Despite being around for 20 years, thus now entering its third decade of existence, you could be forgiven for thinking that Vuzix is a start up company. The financial performance is more reflective of a company that recently underwent an IPO in my view, not one that ascended to the Nasdaq from the OTC penny world after a 1:75 share consolidation in early 2013.
With bottom line performance like what they just reported, they may be headed back to trading over the counter.
Here's a link to the 10Q filing that just came out for the quarter ended September 30th 2017:
I know the rainbow and unicorn crowd will all want this to be ignored, and for the focus to be on what might happen next year. I'll deal with that later, by looking at what was expected for 2017 when the company reported third quarter results in 2016. Spoiler alert, in 2016 things looked fantastic going forward into 2017.
But back to the 3rd quarter just completed. If there's one area where Vuzix exceeds expectations, its in their ability to lose more money than forecasted. As per Yahoo Finance, analysts were estimating losses per share of (-$0.17). They blew that number out of the water, but not in a good way. with losses reported at ($-0.28) per share, off by 11 cents.
More numbers that were just reported for the three months ended Sept. 30th 2017. The loss attributable to common shareholders came in at over $5.9 million. On the revenue side analysts were forecasting $2.14 million while the result was only $1.41 million. Less revenue and higher losses than expected. Anyone who thinks that a winning formula probably works for the accounting firm of Dewey, Cheatham and Howe, (say it fast).
And the accumulated deficit? Up to September 30th the number grew to over $90.5 million. But as we all know, the rainbow and unicorn types love deficits. Meanwhile the share count just keeps going higher and higher. Up to Aug 9th 2017 the number was 20,674,742 shares, as of November 9th that had grown to 22,203,911 shares.
I don't expect it will too long before shareholders experience even more dilution. The last raise was for $8.6 million after issuing another 1.5 million shares. Given the just reported loss of $5.9 million over just 3 months, I would suspect that cash in going to be running seriously low before the end of the year.
Alright....now onto expectations for 2018. There are lots of social media types posting all over stock message boards about this "great" (sic) earnings report. That's not surprising, Vuzix is no stranger to stock promoters with reports saying over 20 have been engaged over the years.
Obviously even a brain dead pumper can't put lipstick on the ugly losses and the missed expectations. But they can try to build expectations for next year. With another dilutive share issue likely in the cards it would make sense. If the PPS can be held up by enticing shareholders to hang tight and buy more, that means less shares have to be printed.
Here's what was being said in 2016 about what to expect in 2017.
That was after reporting losses of 32 cents per share, which might seem better than the just reported loss of 28 cents per share. But note that back then there were only 17,560,686 shares reported as outstanding, not the 22,903,911 that were just reported. Last year's 3rd quarter loss was reported at over $5.4 million, less than the just reported loss of over $5.9 million.....
Anyway here's some of what's being released about expectations going forward, emphasis on forward looking language is my own:
"....hundreds of active M300 pilot programs across a variety of industries and continues to see a fundamental shift occurring in the enterprise space from pilot programs moving to commercial volume multi-site rollouts. Our M300 gross margins continue to improve and with our various manufacturing processes and quality improvements in China, we are back on track to produce and deliver higher volumes to support our expectations of further growth in revenue in the fourth quarter of 2017 and beyond. The stage is set for another record year in 2018 for Vuzix driven by commercial enterprise smart glasses deployments and higher adoption rates
We shall see. It sounds good but its very short on specifics. Higher volumes? How much higher? 10 more units, 100, 1000.....or just 1 unit higher? It all sounds like more rainbows and unicorns to me, reminiscient of the tech bubble Digi-Scents, Pets.com days.
Will they make money in 2018? In my opinion, no....not even close. Happy trading, the PPS moved above the 50DMA with Thursday's trading. We shall see if these results and expectations for 2018 can keep it there or if it will be yet another short lived blip on the road down.
I still have no position long or short, so no skin in the game. Happy trading.
Peace
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