Kopin Stock is a Transformative AR/VR Component Play

Wednesday, March 17, 2021 | Jea Yu
 Kopin (NASDAQ: KOPN) Stock is a Transformative AR/VR Component Play Wearable components maker Kopin (NASDAQ: KOPN) stock is up triple digits in 2021 as Wall Street finally took notice of this under-the-radar augmented and virtual reality (AR/VR) company. The Massachusetts-based company has been operating for over a quarter of a century. As evidenced by the surge in smaller competitor Vuzix (NASDAQ: VUZI) shares, the landscape for enterprise wearables is finally heating up as the benefits of smart glasses and 3D optical systems have become even more apparent during the pandemic. Very much like the initial failure of tablets, originally called personal digital assistants (PDAs), failed with the 3COM Palm Pilot and Apple Newton (NASDAQ: AAPL) in the 1990s before seeing widespread adoption nearly two decades later, smart glasses are seeing a similar adoption after the initial failure of Google (NASDAQ: GOOG) Smart Glasses. Let’s not forget the same thing with smartwatches. The narrative and sentiment is quickly improving and should accelerate with the rollout of 5G bolstering the next wave of connected device and internet of things (IoT) applications. As the iconic architect Anderson famously quoted, “Form follows function”, smart glasses are now being recognized for the various functions they can provide to bolster productivity, efficiency, agility, and convenience. Prudent investors seeking to gain exposure in this segment can monitor opportunistic pullback levels to consider building a position in Kopin shares.

Q4 FY 2020 Earnings Release

On March 2, 2021, Vuzix reported its Q4 2020 results for the quarter ending December 2020. The Company reported revenues of $13.9 million, up 60% year-over-year (YoY) from Q4 2019 revenues of $8.7 million. R&D revenues rose to $4.4 million, up from $2.7 million YoY. Net incomes was $1.7 million or $0.02 per-share versus a net loss of (-$7.3 million) or (-$0.09) per-share YoY. Full-year 2020 revenues were $40.1 million, up 36% YoY. Product revenues and R&D revenues rose 41% and 103% YoY, respectively. The Company ended 2020 with $20.7 million cash and marketable securities with no debt. The Company completed a $20 million at-the-market in December. The Company shipped out its first production order of 720p color MicroOLEDs. Kopin gained 12 new patents and filed for 4 more patents. The Company has over 200 patents and patents pending related to wearable technology.

Conference Call Takeaways

Kopin CEO, John Fan, set the tone, “As demonstrated about the topic increase in R&D spending, which we believe will position the company well for the coming era of AR and VR. This could be a decade of radical transformation from handheld devices to hands-free devices.” The defense produce revenues were the strongest segment increasing 112% in Q4 YoY. CEO Fan noted, “This very significant increase was driven by our two production programs: the display sub-assembly system for the FWS-I thermal weapon sight program and displays for the F-35 jet fighter program.” The Company was awarded a $22.9 million follow-on order for this program in September 2020 and expects to continue to generate strong revenues in the coming years. The Company sees growth accelerating for 3D metrology applications for industrial 3D automatic optical inspection (AOI) equipment. CEO Fan also noted the electric vehicle (EV) manufacturing for their products, “Due to the increasing quality requirements of the complex of the tri-circuit box using the coming generation of electric vehicle and 5G form, 2D AOI inspection machines are now being replaced by 3D inspection machines. This market is still in the early stages of growth. Our main competitor in these applications is Texas Instruments, DMD and digital micromirror device.” He noted the incorporation of their 2.6K and 2.6K micro OLED display microchip to being incorporated in Panasonic VR glasses to be launched in 2021, “The Panasonic VR glasses are the world’s first high-dynamic-range capable ultra-high-definition VR eyeglasses and offering stunning life-life images.” The Company is all-in with AR/VR, “Kopin offers the largest range of leading microdisplay technology in the world for AR and VR.” The entrance into the world of VR without the need for the bulky connected headsets can help drive the resurgence back into the technology especially for gamers and streamers.

$50 At-the-Market Offering

On Mar. 5, 2021, Kopin filed an 8-K detailing a $50 million At-the-Market (ATM) offering agreement with Stifel for 3% commission. This caused shares to initially collapse to a low of $5.70 from a high of $8.80. The rationale for the outsized ATM offering could be for the possibility of a large new client as speculation abounds ranging from Apple, who already mentioned they are targeting AR smart glasses for 2025, to Facebook (NYSE: FB) , Amazon (NASDAQ: AMZN) or Microsoft (NASDAQ: MSFT). Prudent investors can watch for opportunistic pullbacks on KOPN shares.

 Kopin (NASDAQ: KOPN) Stock is a Transformative AR/VR Component Play

 KOPN Opportunistic Pullback Levels

Using the rifle charts on the weekly and daily time frames provides a precision view of the landscape for KOPN stock. The weekly rifle chart has an uptrend with a still rising 5-period moving average (MA) support at $10.03 and upper Bollinger Bands near the $13.84 Fibonacci (fib) level. The weekly stochastic has slowly fallen under the 80 band. This sets up the stage for either a weekly stochastic cross up for a continuation of the weekly uptrend, or the weekly stochastic accelerates lower for a deeper oscillation setting up a channel tightening back to the weekly 15-period MA near the $5.88 fib. The daily rifle chart completed its stochastic oscillation down and crossed back up with a stochastic mini pup. This caused the 5-period MA at $9.35 to cross up through the 15-period MA to form a breakout on the market structure low (MSL) triggered above $8.97. Keep in mind, the weekly market structure high (MSH) sell triggers under the $7.11 fib area. Since the bounce was so sharp, prudent investors can monitor for opportunistic pullback levels at the $9.59 fib, $9.09 fib, $8.30 fib, $7.75 fib, and the $7.20 fib. Keep an eye on peer VUZI as they tend to move together and is a supplier of their smart glass micro displays. Upside trajectories range from the $13.00 fib up to the $17.02 fib level.


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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Kopin (KOPN)0.7$7.47-4.8%N/A-49.80Buy$3.00
Vuzix (VUZI)0.9$20.78-4.2%N/A-25.97Buy$21.50
Apple (AAPL)2.5$128.10+0.2%0.64%39.29Buy$147.34
Alphabet (GOOGL)1.8$2,314.77+0.3%N/A44.73Buy$2,466.54
Amazon.com (AMZN)1.9$3,270.54-1.2%N/A95.77Buy$4,112.06
Microsoft (MSFT)2.8$246.47-0.5%0.91%39.82Buy$287.96
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