Vuzix Corp: Why 5G Could Push This AR Play to a Double

Vuzix Corp: 5G Tech Could Push This AR Stock to a DoubleVuzix Corp to Benefit From 5G Adoption? 

Augmented reality (AR) technology has been around for a few years, but it hasn’t really taken off yet. Things are about to change though, given the move toward 5G mobile network technology. This trend should help AR companies like Vuzix Corp (NASDAQ:VUZI), which has been around since 1997.

With the current accelerated move to develop 5G tech in the U.S., driven by fears of 5G dominance by China, we could see explosive 5G growth. With that, we could also see the rise in AR technologies.

AR enables real objects to be experienced via computer-aided processes regardless of where you are. The “reality” can be visual and haptic (involving touch).

The speed of 5G tech will allow for connections that are almost in real time, and this will benefit AR. For example, a surgeon with AR glasses could operate a robot to perform an operation via 5G remote connections.

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Vuzix Corp is now developing smart glasses and other AR technologies and products. The glasses have built-in video screens, allowing for video and digital content to be shown on the glass. Think “Iron Man.”

Why VUZI Stock Could Take Off 

VUZI stock had been trading at a 52-week high of $8.45, but it has lost steam. Given that Vuzix stock is down about 50% this year, the upside potential is huge if the company can parlay the move to 5G with its AR products.

Consider that Vuzix stock was trading as high as $22.50 way back in 2010 when there was excitement relating to its display technologies used by the military.

Chart courtesy of StockCharts.com

Vuzix is on the small end as far as scale goes—as reflected by its revenue picture—but the company’s outlook is bullish as Vuzix looks to extend its revenue growth.

Fiscal Year Revenues (Millions) Growth
2014 $3.0
2015 $2.8 -9.3%
2016 $2.1 -22.6%
2017 $5.5 160.3%
2018 $8.1 46.2%

(Source: “Vuzix Corp.,” MarketWatch, last accessed November 28, 2019.)

The company’s revenues are estimated to be $7.9 million in full-year 2019 and then surge to $18.8 million in 2020. (Source: “Vuzix Corporation (VUZI),”Yahoo! Finance, last accessed November 29, 2019.)

Vuzix has been reporting negative earnings before interest, taxes, depreciation, and amortization (EBITDA); free cash flow; and generally accepted accounting principles (GAAP) diluted earnings per share (EPS).

Fiscal Year GAAP Diluted EPS Growth
2014 -$0.75
2015 -$0.97 -29.3%
2016 -$1.23 -26.8%
2017 -$1.02 17.1%
2018 -$0.87 14.5%

(Source: MarketWatch, op. cit.)

The good news is that the losses have been narrowing, with the positive trend expected to continue. The average analyst estimate is that Vuzix will see its EPS loss fall to $0.49 per diluted share in 2020.

Analyst Take

The next few years will indicate whether Vuzix Corp has a viable long-term business.

Vuzix stock has been attracting some insider buying, which is always a positive sign. Over the last six months, insiders bought 92,400 shares and didn’t sell any. (Source: Yahoo! Finance, op. cit.)

Ultimately, how VUZI stock performs will depend on whether its AR technologies can take advantage of the expected strong growth in 5G tech.