MicroVision, Inc. (NASDAQ: MVIS) shareholders witnessed a significant swing in their portfolios as the computer vision tech specialist’s shares closed down by 27.79% on Wednesday. This drop reversed some of the substantial gains investors enjoyed last week. However, it’s worth noting that MicroVision is still up by more than 100% in 2023, compared to a 14% rally in the S&P 500.
MicroVision’s Share Price Drops Following New Stock Offering
The drop in share price on Wednesday came after MicroVision announced a new public stock offering as part of its strategy to capitalize on the recent surge in share prices. The offering aims to raise up to $75 million for the company. This move comes on the heels of a nearly 50% jump in shares last week, primarily driven by a short squeeze, making it easier for the company to raise cash through a public offering.
MicroVision reported promising growth in the first quarter of the year. However, its revenue remained below $1 million, and the company faced losses of $19 million during the same period.
MicroVision’s Potential Hinges on Effective Capital Utilization
It is common for stocks to drop after news of a secondary offering, as the creation of more shares can dilute the value for existing shareholders.
However, the true measure of MicroVision’s potential lies in how effectively it utilizes the raised capital. The company’s increased pace of acquisitions contributed to its sales growth in early 2023, and there may be further acquisitions in the future. In their press release, management stated that the funds raised will be used for “general corporate purposes.”
Investors should brace themselves for continued volatility with this small-cap stock, as the stock offering does not pose a threat to its long-term growth prospects.
