Vuzix Stock Growth Shows Investor Excitement for Augmented Reality

2021 has been a challenging year for the development of new technologies. Still operating in the shadows of the COVID-19 pandemic, any initial optimism for the development and launch of AR-enabled smart glasses by the end of the year has been quashed by experts - but despite this, AR-glasses specialists Vuzix has been gaining significant momentum on Nasdaq. 

The leading supplier of smart glasses technology has been acknowledged to currently have no competition on the market by Short Hills Capital Chief Information Officer Steve Weiss when speaking on a recent airing of CNBC's "Fast Money: Halftime Report."

(Image: Motley Fool)

As we can see from Motley Fool’s charting of Vuzix’s performance, growth of nearly 2,000% has taken place over the past year, with the company enjoying an extremely prosperous spring 2021. 

The surge was accelerated in mid March when the small-cap growth stock accelerated by 16% following Vuzix’s announcement that it had received "an initial deployment order totaling approximately $400,000 for Vuzix M400 Smart Glasses from a Fortune 100 U.S.-based insurance and financial services company." The intention of the product is that insurance agents can use the smart glasses to capture claim-related data, according to the description in the press release. 

The day after the release, Vuzix shares jumped 8.5% after the company’s announcement that a unit of The Copper Companies, a significant player in the manufacturing of contact lenses, “deployed Vuzix M400 Smart Glasses equipped with LogistiVIEW's Vision+ augmented reality warehouse software to provide hands-free picking guidance" at a significant distribution centre in New York. 

The following day, shares climbed a further 21% as the rally gathered momentum following the rolling news of corporate deals surrounding Vuzix. The movements of Vuzix stocks shows that augmented reality is a huge deal for tech investors, and the development of AR-driven smart glasses can be a significant money spinner in the fortunes of tech companies. 

Currently, Vuzix stands virtually alone in the AR glasses space. In his discussion on CNBC, Steve Weiss described Google Glass by Alphabet as ‘prehistoric’ compared to the products created by Vuzix. However, with something of a smart glasses space race underway by many major industry players, could the performance of Vuzix just be the start of an investor frenzy for AR-based stocks? 

Augmented Reality’s Emergence on Wall Street

Although Vuzix’s growth is certainly cause for optimism among investors, it’s worth noting that the company will soon be joined by tougher competitors within the augmented reality market. While this may sound like an issue for individuals who have bought into the dominance of Vuzix, it means that there may be some potential value investments arriving on to the market over the coming months and years. 

Google has been a mainstay in the smart glasses market for some time now, having relanced its Glass model for enterprise in 2017. Microsoft also launched its second HoloLens headset in 2019, while Qualcomm has recently launched an AR reference design that has the potential to let OEMs quickly create classes and headsets on their own. 

Amazon has also released its own Alexa-enabled smart glasses, the Echo Frames, while industry behemoths like Apple and Facebook appear set to enter the market with fully fledged AR eyewear over the coming years. 

This prestigious array of competitors could pull both customers and investors away from Vuzix over the long term, with larger companies more capable of undercutting their rivals to win the custom of enterprises and individual customers whilst pinning them to their native operating systems. 

The AR-enabled glasses in development for release in the near future are likely to have undergone a visible change to those on the market courtesy of Vuzix today, considering that the market is expected to reach 210.8 billion U.S. dollars by 2025. 

Notably, Vuzix’s stock currently trades at around 65 times this year’s sales - making it more costly than a lot of the market's best performing tech stocks. The company has also recently raised almost $100 million with a new offering of 4.77 million shares priced at $20.50 per share. This move should considerably boost Vuzix’s cash and equivalents, which formerly stood at around $36 million at the beginning of 021, but will also make its stock more expensive in the process. 

Another significant hint at the growth of Vuzix’s competitors comes in the form of Intel selling its whole stake in the company earlier in 2021. Although the tech leaders may have sold their shares following Intel’s departure from the wearables market in 2018, it may refer to the wider expansion of the market that’s set to take place over the next few years. 

The Rise and Rise of AR

With the world’s leading tech giants all battling to produce the best augmented reality hardware for both enterprise and consumer usage, it’s clear that the AR industry as a whole is set for a period of unprecedented growth. 

(Image: Mordor Intelligence)

Despite VR headsets making a conspicuous bid to become the industry standard in reality technology around the mid-2010s, as the chart above shows, augmented reality is set to experience significant growth over the course of the coming decade, with AR commerce set to expand by as much as 78%. 

This may mean that Vuzix’s sustained growth over the course of 2021 may just be the early signs of a golden age for augmented reality stocks on Wall Street and beyond. With the news that AR gaming market leaders Niantic are also set to make their way into the AR-eyewear industry with the launch of their own hardware, it’s clear that there are set to be many stocks receiving a boost from various announcements and launches over the next few years in particular. 

Although the winner of the AR-eyewear space race is far from certain at this stage, Vuzix’s early lead on the market has offered a glimpse into the value that investors can expect from the emergence of successful hardware and the right levels of public adoption. The impact that the latest advancements in AR will have on global markets has the potential to make handsome profits for investors who find the right value from emerging developments.