At the end of last year, I wrote an article on Seeking Alpha wondering if 2015 would be the year that eMagin turns around. eMagin is a company I have followed for years, and the company has always shown great potential, but never achieved.
Recently their earnings came out, and on May 15th the stock popped up to 33% on good earnings – the appearance is that they are starting to ramp up on production, and breaking into the potentially lucrative market for virtual reality headsets.
So is this the turnaround that I have been long awaiting? I would recommend anybody invested in eMagin read the earnings call transcripts on Seeking Alpha. As per usual, the call is upbeat, and the description of market opportunities leads one into wanting to back the truck up and load up on shares. However, I have been too jaded by previous upbeat results, and while results were encouraging, the top line revenue numbers still don’t get me too excited.
The big highlight on the earnings call (other than having a profitible quarter after 7 negative quarters) was the progress on the virtural reality headset. From the earnings release highlights:
- We finished the development of the Company’s new advanced Head Mounted Display (“HMD”) headset. The HMD has been demonstrated to potential partners and customers in April and May. This HMD is immersive and incorporates eMagin’s latest high-resolution OLED microdisplays and patented optics and is a paradigm shift in the look, performance, weight, and size of Virtual Reality (“VR”) HMDs. The OLED microdisplay and the optics are the fundamental reasons that eMagin’s HMD is half the weight and size of its VR HMD counter parts. The field of view (“FOV”) exceeds 100 degrees on the diagonal with a resolution of 4 megapixels per eye.
Management is talking a big game about breaking into the virtual reality headset market, and mass producing their product to meet huge demand. It appears they are working on a very high end display – which may well be best in class – however cost when producing consumer goods (especially consumer goods in a new category) will be a huge factor to the product’s success. If they can provide a premium display and a cost similar to the competitors – then I may start to get excited. They have some big competitors in the space, and there is a lot of attention on the virtual reality market opportunities in the near future.
So I for one will wait another few quarters before getting too excited watching and waiting for those revenue numbers to start moving up. I am encouraged by the long awaited profitable quarter, but I am still not sold that this is turnaround moment all investors have been long waiting for.