Culturally and in Washington, there’s massive momentum to electrify America’s car fleet, offering a thesis for readers to back emerging battery makers.
With the flood of liquidity out there, it’s almost a "when" and not "if" situation to when investors are going to support the next nascent tech trend.
This environment of chasing higher yields has largely diminished the attractiveness of bonds to institutional investors forcing them to resort elsewhere to get their returns.
I don’t want to demean smaller start-up technologies but many out there are rated as pump and dump opportunities that recently have given way to you-only-live-once (YOLO) behavior that distorts the trading market even more.
This is what gave rise to meme stocks which could be described as a forum-based community that often would post ideas of stocks that haven’t done anything in years, only for a group to communally throw money at a dead business to engineer a short squeeze.
Many can imagine that if timed late, 90% losses on trades became common.
Granted, this can’t be done to mammoth companies like the FANGs simply because the trading volume is too gargantuan for any army of trolls to be able to move the needle.
But smaller stocks are fair game and that is exactly what we have seen.
Another of these meme ideas that have flooded internet chatter the past week is Microvast Holdings (MVST) which makes batteries.
It’s a vertically integrated battery manufacturer, producing its own cathode, anode, electrolyte, and separator.
Microvast’s Lithium Titanate Oxide (LTO) cells are currently Microvast’s star product. Crucially, these cells can be fully charged in 10 minutes and provide an energy density of 180 Wh/l or 95 Wh/kg. These LTO batteries retain over 90% of capacity even after 10,300 full charge/discharge cycles.
Microvast is working on solid-state batteries where the aim is to manufacture cells with energy densities of over 1000 Wh/l. They also boast a clear manufacturing advantage, with plans to increase its annual battery manufacturing capacity to 11 GWh by 2025.
The electric battery industry is about to make a killing and U.S. President Joe Biden was lately promoting a goal to have 50% of all cars sold in America emission-free by 2030.
The President is adamant the future is electric.
Batteries will need to be part of this equation.
Microvast is not on the radar of most investors. That’s fine. The company is puny. It is also a special purpose acquisition company.
MVST’s market cap is $4 billion and they had a quarterly EPS growth rate of -120%. They only do about $100 million of revenue per year so I am definitely not vouching for this company as a convincing buy and hold long term.
There still needs a lot of convincing to happen first with better earnings reports in the future.
The SPAC came public in February via a blank check merger with Tuscan Holdings Corp. That deal valued the business at $3 billion. Shares ran up to $25.20 in early February only to later collapse to $7.83.
The stock is compelling now because the narrative is improving dramatically.
Electric vehicles are here to stay, and the prospect of future revenues is what usually forces stock prices higher.
Biden will do everything in his power to get more EVs on America’s roadways.
Most of the batteries Microvast currently makes end up in commercial vehicles like buses, mining trucks, and taxis.
The company is vertically integrated with proprietary technology across all of the key battery components.
It also has full high-volume production facilities in China, and longstanding commercial and research relationships with businesses like Porsche Motorsport, Dana (DAN), and Oshkosh (OSK).
The reason for the big drop in Microvast was when an analyst put out a $6 stock price target based on the company’s “enhanced execution, competitive, and in-sourcing risks."
The stock cratered to lower than $8 but has since been picked up by the meme stock army ready to make their mark in this name and the last few trading days the stock has had continually produced daily return of over 10%.
The stock is now over $12 and if any reader wants to take a flier on an incredibly volatile, speculative electric battery company, the momentum is now at your back for a trade.
As we have seen with meme stocks AMC and GameStop, don’t count out a meme short squeeze and its potency because although highly speculative, profits are to be had if you buy the pump before the dump.
