While there are a handful of companies that produce silicon-based lithium batteries, Enovix Corporation (NASDAQ: ENVX) is considered to be one of the more promising companies in this space due to its plans for mass production and the quality of its batteries. As a battery producer that uses silicon instead of carbon graphite to construct its batteries, ENVX has an edge over lithium-ion batteries. To ramp up production, ENVX signed an LOI with YBS International Berhad to establish a facility for this purpose. While ENVX stock ran 38% on this announcement, the company is scheduled to release its Q1 earnings report on April 26th which will provide more information on its goals for mass production.
Some investors may zero in on this upcoming catalyst, and as a result, miss the bigger picture. Fixating on fiscal indicators may be too nearsighted since the value of ENVX stock will likely emerge in the long-term.
ENVX Fundamentals
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 secret list of customers -seven of which have a market cap 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 $5.38 million worth of shares in March – possibly due to his confidence in ENVX’s manufacturing capabilities.
Another notable ENVX shareholder is Marc Cohodes – a notorious bear. Cohodes has amassed a following thanks to his work uncovering fraud and predicting corporate collapse. He’s viewed as a hardened pessimist, which is why his decision to go long is notable. His interest in ENVX stock has rubbed off on his supporters as well – driving up interest in ENVX stock.
ENVX Short Data
Given that ENVX is attempting to do what has never been done before, its no surprise that some are bearish on ENVX stock. Currently, ENVX has a short interest of 26%, and 100% utilization. The short interest has crept up along with the ENVX stock which has risen 59% since February 22nd.
ENVX Earnings
As is, ENVX is expected to release its Q1 2023 earnings after hours on April 26th. The street expects an EPS loss of -$.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.
ENVX Financials
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.
Technical Analysis
ENVX stock is currently trading in an upwards channel, above the 200 MA on the hourly timeframe. After testing the lower trendline, ENVX is trading below the 50 and 21 MA. The 200 and 50 MA appear to be drawing together for a death cross – signaling a trend shift. So far the $12.28 support and lower trendline have held which is a bullish sign, the RSI is at 42 and the MACD is bearish but approaching a crossover.
Fundamentally, the stock’s pullback is likely due to the company’s 150 million offering. However, ENVX’s upcoming Q1 earnings on April 26th is a catalyst for ENVX stock. Considering that the stock increased 59% since its last earnings despite missing expectations, the stock’s performance will likely depend on production guidance. Since ENVX’s Chairman and CEO purchased shares in March, this insider buying could be a bullish sign for ENVX’s guidance.
A possible play could be to take a lotto position ahead of ENVX’s earnings. Considering the high short interest, buying from company insiders, and the company’s beat on production numbers for Q1, ENVX stock could be on track to surprise – possibly triggering a short squeeze.
ENVX Forecast
With short interest reaching 26% it appears investors are bearish on the company’s upcoming earnings. Yet, ENVX is attempting to do what has never been done before on such a scale. This type of venture typically attacks criticism, but considering ENVX has attracted the attention of a notorious bear like Cohodes there may be more to this battery producer then meets the eye.
The company’s upcoming earnings will provide investors with updates on the Fab-2 facility and its production goals – helping many decide whether ENVX is worth a long-term investment.
As is, many ENVX investors are not simply waiting for the next catalyst. They are waiting until Fab-2 floods the market with silicon batteries. Since silicon batteries far out weigh the benefits of any lithium-ion battery, if they enter the market in mass, then the battery industry will never be the same. ENVX is one of a handful of companies with the potential to define this industry and for investors bullish on its odds, it could be a worth-while investment.
Some investors may zero in on this upcoming catalyst, and as a result, miss the bigger picture. Fixating on fiscal indicators may be too nearsighted since the value of ENVX stock will likely emerge in the long-term.
ENVX Fundamentals
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 secret list of customers -seven of which have a market cap 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 $5.38 million worth of shares in March – possibly due to his confidence in ENVX’s manufacturing capabilities.
Another notable ENVX shareholder is Marc Cohodes – a notorious bear. Cohodes has amassed a following thanks to his work uncovering fraud and predicting corporate collapse. He’s viewed as a hardened pessimist, which is why his decision to go long is notable. His interest in ENVX stock has rubbed off on his supporters as well – driving up interest in ENVX stock.
ENVX Short Data
Given that ENVX is attempting to do what has never been done before, its no surprise that some are bearish on ENVX stock. Currently, ENVX has a short interest of 26%, and 100% utilization. The short interest has crept up along with the ENVX stock which has risen 59% since February 22nd.
ENVX Earnings
As is, ENVX is expected to release its Q1 2023 earnings after hours on April 26th. The street expects an EPS loss of -$.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.
ENVX Financials
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. Technical Analysis
ENVX stock is currently trading in an upwards channel, above the 200 MA on the hourly timeframe. After testing the lower trendline, ENVX is trading below the 50 and 21 MA. The 200 and 50 MA appear to be drawing together for a death cross – signaling a trend shift. So far the $12.28 support and lower trendline have held which is a bullish sign, the RSI is at 42 and the MACD is bearish but approaching a crossover.
Fundamentally, the stock’s pullback is likely due to the company’s 150 million offering. However, ENVX’s upcoming Q1 earnings on April 26th is a catalyst for ENVX stock. Considering that the stock increased 59% since its last earnings despite missing expectations, the stock’s performance will likely depend on production guidance. Since ENVX’s Chairman and CEO purchased shares in March, this insider buying could be a bullish sign for ENVX’s guidance.
A possible play could be to take a lotto position ahead of ENVX’s earnings. Considering the high short interest, buying from company insiders, and the company’s beat on production numbers for Q1, ENVX stock could be on track to surprise – possibly triggering a short squeeze.
ENVX Forecast
With short interest reaching 26% it appears investors are bearish on the company’s upcoming earnings. Yet, ENVX is attempting to do what has never been done before on such a scale. This type of venture typically attacks criticism, but considering ENVX has attracted the attention of a notorious bear like Cohodes there may be more to this battery producer then meets the eye.
The company’s upcoming earnings will provide investors with updates on the Fab-2 facility and its production goals – helping many decide whether ENVX is worth a long-term investment.
As is, many ENVX investors are not simply waiting for the next catalyst. They are waiting until Fab-2 floods the market with silicon batteries. Since silicon batteries far out weigh the benefits of any lithium-ion battery, if they enter the market in mass, then the battery industry will never be the same. ENVX is one of a handful of companies with the potential to define this industry and for investors bullish on its odds, it could be a worth-while investment.