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Vuzix 3Q23 results, bond auctions & earnings followups -4

16:15 09-Nov-23


Vuzix has issued its third quarter results:
Gross margin was negative 11%!  Management says it has begun a process to reduce operating costs by 20% annually, which will continue into next year, but it did not quantify guidance at all.  The conference call is at 4:30.  I will review it to see if there is any meaningful to report on Atomistic and probably not write further otherwise.

Today's market selloff coincided pretty clearly with the last of this week's treasury auctions, which I referenced last week, and the one before.  Some are making a big deal about it, and there is no denying the worsening demand trend.  BGC is most directly affected, but there's a double-edged effect here.  Changing bond prices are good for BGC, but if the market freezes like housing has, the lack of trading volume would be very bad.  For now, I can only reiterate that Washington needs to find a way to spend and thus borrow less, but of course, there is no progress.  For the long term, I see this as a self-correcting problem though.  What we saw today will increase pressure for budgetary reform, and looking around the world, I expect demand to recover at that point.

In the meantime, the AES C-suite doesn't seem to get it either, as it bought 5450 shares at slightly lower prices than earlier in the week.  That conference call featured a lot of hemming and hawing about the stock price, without referencing the spread to treasuries, and no amount of OMIBs are going to change that effect.

The Kinetik conference call failed to explicitly confirm any details surrounding a dividend increase, but it is on management's mind.  The deleveraging that I mentioned is a big factor, and that is waiting on the still-developing GCX pipeline stake sale.  Getting the PHP expansion going next month will also be a big step forward operationally.  In short, I still think it's coming, but don't expect details until we here about GCX.

Polestar's Investor Day outlined four initiatives, including South Korean production in 2025, but the only interesting one is further collaboration with StoreDot for extreme fast charging prototypes next year.  This is one of several battery technologies I've been tracking, and I think the market is right to ignore the development.  Although the technology pairing is an apt one, given that Polestar is already on top of battery conditioning, and StoreDot achieves its charging time primarily through a silicon anode, which reduces the module form factor allowing for better temperature management.  That said, energy density is traded off in the process. I doubt adding 100 miles in 5 minutes adequately compensates for that.  I'm not always a good judge of what the general public will think, but that's another thing we'll have to wait until 2025 to really gauge.