Is Vuzix Stock A Buy?

Is Vuzix Stock A Buy? Vuzix (VUZI) is the pre-eminent brand in enterprise-focused augmented reality smart-glasses. The company has a strong market presence in multiple industrial and healthcare sectors, and is also developing a consumer product for roll-out further down the line.

The firm both designs and makes its own self-contained augmented reality products, and uses Waveguide optics technology to generate virtual images on its smart-glasses that allow users to perform a range of distraction-free tasks specially suited to their working environment.

Vuzix Has A Massive Market Opportunity

The market opportunity for Vuzix is enormous.

It is predicted that by 2030 the augmented reality and virtual worlds industries will be generating $130B in revenue.

The big tech companies are rapidly increasing their budgets in this sector, and the shifts in working and living practices brought about by the COVID-19 pandemic are expected to drive adoption and demand for the technology.

Vuzix Growth Rate Is Impressive

Although Vuzix’s net margins are negative at the moment, the company is showing some impressive growth figures.

Year-over-year growth rates for the past three-quarters have just exploded. Q2 2020 saw Y-o-Y growth of 40%, Q3 growth of 100%, and Q4 growth of 107%.

Revenue for the previous year was $9M, with expected growth in 2021 of nearly 80% bringing in upwards of $20M.

Vuzix’s forward price multiple is high at 70x, but it has low debt obligations and a good cash ramp. Combine this with its rising revenue levels, and the company is in good financial health.

Vuzix’s share price has quadrupled since November 2020, when it went from under $5 then to over $20 in February 2021. There has been a slight contraction, but it remains high relative to previous levels.

The attraction of Vuzix’s business model right now, especially for a growth company like this, is that its products are being used in the field and are entrenched in common working procedures already. 

Its smart-glasses are currently utilized in healthcare settings by surgeons to perform operations and by ward doctors to enable remote consultations and virtual rounds.

Companies use the technology for training purposes, while manufacturers employ Vuzix’s products for Step Confirmation and Quality Assurance.

The technology is well beyond the proof-of-concept stage, and the company is primed to exploit these market opportunities in the near future.

Is Vuzix Stock A Buy?

When it comes to the consumer market, Vuzix could be looking at the prospect of having to face down such tech giants as Apple (AAPL) and Facebook (FB) in its quest to break into this emerging market in the future.

However, as the failure of Google Glass showed, it’s not quite clear if the consumer demographic is ready for augmented reality just yet. But when it is, Vuzix will be better equipped than almost any other company to take on this challenge.

Furthermore, Vuzix is backed by the might of Intel (INTC) as one its major shareholding partners, making its pivot to the direct consumer market when it happens a far smoother prospect.

Add to that the strong relationships that Vuzix already enjoys with its major industrial partnerships, and the recent investment of the ARK Autonomous Technology & Robotics ETF into the business, and it could be that Vuzix is the competitor rather than challenger in this scenario.

However, some recent developments are cause for concern.Take, for example, the entry of Qualcomm (QCOM) into the augmented reality space with its new AR smart viewer.

The device can be tethered to a user’s own PC or smartphone, enabling a number of virtual displays to be tethered to real-world locations.

Qualcomm’s offering is not as sophisticated as Vuzix’s platform, but it has caused enough worry among investors to see Vuzix’s share price fall nearly 4% on the announcement of its launch later in 2021.

As the augmented reality marketplace becomes more saturated with products, it is almost certain to be a challenge to Vuzix’s dominance in the market going forward.

Risks of Buying Vuzix Stock

In addition to the threats posed to its market share from other businesses in the augmented reality and smart-glasses space, Vuzix also treads a precarious path when it comes to the question of adoption.

So far, at least, Vuzix has focused on its enterprise clients. But going forward, it would seem natural for the company to want to capitalize on the vast possibly for expansion into the emerging consumer markets.

The big companies, such as Facebook (FB), Google (GOOG), Apple (AAPL) and Snapchat (SNAP) have all been working on their respective versions of augmented tech, but it remains to be seen when this market will mature and come to fruition. 

On the plus side, Vuzix’s expertise and the technological advantages it possesses positions the company well; as holders of over 180 patent rights, its intellectual property moat is wide and its decades’ long experience in the field stands it in good stead for the future.

Is Vuzix Stock A Buy? The Bottom Line

Vuzix is providing and developing a technology that is capable of solving a wide array of problems in ways that other technology firms are nowhere near able to do. The company is at the forefront of an untapped market that is ready to expand and mature in the coming years.

Its shares have seen a wild ride recently to new all-time highs, and it’s hoped this trend will continue. But cautious investors might bide their time and choose a more modest price to open a position.

However, with Intel and the ARK ETF recognizing Vuzix’s importance at this stage, it is clear that the firm has a bright future ahead of it. 

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.