We recently compiled a list of the 10 Most Volatile Stocks Under $3 For Day Trading. In this article, we are going to take a look at where MicroVision, Inc. (NASDAQ:MVIS) stands against the pump and dump stocks.
Day trading involves buying and selling stocks within a single trading day to capitalize on short-term price movements. Volatile stocks are often preferred for their frequent price swings, creating opportunities for quick profits. Equity beta, which measures the sensitivity of a stock’s return to market changes, is a key metric often used by investors for gauging volatility. Day traders close their positions by the end of the trading day to avoid the risks associated with holding overnight, such as unexpected market events, earnings announcements, or global developments that can drastically impact stock prices before the next trading session begins. While penny stocks, particularly those priced under $3.00 per share, are appealing due to their low entry cost and potential for rapid gains, they also carry heightened risks like low liquidity and susceptibility to manipulation. The key takeaway for readers is that these trades shall be approached with cautiousness and a clear strategy with risk management in place.
READ ALSO: 10 Best Stocks For Day Trading
Stocks under $3.00 offer a distinct advantage in that they typically operate below the radar of hedge funds, which prioritize larger, more liquid investments to accommodate their substantial capital and complex strategies. Hedge funds, the most informed and skilled investors, leverage extensive resources, market expertise, and advanced analytics to gain a competitive edge. Their absence in the penny stock space leaves more room for retail investors to seize opportunities without competing against institutional investors’ sophisticated tactics. This lack of institutional interest can create less efficient pricing, offering well-researched retail traders the potential to identify undervalued stocks and profit from short-term volatility via day trading.
Short-term trading strategies become more attractive during times of macroeconomic uncertainty, which can further fuel volatility and create opportunities for swing trading. The main volatility index in the US market still remains elevated vs. its moving average as investors have a hard time digesting the tariffs situation and the abrupt cuts in federal workforce and spending. Bond yields are reluctant to price in lower rates in the future – despite odds of an economic recession rising substantially if compared to the beginning of the year, the potentially accelerating inflation, as fueled by tariffs, will likely keep rates high. Regardless of what happens, it is clear that Trump 2.0 gives investors plenty of anxiety – many have been actively seeking cheaper investments abroad, particularly in Europe, which has caused the US stock market to relatively underperform the rest of the world.
Small-cap stocks are usually the most affected during periods of heightened volatility. The good news is that the Bull-Bear Ratio compiled by Investors Intelligence fell to 1.3 during the past week, which, from a contrarian perspective, is a bullish signal. This means that pockets of opportunity might soon return to the penny stocks category, both for long-term investors and day traders. Despite short-term fears and uncertainty, the fundamentals of the US stock market remain solid, with future earnings estimates staying strong and potentially seeing an uplift from tax cuts later this year or next. We suggest considering stocks with a high equity beta, above 2.0, as this category will likely outperform in a rising market.
A technician wearing a head-mounted augmented reality headset examining a MEMS device.
Our Methodology
We used Finviz to filter companies with a share price under $3.00 and that have an equity beta above 2.0. Then we compared the list with Insider Monkey’s proprietary database of hedge funds’ holdings as of Q4 2024 and included in the article the top 10 stocks with the highest hedge fund ownership.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
MicroVision, Inc. (NASDAQ:MVIS)
Number of Hedge Fund Holders: 11
MicroVision, Inc. (NASDAQ:MVIS) is a technology company specializing in lidar sensors and augmented reality (AR) display solutions. It develops solid-state lidar systems for automotive applications, including advanced driver-assistance systems (ADAS) and autonomous vehicles. The company also designs MEMS-based laser scanning technology used in projection, 3D sensing, and AR applications. MVIS’s lidar products aim to enhance object detection, mapping, and safety in mobility and industrial automation. It primarily serves automotive OEMs, Tier 1 suppliers, and other technology firms integrating lidar into their systems, and generates revenue through product sales, licensing, and technology development agreements. The US-based company ranked seventh on our recent list of 12 Best AI Penny Stocks to Buy According to Hedge Funds.
MicroVision, Inc. (NASDAQ:MVIS) is tactically carving out a strong presence in both the industrial and automotive LiDAR sectors. Within these markets, industrial sales present the most promising avenue for securing consistent annual revenue streams. The company’s flagship offerings are distinguished by the seamless integration of LiDAR hardware and perception software, operating at minimal power levels – a distinct competitive edge. Notably, MVIS is engaged in seven RFQs with automotive manufacturers, targeting safety applications for L2+ and L3 passenger vehicles.
On the financial front, MicroVision, Inc. (NASDAQ:MVIS) has reinforced its balance sheet through a convertible note facility, ensuring financial stability through 2026. Operational costs have been streamlined, achieving an annual operating expenditure range of $48 million to $50 million for 2025. This positions MVIS among the industry leaders with remarkably low cash burn rates. The anticipated revenue for 2024 ranges between $8 million and $10 million, with significant contributions expected in Q4 from LiDAR sensor sales and non-recurring engineering development fees. Additionally, the company’s scalable production capabilities – reaching an output of approximately 45,000 units annually on a single shift – underscore its potential for delivering cost-competitive solutions, bolstered by proprietary low-cost sequential flash LiDAR and MEMS scanning technologies. With an equity beta of 2.62, MVIS is one of the most volatile stocks under $3 for day trading.
Overall MVIS ranks 10th on our list of the most volatile stocks under $3 for day trading. While we acknowledge the potential of MVIS as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MVIS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.