Autonomous Lidar Adoption And Defense Demand Will Drive Long-Term Upside Potential

Catalysts

About MicroVision

MicroVision develops lidar sensors and perception software that enable advanced driver assistance, autonomous systems and defense applications across automotive, industrial and drone platforms.

What are the underlying business or industry changes driving this perspective?

• Planned 2026 production launch of the low cost MOVIA S solid state lidar family and LCAS collision avoidance solutions positions MicroVision to benefit from accelerating adoption of automation in industrial, warehouse and mobility markets, supporting higher product revenue and improving gross margins as volumes scale.
• Tri Lidar satellite architectures that mirror the multi sensor model already standard for cameras and radar in vehicles create a clear path for multiple lidar units per platform as ADAS and autonomy features expand, which can structurally increase average selling prices per vehicle and long term revenue visibility.
• Integration of Scantinel's 1550 nanometer FMCW long range technology with MicroVision's existing 905 and 940 nanometer time of flight portfolio creates a full stack lidar offering tailored to both passenger and commercial vehicles as well as defense programs, enabling higher value mix and improved earnings power as programs enter production.
• Open software framework that allows customers to embed their own perception stacks directly on MOVIA sensors aligns with the industry shift toward software defined vehicles and highly configurable automation systems, supporting differentiated pricing, software and services upsell and stronger net margins over time.
• Growing defense and drone based ISR and navigation initiatives, supported by the new Aerial Systems team and Virginia test site, position MicroVision to capture rising government and defense spending on autonomous and attritable platforms, adding a higher margin revenue stream that can smooth earnings cyclicality versus pure automotive exposure.

Assumptions

How have these above catalysts been quantified?

• Analysts are assuming MicroVision's revenue will grow by 195.3% annually over the next 3 years.
• Analysts are not forecasting that MicroVision will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate MicroVision's profit margin will increase from -3354.1% to the average US Electronic industry of 8.8% in 3 years.
• If MicroVision's profit margin were to converge on the industry average, you could expect earnings to reach $5.9 million (and earnings per share of $0.02) by about January 2029, up from $-88.4 million today.
• In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 203.3x on those 2029 earnings, up from -3.1x today. This future PE is greater than the current PE for the US Electronic industry at 24.7x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.89%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• The lidar industry remains niche with very limited adoption because OEMs continue to solve most use cases with cheaper cameras and radar. This would cap sensor volumes even if MicroVision hits its technology milestones and could constrain revenue growth and operating leverage over the long term, pressuring earnings.
• MicroVision is still at a very early commercial stage with third quarter 2025 revenue of 0.2 million dollars and major product launches for MOVIA S and LCAS not planned until 2026 or later. Industrial, automotive and defense RFQs and RFIs are progressing slowly, so any further delays in customer decisions or program launches could extend the company’s loss making period and weigh on net margins.
• The strategy depends on achieving very aggressive cost targets such as 200 dollars for short range and 300 dollars for long range solid state lidar, in a market where Chinese suppliers already compete heavily on price and FMCW technology remains more expensive. If cost reductions or scale efficiencies fall short, MicroVision may have to sacrifice pricing or margins to win business, hurting gross margins and future earnings.
• The company is investing ahead of revenue with quarterly cash burn of 16.5 million dollars, rising operating expenses to support new teams in defense and Germany and an expected increase of 1.5 million dollars to 2 million dollars in quarterly spending, while relying on ATM and convertible facilities. If the revenue ramp in 2026 to 2029 underperforms, further equity issuance or unfavorable financing could dilute shareholders and suppress earnings per share.
• Key growth verticals such as automotive Level 3 systems and advanced industrial automation have long design in and validation cycles, with automotive volume now more realistically expected around 2029 and defense programs still at proof of concept. Macro or regulatory shifts that slow autonomy adoption, change platform roadmaps or reduce defense budgets could delay or reduce lidar content per platform, limiting long term revenue and margin expansion.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The analysts have a consensus price target of $2.5 for MicroVision based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $3.0, and the most bearish reporting a price target of just $2.0.
  
• In order for you to agree with the analysts, you'd need to believe that by 2029, revenues will be $67.9 million, earnings will come to $5.9 million, and it would be trading on a PE ratio of 203.3x, assuming you use a discount rate of 8.9%.
  
• Given the current share price of $0.89, the analyst price target of $2.5 is 64.4% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.