Tech investors are optimists by definition. Why buy tech stocks unless you believe these companies’ technologies will ultimately improve people’s lives.

But promises of a better tomorrow don’t pay the bills in the here and now. For a reminder, look no further than Himax Technologies (HIMX).

This designer of microchips primarily for TV and smartphone display screens was added to the portfolio a year ago for its industry-leading virtual reality technology, including headsets preferred in the past  by Microsoft as well as Google/Alphabet.  The potential is very real and very large, but the rate of consumer adoption of virtual reality applications has, perhaps inevitably, disappointed.

In the meantime, Himax remains heavily dependent on flat-panel and smartphone display drivers, and both product markets are currently cyclically challenged. Things should improve by late this year and into 2018, but this technology is also undergoing rapid upgrades that Himax must invest in in order to defend its market share.

So now you have the backdrop for last week’s quarterly report, which met prior corporate guidance but also delivered  a decidedly tempered near-term outlook.  First-quarter revenue was down 14% year-over-year, and is expected to decline a further 5% sequentially in the current quarter.  Costs, meanwhile, are on the rise as the company rushes to install new equipment to meet a large customer’s future needs and its long-range R&D.

Himax is pushing into new applications like 3D scanning technology, where it faces plenty of competition. It recently bought an Israeli software company whose machine-vision algorithms could help Himax transform a sensor into a smart network node.

I think all of this goes a long way to explain why the stock is down 27% since April 7. After a failed relief rally on earnings day it’s now testing a near-term technical support level. Its breach would put in play the 2017 low near $5 a share.

So the immediate outlook is definitely a bit chilly. On the other hand, much of the virtual reality hype has been wrung out at this point and investor sentiment has definitely turned extremely bearish. Himax also has good visibility into the upturn in displays later this year, and its virtual reality portfolio retains tremendous promise.

Even at this difficult juncture the business is generating modest cash flow. Himax also has more cash than debt, so it has time to deliver on the promises of its technology.

This is a stock that has fluctuated between roughly $5 and $15 over the last four years, so it’s definitely not for the faint-hearted. It’s also not for traders looking for favorable near-term odds, which is why we’re downgrading Himax to Hold. There will be better spots to buy this one.