This article was originally sent out as a bonus note for the Irregulars on Friday, February 2… but people are still asking about it two weeks later, so we’re now releasing it for anyone to read. What follows has not been updated since it was originally published.

Altucher is pitching his Paradigm Mastermind Group ($5,000/year), which is basically just an AI-focused publication that’s combining the work of the three Paradigm editors, Altucher, Ray Blanco and James Rickards. All of whom have apparently become leading AI experts in the last year.

But this spiel from Altucher is all about the latest product launch from Apple, their Vision Pro augmented reality headset… and about a tiny supplier. Here’s the summary that a reader sent last night…

“In case you missed it, James Altucher spent close to two hours in a video this evening hyping Apple’s biggest new product launch since the iPhone.

“With good reasoning, he believes this will do to META and other mixed reality headsets (AR/VR) what the iPhone did to the Blackberry.

“But, he’s not recommending Apple; he’s recommending what he calls a $2.00 supplier with 200 patents on a required display technology (light weight, spherical plastic lens) which is apparently an essential component of Apples big new launch, Vision Pro.

“Altucher says this tiny company is already a supplier to Google, 3M, Garmin, Lockheed Martin, General Dynamics and others. He’s betting that with the launch of Vision Pro the stock will soar10x near future, and 100x over time; that the stock will either increase in price very quickly or that Apple will buy them out, either way at huge gains to investors.

“Of course, he is revealing this to a limited number of people at a huge price through a subscription to a new service, Paradigm Mastermind Group and its free newsletter, My Second Apple Prediction.

“Apparently Apple’s Tim Cook will make the announcement of the launch tomorrow morning (Feb 2) at 10.00 AM (Eastern ?).

“Any idea what company he’s talking about?”

And yesterday, I got some similar questions:

“i assume you are already on top of what James Altucher is pushing on his $2 stock the owns all the patents that Apple is ready to jump on & buy for $1-3B once they release their Vision Pro system Friday morning, so are you going to come out with your report to beat Jamnes to the punch?

“Btw, my wealthy friend who used to follow you religiously just told me he tried out a prototype VP about year ago & owns Zuck’s Oculus & agreed with James that there is no comparison between the e goggles, so the $64 thou or billion question is what is that $2 stock James is promoting for $2497 as of tonight!?”

And yes, it’s true that the Apple Vision Pro did go on sale today, and there was sort of an “event” as the sales started, with Apple CEO Tim Cook in New York and making the media rounds to show off the new gadget, though most of the details about the Vision Pro, short of a real teardown, have been available for months.

Altucher is essentially arguing that there’s a component supplier for the Vision Pro that either is supplying parts for the headset or owns patents on the technology the headset needs, and that this supplier will boom in value as the Vision Pro sales take off… or maybe get acquired, if Apple turns out to really need the technology.

That reader’s description above, about the plastic lens and display technology, and the hint about “200 patents” and the $2 share price, mean that this is almost certainly a tease of one of the two perennial “smart glasses” and “augmented reality display” hopefuls Vuzix (VUZI) or Kopin (KOPN). Both have been teased for years as potential linchpin technology owners in virtual and augmented reality hardware, going all the way back to the days of the original Google Glass failure.

Over the past three years, VUZI has been more consistently teased by a few of the technology-focused newsletter pitchmen as the “iPhone killer” — I got awfully tired of re-hiking that same trail, so I last posted a similar article about a Michael Robinson tease of Vuzix, which had a similar theme, about a year ago, but the pitch has been pretty constant since 2021 (partly because this Vision Pro project has been hinted at and leaked by Apple for a couple years, before becoming “real” last year and actually getting sold starting now).

Here’s what I said in the Quick Take from that year-ago article:

Vuzix (VUZI), which makes smart glasses and is sometimes rumored to be selling components for larger “smart glasses” projects from Apple or Google, is the match for this tease about an “iPhone Killer” that Robinson says will be announced on January 25. And yes, it’s a repeat of ads that Lou Basenese ran over the past couple years before he turned over his newsletters to Michael Robinson a few months ago, predicting the same ‘iPhone Killer’ event off and on since mid-2021. Apple is developing a smart glasses AR/VR product, and they’re getting close, but the tech journalists don’t expect to see anything real until later this year, and we have no indication that Vuzix is at all involved with Apple as a supplier or partner (all things are possible, and Apple rarely talks about suppliers, but there would probably at least be rumors). I don’t think the odds are very good that Apple will be working with Vuzix, or that Vuzix will otherwise make any explosive progress as a small hardware company, it’s tough to break into the market against such gigantic and well-funded leaders, but there is a little dollop of hope in VUZI’s recent attempts (so far nothing big) to sell parts to other OEM headset manufacturers. It’s possible that Google or Apple could buy more control of the category by purchasing VUZI and controlling its patents or designs. The fact that they haven’t, and that VUZI has been selling smart glasses mostly for industrial applications for years, with limited success, is an indicator for me that the big guys don’t see VUZI as a threat or an innovator or an owner of patents that will slow the development of either tech giant’s progress. I do know a lot of folks are VUZI fans, and it certainly might work out, the stock has had surges in the past because they’ve gotten attention as the only real “smart glasses” pure play stock, and they’re very small, so the stock sometimes reacts quickly to extra attention, but I remain very skeptical.

The latest word from VUZI has not been much more encouraging, frankly, though I guess there’s still hope. They preannounced their fourth quarter numbers in mid-January, and that the bump up in engineering work they did for AR projects earlier in 2023 had died down, at least for the moment, but that their sales of their own smart glasses had risen in the fourth quarter… but the total impact was pretty dismal, with fourth quarter revenue down to $2.1 million (their lowest sales quarter since 2020), and with an announcement that they’re streamlining the business by focusing on their OEM projects and the most popular smart glasses products they sell (mostly into healthcare and manufacturing working environments), which will mean reductions across all major areas of their business to reduce cash losses.

Perhaps this doesn’t need to be said, but a company that’s about to get windfall orders from Apple isn’t very likely to implement major cost-cutting initiatives and streamline operations to slow their cash burn. Nor does it seem likely that they would see a major decline in engineering services work in the quarter before Apple’s product goes on sale.

It’s true that Apple is very secretive about suppliers, and it’s possible that maybe they are using Vuzix’ waveguides lenses and optical micro displays in the Vision Pro, or are infringing on Vuzix patents and will end up having to buy the company or license the tech. But I have to say, it doesn’t seem probable. Apple has been working on this Vision Pro headset for years, and just their R&D budget would have allowed them to buy Vuzix 1,000 times over if they believed it was critical to their product or their technology.

Never say never, but I don’t think I’ve ever felt compelled to buy Vuzix, and that remains the case today. It is probably getting to be a better company, with some production capacity for components for augmented reality glasses and similar display technology, and they do say they have a lot of OEM partners with whom they’re working on possible products, but it seems more likely that they’ll be focused on industrial and defense niches with those customers, for the most part, as they have been for their smart glasses products over the past few years, and nothing the company is doing today indicates that massive volume orders for components are on their way.

Will the Apple Vision Pro be a real “game changer” for augmented reality? No idea. The press coverage I’ve seen from the initial test users makes it sound interesting, and clearly a huge leap forward from the Oculus headsets by Meta, but this is also just the first iteration, and it’s heavy and inconvenient and very expensive, so I expect this is more of a test case for the technology, a toy for early adopters and enthusiasts… and we’ll see how it evolves to meet some real consumer wants and needs in the years to come. If anyone can turn this cumbersome technology that doesn’t really have a “killer app” into a “must have” consumer product, it’s Apple, but my guess is that will take a few years.

Vuzix won’t report their full fourth quarter numbers for about a month, most likely, but their third quarter investor presentation is here, and that press release pre-announcement about the weak fourth quarter and the cost cutting plan is here.

This has been a ‘story stock’ for its entire existence, and has been burning cash for 15 years. Here’s a little chart summing up the company, and reminding me that there’s not much point in chasing these kinds of early-stage stories unless you’re a nimble trader — that’s the share price in purple, it was around $6 nine years ago and did hit $30 for a moment during the meme stock mania of 2021, but is now around $1.70… and the cash flow from operations, which has been negative every year but has tended to get worse over time, not better (other than a little improvement in 2020)… and perhaps the most important measure for perennial R&D startups, the share count, which has gone from about 15 million in 2015 to well over 60 million today. The good thing is that they raised money while the shares were surging in 2021, so that gave them a bit of a cushion, but the cushion is wearing thin — they were down to about $38 million in cash last quarter, and have been burning about $10 million per quarter, so you can see why they need to cut costs and “streamline” this year.

Is it possible that Vuxiz will finally have its day in the sun, and become a real operating business that can generate cash instead of consuming it? Sure, lots of things are possible I haven’t seen anything in the last ten years that makes me think it’s likely, and it also doesn’t seem likely that they’re working with Apple at all… but I certainly can’t prove a negative. I’ll just continue to not invest in VUZI.

Kopin (KOPN) is somewhat more appealing than Vuzi, but that’s mostly because this company has built itself a pretty nice position as a supplier of high-tech displays for the military over the years, including a key position in the F-35 pilot’s helmet as well as some weapons sights and similar stuff. One reason they’ve survived this long, I would guess, and have a chance to eventually become profitable, is that they’ve mostly eschewed the consumer market, where high volumes are critical for suppliers, and focused on the defense business.

As with Vuzix, I don’t see any sign that Kopin is on the verge of getting big Apple orders, and it’s unlikely that they’re supplying components for the Vision Pro… but, again, we can’t really prove a negative — now that the first sales are happening, we should see some hardware teardowns of the Vision Pro pretty soon, so that might reveal who is supplying many of the key components… but, again, it’s not necessarily going to be a high-volume device with millions of units sold, so it might not be a huge boon for any suppliers. Kopin has been teased a number of times as a play on virtual/augmented reality, starting back in 2016, but the most recent article I wrote about it was back in 2022, updated in early 2023, and that was (more appropriately) a pitch from a military-focused newsletter… here’s what I wrote at the time:

This is a pitch about secret government research and funding leading to the development of “retinal matrix” tech, with one company owning tons of patents and supplying key tech to AR helmets for fighter pilots and next-generation weapons sights, and turning that into leadership in the “metaverse” as augmented reality goes mainstream. That’s a pitch for Kopin (KOPN), which has been similarly teased as a VR/AR leader in the past, though they remain a small R&D focused company, with roughly half of their revenue from defense contracts, and they have never built to sustainable profitability in thirty years as a public company — it’s always hard, and a little dangerous, to trust in a public company that has been around for decades but still has to sell stock every couple years to make payroll, and remains extremely small (KOPN’s market cap is about $100 million at this point). Maybe this time will be different, and the stock has had good runs in the past as the story has gotten attention (Google Glass in 2013, Virtual Reality in 2016, the Metaverse in early 2021), but it hasn’t ever really turned into sustainable revenue growth or profits, so it might require nimble timing to ride whatever the next wave might be and jump off at the right time… or serious patience to wait out the rise of AR, maybe following the next Apple device, and hope that Kopin catches some of that rise and turns into a sustainable business someday. They raised some more cash in January at low prices, and also reported a very weak fourth quarter as their new CEO tries to get the company turned around and focused on profitability, so it looks like they’re trying to do the right things but aren’t likely to see a surge of growth anytime soon. I’ll pass, personally, I’m a little jaded after seeing this story fail to turn into profits after so many years, but I do expect the Kopin story, like the Vuzix story, to keep coming around whenever there are a lot of AR or metaverse headlines.

Things are a little better than that for Kopin now, the stock was down around $1-1.50 back then, as they were selling yet more shares, and the cash burn slowed a little in the past few quarters, so it has gotten off the mat a bit but is not exactly booming right now — they do have some orders, but they’re kind of “between orders” at the moment for big stuff, so their last quarter was a little weak and we probably won’t get more detail on the end of 2023 until mid-March.

And they don’t burn as much cash as Vuzix, but they are still losing money. Here’s a chart of those same metrics for Kopin over the past decade or so — you can see that the dynamics have been awfully similar, including that surge of attention in 2021 (though KOPN didn’t raise funds as aggressively during that meme-stock surge), and that the overall performance has been a little less bad… but they’ve still been selling shares to keep the lights on for years, and have consistently burned cash each year for a very long time:

Given the surge in Kopin’s share price this morning, with no real news, I imagine that’s probably the stock Altucher actually talked up in his special presentation. I’d prefer Kopin over Vuzix, I suppose, given the likelihood that their growing military business will be fairly steady and might grow enough to give them a chance at profitability, while Vuzix is in somewhat worse shape on the balance sheet… but that’s like saying I’d rather jump off a ten foot wall than a 20-foot wall, I’m pretty happy not being forced to do either. If Kopin is going to become a fantastic and profitable company someday, the signs are not obvious just yet… you’ve probably got time to think it over, and there’s not likely to be any Apple-specific news that supports this 30% jump this morning, a jump that was presumably caused by Altucher’s pitch. When tiny stocks soar because of full-throated hype from a newsletter about an urgent announcement, and that announcement doesn’t actually have a financial impact on the company being teased, the share price usually comes right back down. We’ll see if history rhymes again this time.

Disagree? Agree? See signs of hope that I’m not aware of? Think Altucher has ginned up some different little AR supplier company instead, and that he’s not teasing Vuzix or Kopin? Feel free to let us know with a comment below. Thanks for reading!