Lidar Adoption And Autonomous Vehicle Demand Will Drive Powerful Long Term Upside Potential

Catalysts

About MicroVision

MicroVision develops cost-disruptive solid-state lidar sensors and perception software for automotive, industrial, and defense applications.

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

• Planned launch of MOVIA S and the Tri-Lidar satellite architecture, designed around wafer-level, solid-state manufacturing, positions MicroVision to participate in the same type of multi-decade volume curve that took radar to over 100 million units annually, which can materially expand long-term revenue and operating leverage.
• Rapidly increasing demand for advanced driver assistance and higher levels of vehicle automation, coupled with OEM pressure to democratize safety, plays directly into MicroVision’s low-ASP lidar roadmap at $200 for short range and $300 for long range, creating a path to scale that can improve gross margins as volumes ramp.
• The combination of time-of-flight MOVIA and MAVIN products with Scantinel’s 1550-nanometer FMCW technology creates a unique full-range lidar portfolio, allowing MicroVision to serve both mass-market passenger vehicles and premium commercial platforms, broadening total addressable market and supporting diversified, higher quality earnings streams.
• MicroVision’s open software framework and full-stack perception solutions, including LCAS and drone-based mapping and navigation, align with the industry shift toward software-defined vehicles and autonomous platforms, enabling recurring software and solution revenue with structurally higher net margins than hardware alone.
• Growing adoption of automation in warehouses, factories, and logistics, together with rising defense investment in autonomous and semi-autonomous unmanned systems, provides multiple non-cyclical demand drivers for the same lidar and software core, which can smooth revenue cyclicality and support more stable, scalable free cash flow over time.

Assumptions

This narrative explores a more optimistic perspective on MicroVision compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts. How have these above catalysts been quantified?

• The bullish analysts are assuming MicroVision's revenue will grow by 203.0% annually over the next 3 years.
• The bullish 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 $6.4 million (and earnings per share of $0.02) by about December 2028, up from $-88.4 million today.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 225.5x on those 2028 earnings, up from -3.3x today. This future PE is greater than the current PE for the US Electronic industry at 24.8x.
• The bullish 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 8.84%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Lidar adoption across automotive platforms remains limited and niche due to persistent cost pressures and OEM reliance on cheaper camera and radar based systems. This could significantly cap the long term volume ramp assumed in the bullish view and constrain revenue growth.
• The move from MOVIA L to lower priced MOVIA S, combined with customer driven delays that already pushed a previously visible 30 million to 50 million revenue pipeline further out, increases the risk that unit economics tighten faster than volumes scale. This could pressure gross margins and delay a path to positive earnings.
• Extended predevelopment and qualification cycles with OEMs and industrial customers, together with guidance that meaningful industrial revenue is not expected until 2026 and automotive volume only nearer 2029, imply a prolonged period of minimal sales. Earnings and cash flow may remain highly negative for years despite rising operating expenses.
• The Scantinel FMCW acquisition adds another pre revenue technology platform that will require incremental investment and execution to industrialize. If integration or roadmap timing slip, MicroVision could shoulder higher R&D and SG&A without corresponding top line contribution, further depressing net margins and extending losses.
• Even with roughly 99.5 million in cash and additional ATM and convertible capacity, the company is modestly increasing quarterly spend by 1.5 million to 2 million and signaling continued opportunistic equity raises. If industry consolidation, Chinese price competition or slower end market demand persist, ongoing dilution and financing needs could weigh on per share earnings and limit upside from any eventual revenue inflection.

Valuation

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

• The assumed bullish price target for MicroVision is $3.0, which represents up to two standard deviations above the consensus price target of $2.5. This valuation is based on what can be assumed as the expectations of MicroVision's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• 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 more bullish analyst cohort, you'd need to believe that by 2028, revenues will be $73.3 million, earnings will come to $6.4 million, and it would be trading on a PE ratio of 225.5x, assuming you use a discount rate of 8.8%.
  
• Given the current share price of $0.94, the analyst price target of $3.0 is 68.5% 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.