After reaching its quarterly production milestone earlier than expected, Enovix Corporation (NASDAQ: ENVX) ran 10%. Additionally, ENVX took another step toward mass-producing its batteries as it chose a site and hired a leadership team in Malaysia for its Fab-2 line. Meanwhile, ENVX stock is gaining investors’ interest lately following a short report that investors believe may be a malicious report from short sellers. With a high short interest, ENVX stock could be a short squeeze candidate to watch closely this week.
ENVX Stock News
ENVX’s allure was not simply brought about by its plans to scale up operations, rather the demand its batteries could receive is a significant draw for investors. Considering that lithium batteries are used in everything from laptops to EVs to power tools, if ENVX succeeds in mass-producing batteries which store twice the conventional amount of energy and do not pose a fire hazard, then it could easily dominate the market.
Usually, grand aspirations are met with a grain of salt, however, this is not the case for ENVX. With its products already available on the market and an impressive although a secret list of customers -seven of which have a market cap of over $200 billion – ENVX’s batteries have proven their potential. Given ENVX’s detailed timeline for achieving mass production, investors’ confidence in the company has recently been bolstered by its plans for 2023 and beyond.
Enovix & the EV Industry
Even if ENVX achieves mass production, it will still need to attract customers for its products. With this in mind, ENVX’s Chairman T.J Rogers stated that ENVX has recently been engaging with more EV manufacturers. This comes after ENVX shipped its batteries to a tier 1 EV producer and 10 renowned OEMS for testing in Q3 2022. Building relationships with automakers this early on is an encouraging sign and if ENVX’s batteries are adopted by major automakers its batteries could become the standard moving forward.
The EV industry and ENVX’s batteries could be an incredible pairing considering that conventional carbon graphite lithium batteries can burn due to overheating and they store less energy than silicon batteries. Since silicon batteries can store more lithium ions given the same mass, they can store more electricity gram for gram than carbon graphite. Despite this edge, silicon batteries have some drawbacks. Silicon swells as it charges and they are not as easily manufactured – something ENVX is working to overcome.
As is, no corporation has ever mass produced silicon batteries before. Sila Nanotechnologies and Group14 Technologies are currently regarded as silicon battery specialists by the EV industry, however neither are ready to mass produce. One reason, ENVX may be the first to mass produce silicon batteries is its solution for silicon’s notorious swelling issue. Since it has developed the technology to prevent it, ENVX likely has an edge over its competitors.
Meanwhile, ENVX is working to secure joint ventures and licensing. This is a critical step for the company’s after achieving mass production because licensing provides the necessary legal framework to enter the EV market and JVs can provide connections and industry knowledge.
In short, if ENVX succeeds in mass producing a battery that is unparalleled by current standards then it will lead to top-line growth and ENVX stock price will likely appreciate as well.
Plans for Mass Production
Another notable step towards mass production is ENVX’s plan to open a factory in Malaysia. Thanks to an LOI with YBS International Berhad, ENVX will use a YBS building for its Fab-2 facility – the cornerstone of ENVX’s mass production plan. In exchange YBS will bear a significant fiscal stake in its production line, Gen-2 line 1, which is designed to increase ENVX’s production speed tenfold.
The Fab-2 facility is a turning point for the company because, unlike Fab-1, it is a high volume manufacturing facility capable of producing 9.5-18.9 million units per Gen 2 line based on cell size. Since this was the first step towards producing the first ever high volume manufacturing facility for silicon batteries, investors responded to the event causing ENVX stock to run 38% on the news.
However, the Fab-2 facility is only one piece of ENVX’s production plans. In order to achieve the rest of its production goals, it is offering $150 million in convertible senior notes due 2028.
Out of the $150 million, $10 million will be purchased by an organization affiliated with ENVX’s Chairman. Capital raised by the senior notes, along with the $70 million in non-dilutive financing the company is pursuing, will be used to build four production lines. These production lines are expected to produce between 38-75 million batteries a year – a notable increase from the company’s plans to produce 180 thousand batteries this year.
In addition to ENVX’s facility in Penang, Malaysia, ENVX has an active facility in Fremont California where ENVX is developing a new production line to provide more flexibility alongside its Gen 2 production line. The Agility Line as it is called, is designed to take care of custom cells which will accommodate the many machines of different sizes and shapes that may use ENVX’s batteries. The first Agility Line is expected to be installed in Fab-1 by the end of 2023.
In this way, ENVX will drastically speed up production using its Gen 2 line while incorporating greater flexibility through the Agility Line – ultimately increasing the units produced.
Insider Buying
Herculean effort aside, ENVX insiders seem optimistic about the company’s trajectory. ENVX Chairman, T.J Rodgers bought $5.38 million worth of shares in March – possibly due to his confidence in ENVX’s manufacturing capabilities.
Another notable ENVX shareholder is Marc Cohodes – a notorious bear. Cohodes has amassed a following thanks to his work uncovering fraud and predicting corporate collapse. He’s viewed as a hardened pessimist, which is why his decision to go long is notable. His interest in ENVX stock has rubbed off on his supporters as well – driving up interest in ENVX stock.
ENVX Stock Short Data
Given that ENVX is attempting to do what has never been done before, its no surprise that some are bearish on ENVX stock. Currently, ENVX has a short interest of 26%, and 100% utilization. The short interest has crept up along with the ENVX stock which has risen 59% since February 22nd.
ENVX Stock Earnings
As is, ENVX is expected to release its Q1 2023 earnings after hours on April 26th. The street expects an EPS loss of -$.223 and $43.8 thousand in revenue. Since ENVX is still an unprofitable company – posting a net loss of $51.6 million in 2022 – the market’s reaction to Q1 earnings will mostly depend on the its guidance.
ENVX estimates that it will produce north of 9,000 units in Q1 2023, doubling its production from Q1 2022. In fact, the company plans to double production each quarter. According to its latest 8-K filing, ENVX produced 12.5 thousand batteries, surpassing its estimate by 3,5000 units. If guidance at its upcoming earnings projects a rate of production that more than doubles by Q2, this this could be catalyst for ENVX stock.
*Updated June 20, 2023.
Exceeding Production Targets
Earlier this month, ENVX announced that it had reached its Q2 production target of 18,000 units with two weeks remaining in the quarter, which sent ENVX stock up more than 10%. This is the second time ENVX will exceed its forecast since it also exceeded its Q1 forecast by almost 40%.
Furthermore, ENVX has chosen a Malaysian site for its Fab-2 ahead of schedule and has hired the leadership team as well as a team of 25 engineers, indicating that it may begin production earlier than the expected date in 2024, which will see ENVX exponentially increase its 2024 production.
Malicious Short Report?
On another note, a small Twitter account recently published a short report regarding ENVX stock on a newly made website. Some ENVX investors believe that this may be a malicious report from short sellers since ENVX is currently highly shorted, with 23% short interest and almost 32% of the float on loan, with the utilization rate remaining high at 100%.
The short report may make investors rally behind the stock, which would add buying pressure on the short sellers and make the stock run.
ENVX Stock Financials
2022 Annual Report
According to its 2022 earnings report, assets decreased slightly from $482 million to $440 million, meanwhile, liabilities decreased drastically from $156 million to $84 million.
In terms of revenues, ENVX realized $6 million in 2022, however, the cost of revenue was $23.2 million resulting in a gross loss of $17 million. Additionally, total operational costs skyrocketed YoY – increasing from $67 million to $114 million. ENVX’s net loss in 2022 was $51 million which is an improvement from 2021’s net loss of $125.8 million. Considering that ENVX’s operations are cost-intensive and the company is in the midst of scaling up its operations, the company is likely still far from becoming profitable.
Q1 2023 Earnings
In its Q1 2023 report, ENVX’s assets decreased 7% QoQ from $ 440 million to $410 million and its cash and cash equivalents decreased 9% QoQ from $322 million to $293 million. ENVX’s total liabilities increased by 16% QoQ from $84 million to $98 million.
Operating costs increased almost 112% from $24 million to $51 million, which contributed to the operating loss increase of 152% YoY from $25 million to $63 million. As a result, ENVX reported a net loss of $73 million.
Media Sentiment
@brynkahrl is bullish on ENVX’s future prospects.
@BeforeTheRocket believes a short squeeze may occur.
Technical Analysis
ENVX stock’s trend is neutral with the stock trading in a sideways channel between $13.20 and $14.34. It is also worth noting that the stock has recently broken its upper trendline and may enter a new channel. Looking at the indicators, the stock is trading above the 200, 50, and 21 MAs which are bullish indications. Meanwhile, the RSI is overbought at 75 and the MACD is bullish.
As for the fundamentals, ENVX stock just witnessed a catalyst in ENVX reaching its Q2 production target early. ENVX exceeding the Q2 target and the increasing possibility of a short squeeze will be future catalysts for ENVX stock.
ENVX Stock Forecast
ENVX reaching its quarterly targets early for the second consecutive quarter strengthens its chances of reaching its yearly target. Furthermore, it is planning to scale production after it has decided on a location for its Fab-2 and hired the leadership team as well as a team of 25 engineers for it. That, coupled with investors rallying behind ENVX stock due to the short report they deemed malicious makes ENVX a stock to keep an eye on.
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