quarter.
Now what
A stock will frequently drop following news that a secondary offering is in the works because creating more shares has a dilutive effect on existing shareholders.
Yet the real test will be whether MicroVision can put the cash it raises to productive uses. A ramped-up pace of acquisitions helped boost its sales in early 2023, for example, and further purchases are possible. In the press release about the offer, management only said that they intend to use the funds for "general corporate purposes."
While the stock offering doesn't threaten the long-term growth thesis, investors should expect more volatility from this small-cap stock.
