Most investors shun risky penny stocks in favour of established mega-cap companies. I do the same, with one exception.
And that exception has been doing rather well recently.
Pedal to the floor
AI-powered driver-monitoring system specialist Seeing Machines (LSE: SEE) has been moving through the gears in recent months. In fact, the share price has now climbed over 80% since May.
Sure, some of this momentum might be down to markets having a seriously good year. But there have been a few other developments that seem to have brought out the buyers.
For one, the European General Safety Regulation (GSR) comes into effect next year. Its goal is to improve road safety and reduce deaths and injuries by making advanced safety technologies mandatory. This includes fitting camera-based driver monitoring systems in all new vehicles — the sort that can spot when someone is becoming distracted or drowsy.
Such a move clearly plays into the hands of Seeing Machines. Indeed, the number of vehicles equipped with its system rose 36% in Q4 FY2025 compared to the previous three-month period. With its tech in 3.73m vehicles according to its update in August — up from 2.21m at the same time in the previous year — it doesn’t feel outlandish to say that demand from manufacturers is ramping up.
The firm’s Guardian product – designed to be used in commercial fleets — is also showing excellent growth.
Seeing Machines has continued to win backers too. Mitsubishi Electric Mobility now owns nearly 20% of the business, helping to push its tech into new areas thanks to the latter’s global distribution network.
So, is this penny stock a slam-dunk investment from here? Well, there are no guarantees in investing.
Risks remain for this penny stock
As a holder for many years, I’ve watched the share price slip into reverse on a number of occasions. In fact, it’s only just returned to where it was at the start of the 2025. And despite recent progress and boasting a market cap of over £200m, this company is still loss-making and burning through cash.
If this doesn’t change soon, perhaps as a result of growth slowing unexpectedly or contracts hitting snags, that lovely gain (and more) could be lost.
There’s also a chance the stock could suffer heavily if general market sentiment shifts. In such a scenario, Seeing Machines might be chucked out with the bath water, even if it continues to drop encouraging news.
And as I type this (18 November), there are certainly a few jitters in the investing world.
Safety in numbers
I won’t deny that performance over recent times has been lovely to behold. If half-year numbers next March show evidence of yet more progress in terms of sales growth, it might just continue.
But that ‘if’ can’t be overlooked. As much as I’ve enjoyed the ride and would love the stock to trade for pounds rather than pennies, this is precisely why only a small amount of my wealth is invested here.
Personally, I prefer taking a diversified approach and spreading my money around.
It’s true — penny stocks have the potential to dramatically change a person’s fortunes, sometimes in a very short amount of time. As always, however, it pays to keep one’s eyes wide open.
