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Vuzix 1Q23 results, plus Ebix and trade follow up ?3

18:13 10-May-23


Vuzix has reported its first quarter results:
Again, the revenue beat just shows how market estimates are not being updated.  On the call management characterized the coming year as an inflection point for defense and consumer, with the latter representing hundreds of millions in revenue from ultra-lite introductions next year, after production ramps toward the end of this year.  To that end, it says Atomistic is"making great progress" with new designs whose production mechanisms are being designed from the ground up, but still could not share any specifics on milestones when asked.  It also mentioned third party manufacturing relationships, and drop-ins to current eyeglass retail names, but again couldn't provide details.

I agree that an inflection point is coming, but can't necessarily cast it in positive terms.  All that can be said for sure, looking at the 10-Q, is that Vuzix used a little over $9M for the quarter and has $63.2M left.  I also see that last night, Vuzix filed a prospectus for the Atomistic founders to sell up to 2.84M shares of the stock they've been granted.  That's about 4.5% of the company, for starters.  Maybe all the secrets will produce a breakthrough, as management is implying, but I'm not willing to bet on it for the coming environment.

Similarly, on the Ebix call, the CEO could only say that EbixCash is hoping to list in 3Q23.  Clearly that won't be in time for the current deadline, and I don't think IPO success should be viewed as a given, since its business is still at around 65% of pre-COVID levels.  Alternatively, an asset carve out is being considered, but of course no details were available.  All that can be said for sure is that the CEO is feeling pressure as he resorted to darkest night, dazzling morning quotes, and tunnel analogies.

In summary, this simply isn't an economy where it pays overall to try to trade GRoDTs and distressed stocks in the short term.  For those willing to wait, I'll offer the opinion that CHPT and LUMN have the best current price points, but I have no confidence that either management will be able to show enough progress in their upcoming reports to materially amend the stock valuations for the months to come, and thus that either stock is worth the risk and wait, respectively.  On Lumen in particular, those who are willing to wait years may be better served by the CTDD & CTBB baby bonds, currently trading at less than half of par, but clearly those won't be redeemed until sometime after the latest debt exchange has been eliminated.  The market is starting to realize that something's gotta give, but it remains to be seen whether that's the Fed or the economy.