Last year Himax Technologies (NASDAQ:HIMX) surged from $3 a share to a high of $16.15 per share as it became known that they are the supplier of LCOS displays for Google's (NASDAQ:GOOGL) (NASDAQ:GOOG) groundbreaking product Google Glass.
Majority of consumers and investors speculated that Glass would be released around Christmas of 2013. Investors began to worry as the holiday season came and went without any announcements from Google.
As a result, analysts questioned when Himax would begin to receive revenue from Glass. Bank of America was the first to downgrade their price target on Himax to $12, Topeka Capital Markets to $9, Chardan Capital to 9, Craig Hallum to $10, and Oppenheimer to $10. After news got out that Analysts were lowering their outlook on Himax, momentum investors began to run for the exits and ultimately drove shares of Himax down over 50% in the process.
Last month Google announced that they were going to begin selling "Explorer" editions of Glass to the public for the first time though a one day sale. Despite the $1500 price tag Glass sold out within 16 hours.
Although Google was finally showing signs of a potential release of Glass, investors questioned when Google would make Glass fully available to consumers and most importantly if the average person would ever want to pay $1500 for them. During this time Chardan Capital downgraded their price target on Himax for a second time to $6. Shares of Himax plummeted nearly 60% off of its high only two months ago to a new bottom of $6.62.
Last week, Google announced that the remaining Explorer editions of Glass are on sale in the U.S. as they continue to improve the hardware and software for the release of a more polished version which Google has confirmed will include Ray Ban and Oakley frames. As of today, all charcoal (black) versions of the Explorer Edition have already sold out.
My opinion is that Google Glass is a revolutionary new product that people may be skeptical to buy at first just the same as they were skeptical to buy the iPad when it first came out. I ordered a pair of Glass during their one day sale and admit that there were a few glitches. I believe Google made the right decision to iron them out before they release a full version to the public. I speculate that their full version will contain the Oakley/Ray Ban frames and will be substantially cheaper than the $1500 people are currently paying for the explorer edition. Many people believe that they would be priced at a more attractive $300 to $400 price range.
What baffles me the most is that the price of Himax stock is bound to the success of Google Glass. Investors aren't taking into consideration that Himax is a worldwide market leader in display driver ICs and timing controllers used in TVs, 4K TVs, laptops, monitors, mobile phones, tablets, digital cameras, car navigation. and many other electronic devices. They aren't just a one trick pony with Glass. In the first quarter of 2014, Himax made $194.6 million in revenue and are consistently showing an increase of 10.8% year over year. Glass and 4K technology televisions are simply viewed as catalysts for an already successful company.
I believe that shares of HIMX are oversold and may have bottomed out at $6.62 earlier this week and am now looking for a reversal back to $9 to $10 range.
Disclosure: I am long HIMX, GOOGL.
Additional disclosure: I wrote this article myself, and it expresses my own opinions.