Enovix stock analysis.
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The processing power of smartphones is growing at a rate of 10 to 40% a year but batteries are improving at only 4% a year. So manufacturers like Apple need a battery that can keep up.
Enovix, ticker symbol ENVX, thinks it has the answer.
By introducing silicon into its batteries and replacing the so-called “jelly roll” architecture, the company thinks it can produce batteries that outperform lithium-ion batteries by as much as 80%.
And if Enovix is successful, the potential market is huge. The market for smartphone batteries alone is over 20 billion. And Enovix’s batteries could one day be used in larger applications like electric vehicles.
Based on the latest share price, Enovix has a market cap of just over 3 billion dollars. The company has 294 million of cash on the balance sheet and no debt so the enterprise value is 2.87 billion.
Going through the rest of the financials at this stage adds little value since the company is yet to start production and its made only 6 million in revenue over the last 12 months.
So an investment in Enovix relies on whether you think its battery technology is going to succeed and there are strong arguments on both sides.
For bulls, Enovix’s batteries have the potential to transform the industry. A Forbes article from April this year cited numerous experts who all argued that Enovix’s technology is the real thing.
And Enovix has a number of high-profile backers including Marc Cohodes and Stanley Druckenmiller. Executive chairman TJ Rodgers also has a history of success including an investment in Enphase Energy which increased by more than 150 times and CEO Raj Talluri has 30-years experience in the semiconductor industry.
#enovixstock #stocks #investing #stockstowatch
Discover under-the-radar stocks: https://www.overlookedalpha.com
The processing power of smartphones is growing at a rate of 10 to 40% a year but batteries are improving at only 4% a year. So manufacturers like Apple need a battery that can keep up.
Enovix, ticker symbol ENVX, thinks it has the answer.
By introducing silicon into its batteries and replacing the so-called “jelly roll” architecture, the company thinks it can produce batteries that outperform lithium-ion batteries by as much as 80%.
And if Enovix is successful, the potential market is huge. The market for smartphone batteries alone is over 20 billion. And Enovix’s batteries could one day be used in larger applications like electric vehicles.
Based on the latest share price, Enovix has a market cap of just over 3 billion dollars. The company has 294 million of cash on the balance sheet and no debt so the enterprise value is 2.87 billion.
Going through the rest of the financials at this stage adds little value since the company is yet to start production and its made only 6 million in revenue over the last 12 months.
So an investment in Enovix relies on whether you think its battery technology is going to succeed and there are strong arguments on both sides.
For bulls, Enovix’s batteries have the potential to transform the industry. A Forbes article from April this year cited numerous experts who all argued that Enovix’s technology is the real thing.
And Enovix has a number of high-profile backers including Marc Cohodes and Stanley Druckenmiller. Executive chairman TJ Rodgers also has a history of success including an investment in Enphase Energy which increased by more than 150 times and CEO Raj Talluri has 30-years experience in the semiconductor industry.
#enovixstock #stocks #investing #stockstowatch
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NewsTranscript
00:00 The processing power of smartphones is growing at a rate of 10-40% a year but batteries are
00:05 improving at only 4% a year so manufacturers like Apple need a battery that can keep up.
00:11 Enevix, ticker symbol ENVX, thinks it's got the answer. By introducing silicon into its batteries
00:17 and replacing the so-called jelly roll architecture, the company thinks it can
00:21 produce batteries that outperform lithium-ion batteries by as much as 80%. And if Enevix is
00:27 successful, the potential market is huge. The market for smartphone batteries alone is over
00:33 $20 billion and Enevix's batteries could one day be used in larger applications like electric
00:39 vehicles. Based on the latest share price, Enevix has a market cap of just over $3 billion.
00:44 The company has $294 million of cash on the balance sheet and no debt so the enterprise
00:50 value is $2.87 billion. Going through the rest of the financials at this stage adds little value
00:56 since the company is yet to start production and it's made only $6 million in revenue over the last
01:01 12 months. So an investment in Enevix relies on whether you think its battery technology is going
01:07 to succeed and there are strong arguments on both sides. For Balls, Enevix's batteries have the
01:12 potential to transform the industry. A Forbes article from April this year cited numerous
01:18 experts who argued that Enevix's technology is the real thing. And Enevix has a number of high
01:24 profile backers including Mark Cohodes and Stanley Druckenmiller. Executive Chairman TJ Rogers also
01:30 has a history of success including an investment in Enphase Energy which increased by more than
01:35 150 times. And CEO Raj Taluri has 30 years experience in the semiconductor industry.
01:42 However not everyone is so bullish on Enevix. The stock has a high short interest of 25%
01:48 and there have been at least 3 short seller reports out on the company just this year.
01:53 The bear case rests on two key arguments. First, batteries are a notoriously difficult market.
01:58 Alternatives to lithium ion batteries have been proposed again and again and nearly always met
02:04 with failure. And the nature of battery development means that even if successful,
02:08 the price of batteries are going to keep declining and that will naturally put a ceiling on profit
02:13 margins. Second, in November last year Enevix announced it would scrap the development of
02:18 its Gen 1 battery and go all in on Gen 2. Management made out that this was due to
02:24 better performance of Gen 2. But bears rightly argue, if Enevix couldn't get its manufacturing
02:29 to work with Gen 1, how can you trust them to succeed with Gen 2? Overall, Enevix stock is a
02:35 highly interesting but highly risky investment. If the company's technology fails, the share
02:40 price probably goes to zero. But if it succeeds, the stock could easily be a 10 or 20 bagger.
02:46 It's wise to follow this stock closely. Based on the evidence, I'm going to give the stock a
02:51 cautious bullish rating. I do own a small number of shares and if you want to read a more detailed
02:57 analysis on Enevix, we just published this report on our website overlookedalpha.com.