Himax Technologies (NASDAQ:HIMX) punished investors when the stock fell below $2.00. The stock fell as low as the $1.70 level. From there, speculators accumulated the stock. News that Microsoft (NASDAQ:MSFT) would continue its Hololens development and its deal with Lumotive renewed some optimism for HIMX stock. That may not last.
Himax and Lumotive agreed to start developing a LiDAR system for autonomous vehicles. Lumotive is a start-up backed by Bill Gates. The connection to the billionaire may have fueled renewed interest over HIMX stock but investors should exercise caution. Himax is once again pivoting to a hot, growing, but competitive market. Investors are better off buying Ambarella (NASDAQ:AMBA), NXP Semiconductors (NASDAQ:NXPI), or Intel (NASDAQ: INTC) for exposure to the ADAS market.
Himax has a history of trying to latch on to the latest fast-growing market, only to stumble. The company may be too small a player to compete. It may need to get acquired, go private, or to take a big loan to increase its resources available for growth.
Takeaway
Himax is at risk of falling back to $2.00 as speculators who bought at the bottom lock in gains. The company lowered its outlook and is sure to disappoint investors when it reports quarterly earnings.
Disclosure: Author owns shares of NXPI.
