Enovix Corp: Speculative EV Stock That Wall Street Thinks Can Double

Enovix Stock Is an Overlooked EV Stock Poised for Serious Growth

Enovix Corp (NASDAQ:ENVX) is an electric vehicle (EV) stock that’s overlooked, simply because it only went public in July when it completed its merger with Rodgers Silicon Valley Acquisition Corp. That move generated $405.0 million in gross cash proceeds.

Enovix said it will use those proceeds to build out two lithium-ion battery cell production facilities. The batteries will be used in computers, land mobile radios, smartwatches, wearable devices, augmented reality devices, and EVs.

Enovix Corp is looking to start commercial production at one facility in the first quarter of 2022 and have revenue coming in from the second facility in the second quarter of 2023. By the fourth quarter of 2025, it expects to generate in excess of $1.0 billion in revenue. (Source: “Investor Presentation: August 2021,” Enovix Corp, last accessed September 3, 2021.)

Enovix is well positioned to reach those lofty goals with its U.S.-based manufacturing footprint.

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In June, the U.S. Department of Energy released the National Blueprint for Lithium Batteries 2021-2030. According to the report, the worldwide lithium battery market is expected to grow by a factor of five to 10 in the next decade. (Source: “Executive Summary: National Blueprint For Lithium Batteries 2021–2030,” U.S. Department of Energy, last accessed September 3, 2021.)

The five-pronged approach includes building out a domestic supply chain for lithium batteries, which are critical for EVs and renewable energy. By 2030, the U.S. wants to be able to do nearly everything domestically, from mining, to manufacturing, to recycling batteries.

“Maintaining and expanding lithium cell and battery manufacturing capability here in the U.S. — as well as in allied and partner countries — is critical to U.S. national security and is essential to developing resilient defense supply chains not under threat from near-peer adversaries,” said the report. (Source: Ibid.)

Wall Street thinks Enovix Corp has what it takes to be a leader in the lithium-ion battery field.

Of the analysts providing a 12-month share-price forecast for ENVX stock, their average price is $29.67, while their high estimate is $23.00. This represents growth estimates of 93.5% to 108%, respectively.

Chart courtesy of StockCharts.com

ENVX Stock Overview

Enovix is the leader in advanced silicon-anode lithium-ion battery development and production.

The company’s proprietary 3D cell architecture increases energy density and maintains a high cycle life. The Enovix battery provides up to 110% higher energy density than the standard lithium-ion battery in mobile devices today. (Source: “Investor Presentation: August 2021,” Enovix Corp, op. cit.)

Enovix is building an advanced silicon-anode lithium-ion battery production facility in the U.S. for volume production. The goal is to provide designers of mobile devices a high-energy battery so they can create more innovative and effective products.

The company is also developing its 3D cell technology and production process for the EV and energy-storage markets to enable widespread usage of renewable energy.

Contract With U.S. Army

In July, Enovix announced that it had been awarded a contract to demonstrate safe and efficient advanced lithium-ion battery technology to the U.S. Army. (Source: “Enovix Awarded Contract to Demonstrate Advanced 3D Silicon Lithium-ion Batteries for U.S. Army,” Enovix Corp, July 15, 2021.)

The batteries will be used as the central power source in the “WarFighter,” which is used to power equipment that’s worn and carried by soldiers.

U.S. soldiers carry more than 60 pounds of gear, including more than 15 pounds of batteries to power critical equipment such as weapons, smartphones, tablets, and GPS devices.

Traditionally, those batteries have been developed and sourced internationally. 

Since 2011, the U.S. Army has used slim and light batteries that can last through a three-day mission. Enovix has been developing batteries that can provide almost double the run-time in the same size and weight. 

Enovix Corp believes that the total U.S. wearable military battery market is approximately $350.0 million annually.

Enovix Corp Achieves Manufacturing Milestone & Books $20-Million Order

In early August, Enovix announced that it had achieved a key milestone. It completed the installation of equipment at its first U.S.-based advanced battery production facility, which is in Fremont, CA. (Source: “Enovix Continues Momentum, Achieves Key Manufacturing Facility Milestone and Books Order in the Wearable Device Space,” Enovix Corp, August 10, 2021.)

Enovix also announced that it had signed a master purchase agreement and a cooperation agreement with a California-based technology company focused initially on the wearable device space. 

Enovix Corp will receive a manufacturing capacity reservation fee and pre-payments totaling $3.5 million over the next 12 months. The agreements are valued at up to $20.0 million in total, with commercialization scheduled to begin in 2025.

Harrold Rust, president and CEO, noted, “Completing the equipment installation puts us one step closer to our planned start of production and customer deliveries in 2022.” (Source: Ibid.)

Once operational, the Fremont facility will be the first in the world capable of volume production of advanced lithium-ion batteries with a 100% active silicon anode. Once the factory is fully scaled, Enovix plans to produce 45 million batteries a year.

Second-Quarter Results

Enovix is in the process of evolving from a company that’s primarily focused on research and development to one that’s focused on commercialization.

It hasn’t started the mass production of its batteries yet, so it’s not generating any real revenue. But the company is on track to deliver its first product revenue in 2022 and scale up after that. (Source: “Enovix Announces Second Quarter 2021 Financial Results,” Enovix Corp, August 10, 2021.)

Which is to say, Enovix stock is a speculative play with tremendous potential.

Rust commented, “We enter the second half of 2021 focused on executing our plan to deliver batteries to category-leading customers with industry-leading energy densities.”

He added,

We have made tremendous progress in equipping our first advanced production facility and continue to add talent to our world-class team to accelerate the expansion. With a strong balance sheet and validation from leading customers, Enovix is well positioned to create shareholder value by delivering a step change in energy density after 30 years of only modest gains by the industry.

(Source: Ibid)

Enovix Corp expects to make meaningful progress toward its goal of starting production in the first quarter of 2022, with product revenue in the second quarter of 2022.

To get there, the company will continue to burn through a lot of money, which is to be expected for a start-up. It expects to use between $110.0 and $120.0 million of free cash flow, with roughly half coming from capital expenditures.

Analyst Take

Enovix stock is a great example of a speculative EV stock with tremendous near- and long-term growth potential.

As discussed earlier, Enovix Corp recently took receipt of key equipment for the first production line at its Fremont facility, where it expects to begin production of its batteries in the first quarter of 2022. The company’s first production revenue is expected in the second quarter of 2022, and its revenue is projected to soar past $1.0 billion by the end of 2025.

As such, Wall Street thinks ENVX stock looks cheap at its current valuation.

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