In October, the company moved into a new headquarters in Newark, California, consolidating the operations of three sites. Any stock that rockets ahead on hype about possible sales merits skepticism. Even in a case like this one where the sales pan out, an investor should expect volatility, even Trouble. The recent implosion owes a lot to the simple logic of valuation. Exceptional earnings growth today isn't worth much if sales might slow or even contract in the near future.
Companies deserve earnings multiples that discount such uncertainty.
InVision depends on U.S. government spending, a tough spot to be in. Even when money is appropriated, it may not flow as quickly as expected. Plus, since the FAA has provided seed money to develop the industry, it may want to develop some competition, too, before placing more orders. Also, a company's move to a new headquarters often represents a market top, as executives become overly optimistic about future prospects only to find they've saddled themselves with higher overhead expenses at precisely the time when sales begin to slow. That's a possible scenario here.