Loading Up On MVIS In Preparation For The GME-Like Breakout Squeeze

It's time to load up on MVIS again. The stock price has stabilized around $14 after a 50% retracement from the recent pop from $10 to $28. While it has been stabilizing, it sits just below the 50-day moving average which acts as a resistance. However, if that resistance is broken through, it becomes support and it can easily bust over $20 again. 

Shorts have been increasing their attack recently, criticizing the company's lack of material revenue and doubting its ability to compete in the LiDAR industry. Despite multiple short squeezes already, short interest is higher than ever with more than 31 million in shorts outstanding as of 4/15. 

 

The last short squeeze at the end of April may have forced some to cover, but we think other shorts have taken their place. Bears point out that MVIS has not been successful in marketing a product at mass scale in the past and conclude that it won't succeed in LiDAR either. But these people refuse to understand or want to scare investors out of the true story. MVIS is a trading vehicle just like Dogecoin or GameStop. As long as there is hype around the company's future, the stock price will go up and it will force shorts to cover. 

The bearish argument says that the stock is up primarily on a shaky retail trader crowd following meme stocks, but the short side is the exact mirror of this. Most longs recognize that there are "meme stock" traders or rookies with paper hands in the stock and have no problem with the risks and volatility associated with this. But shorts want to pretend that they are an elite crowd of intellectually superior and experienced investors and only they know how to read SEC filings in the public domain that absolutely anyone can read. And make educated investing or speculating decisions from there. 

A look at the MVIS page on Seeking Alpha shows a sharp increase in bearish articles trying to influence MVIS' stock price downwards. Seeking Alpha is a site where anyone can write articles including retail traders who disguise themselves as analysts or firms by calling themselves names like "X Capital" or "Y Research". Four articles of a bearish or very bearish nature have come out against MVIS in the last three weeks, comparing to just one article on MVIS for the prior three months of 2021. Most of them mention Wallstreetbets as the primary force behind the increased stock price, implying that it's a short term pump and dump and not some organic shift in market sentiment on the stock. People said the same thing about GME when it hit $40 in February, and look what it did since then. It's trading in the mid-$100's and building major technical support around that area over months. Pump and dumps don't do that. 

A pump and dump stays at a high price for only a few days or weeks, not several months. GNUS or NKLA trading last June would be good examples of that. One Seeking Alpha article refers to MVIS as "Another Wallstreebets trap", but considering how well many WSB stocks have performed well over a longer period of time, it's hardly been a trap but a good money making opportunity. Bears have been mocking GME and warning longs that it'll go back under $20. We are four months into the massive run and they have still been wrong. It only took NKLA 4.5 months to go from $20 to $90 back to $20 from May to September last year. It only took 2 months for GNUS to go from less than $2 to over $11 to back under $2 from May to July.  

This increase in the trashing of MVIS' business and blaming Wallstreetbets for a pump and dump is an indication of shorts getting desperate, or third parties paying people to try to influence the narrative. While hedge fund shorts may be difficult to bring down, retail shorts can be forced to cover a lot sooner since it would be harder for them to fund any margin calls. Then as the stock price continued upward on the retail short squeeze, the institutional shorts would feel the pressure and be forced to cover at ever-higher prices, making the stock go parabolic. This is exactly what we saw on GME as it bounced between $10 to $20 for three months from October to mid-January before it finally broke out. Retail shorts like Andrew Left capitulated quickly (despite his Citron Research name, he's really nothing more than a large and reasonably well-known retail trader who pays consultants to help with his research) while Melvin Capital, an actual hedge fund backed by billionaire investors like Steve Cohen, fell a few weeks later. 

Traders have been heavily loading up on front-month call options on MVIS, which was one of the catalysts for the GME squeeze. According to Benzinga, there was $620,000 worth of call sweeps on May and June expiries on strike prices ranging between $11 to $16. Another $98,000 was purchased on January $15 calls. This is important because we know this bigger money betting on a MVIS long has a tremendous incentive to push the stock at least over $16 in the next two weeks. That means their call options expire in-the-money which could be a catalyst for causing a gamma squeeze.