Key Points
- Kopin manufactures high-resolution microdisplay lenses in Google Smart Glasses and the Vuzix M400 intelligent AR glasses.
- Kopin makes specialized microdisplay glasses for the military.
- The company appointed a new CEO and reset its strategy resulting in improved gross margins, smaller workforce and cash flow breakeven expected by year’s end.
- Book-to-bill ratio ended positively for Q1 2023 as the international and defense business is a growth driver.
- Kopin hit a milestone for its superbright MicroLED 2K x 2K displays reaching over 3 million nits. In comparison, smartphone displays have up to 1,200 nits brightness.
- 5 stocks we like better than Kopin
High-resolution microdisplay maker Kopin Co. NASDAQ: KOPN stock is still trading down over 80% from its $13.62 post-COVID highs in 2021. The business has improved since then, but shares are trading down significantly. The global artificial intelligence (AI) mania has spread across all levels of technology and industry as it’s seen helping to enhance application and user experience.
As investors search for the next big technology breakthrough, Apple Inc. NASDAQ: AAPL unveiled its newest upcoming innovation, the Apple Vision Pro. The $3 500 augmented reality (AR) smart glasses or goggles are expected to launch in 2024. Rumors of lighter AR glasses are in the works for release in 2025.
One of the oldest leading manufacturers of smart glass microdisplay lenses for wearables has been under the radar for years, Kopin. Kopin supplies MicroLED displays for Vuzix Co. NASDAQ: VUZI as well as Alphabet Inc. (NASDAQ: GOOGL) and competes with Microsoft Co. NASDAQ: MVSI acquired HoloLens maker Microvision.
3 Million Nits Brightness Milestone
On June 7, 2023, Kopin announced it hit a milestone in the development of ultra-high brightness for its 2K x 2K monochrome MicroLED display. AR requires extremely high brightness since it must be visible against a bright background to see crisp images clearly in bright daylight. Kopin's one-inch diagonal 2K x 2K MicroLED display has been developed through its proprietary backplane and drive technology to produce brightness levels over 2.8 million units, with production display brightness growing to 3.2 to 3.5 million nits. Nits are a measurement of brightness in displays. Apple iPhone on HDR generates up to 1200 nits. High-end OLED smart TVs generate up to 2,000 nits.
MicroLED Evolution for AR
Kopin’s Senior Vice President of Business Development Strategy commented, "MicroLED displays can achieve brightness levels that are necessary to allow AR systems to be fully deployed in bright ambient conditions. We believe the 2K x 2K MicroLED that we are developing is by far the highest-resolution LED microdisplay that has ever been developed. It incorporates several proprietary design features that overcome challenges which previously limited the use of this technology.” Kopin will start integrating these MicroLED displays into production.
Accelerating Product Sales
On May 11, 2023, Kopin reported its Q1 2023 results for the quarter ending March 2023. The Company reported revenues of $10.8 million, down (7%) year-over-year (YoY) from $11.6 million in the year-ago period. Product revenues rose 17.6%, with defense products growing 35% YoY to $1.7 million.
Industrial revenue fell (39%) to $0.6 million. Funded research and development revenues fell (41%) or $2 million as defense development programs progressed into production. Net loss was $2.6 million or ($0.03) per share. EPS beat analyst estimates by $0.01, and revenues beat by $965K.
New CEO Insights
Newly appointed Kopin CEO Michael Murray expressed how the company is seeing results from its reset course and focus at Kopin. The company has renewed its emphasis on quality and efficiency, resulting in production rate improvement and less material usage. This has enabled the company to produce products more efficiently while improving margins from an optimized workforce. The company is targeting a cash flow breakdown by the end of the year. He sees international and domestic defense demand as a growth driver driven by “… the need for advanced augmentation and visualization of the analog and digital environments.” On June 2, 2023, Stifel started coverage of Kopin with a Buy rating and a $3.00 price target.
Kopin analyst ratings and price targets are at MarketBeat.
Weekly Descending Triangle Breakout
The weekly candlestick chart on KOPN illustrates the weekly descending triangle that commenced after peaking at $2.88 in March 2022. Shares continued to make lower highs on bounces, rejecting the breakout attempts on the descending trendline.
Shares attempted to form a weekly market structure low (MSL) breakout through the $1.53 trigger in January 2023 but only lasted for a single weekly candle before flushing straight back down into the triangle and hitting a low of $0.94 in March 2023, forming a flat-bottom horizontal trendline for the triangle.
As the descending trendline closed in on the flat-bottom horizontal trendline nearing the apex, KOPN finally broke out in May 2023 through $1.12. KOPN spent the next four consecutive weeks rising to a high of $2.50 in the last week of May before forming a market structure high (MSH) sell trigger on a breakdown under $1.98. The weekly RSI fell back below the oversold 70-band. Pullback support levels are $1.74, $1.53 weekly MSL trigger, $1.37 and $1.26.
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