Solid Power (SLDP) made its stock market debut in December 2021 as the only publicly traded pure-play solid-state battery manufacturer for electric vehicles. However, the stock has since fallen more than 45% as a result of the bleak financial situation amid an extensive market correction. Given the rising demand for EVs worldwide, will SLDP be able to recover soon? Read more below….
Solid Power, Inc. (SLDP) is a pure manufacturer of solid-state battery cells. The company’s products have applications in electric vehicles. It went public through a reverse merger with blank check company Decarbonization Plus Acquisition Corporation III on December 9, 2021, yielding gross proceeds of $542.90 million. As of December 9, 2021, SLDP will be the only pure-play solid-state battery company trading in the public markets.
Speaking about this, Doug Campbell, Co-Founder and CEO of SLDP, said: “Solid Power has spent the past decade developing all-solid-state battery technology designed to deliver the higher performance demanded by both automakers and consumers. We have completed our business combination with DCRC and We look forward to our future as the only pure-play solid-state company trading in the public markets.”
However, the company stated in a press release that its low-capital vehicle integration business model is expected to take place in 2026. Shares of SLDP have fallen 45.8% since their Nasdaq listing. In addition, the stock plunged 19.3% year-to-date and 8.3% over the past five days. The SLDP’s bleak financial data and growth prospects, as well as pessimistic broader market sentiment, have caused the stock to lose momentum since its public debut.
Here’s what could affect SLDP’s performance in the near term:
Dismal financial data
SLDP’s revenues grew 357.5% year-over-year to $2.20 million in the fiscal first quarter ended March 31, 2022. However, the company’s total operating expenses increased 183% year-over-year to $4 billion. 13.50 million. As a result, operating loss increased 163.5% year-over-year to $11.31 million. The pre-tax loss deteriorated 44.1% from a year ago value to $10.37 million, while the year-over-year net loss increased 44.9% to $10.34 million. Loss per share was $0.06.
In addition, net cash and cash equivalents used by operating activities increased 294.4% year-over-year to $14.37 million. The balance of cash and cash equivalents was $450.41 million as of March 31, 2022, compared to the balance of $513.45 million as of December 31, 2021.
SLDP’s latest 12-month P/E multiple of 112.63 is 777.4% higher than the industry average of 12.84. In addition, the forward EV/Sales multiple of 173.94 is significantly higher than the industry average of 1.11.
The lagging price-to-book ratio of 2.36 over 12 months is 7.2% higher than the industry average of 2.20. In addition, SLDP is currently trading 299.68 times its forward sales, 31,298.2% higher than the industry average of 0.95.
POWR ratings reflect bleak outlook
SLDP has an overall rating of D, which translates to Selling in our proprietary POWR Ratings system. The POWR Ratings are calculated taking into account 118 different factors, with each factor being optimally weighted.
SLDP has a grade of D for Value and Quality. The high valuation of the stock compared to its competitors justifies the quality class. In addition, the company’s 12-month gross profit margin and ROTC are negative 3.64% and 7.4%, respectively, in line with the quality figure.
SLDP ranks 75 out of 93 shares in the Industrial – Equipment group.
In addition to what I’ve mentioned above, you can check out the SLDP ratings for growth, momentum, sentiment and stability here.
SLDP is a leading developer of solid-state battery cells for EVs. However, given the constraints of the global supply chain and the shortage of lithium supplies, SLDP’s operating costs have increased significantly. As adverse macroeconomic conditions continue, the company is expected to face severe production and cost headwinds in the near term. So the stock is best avoided now.
How does Solid Power (SLDP) compare to its competitors?
While SLDP is D-rated in our proprietary rating system, one might consider looking at its industry peers, Standex International Corporation (SXI), Preformed Line Products Company (PLPC), and Belden Inc. (BDC), which have an A (Strong Buy) rating.
SLDP shares closed at $6.90 Friday, down $-0.15 (-2.13%). Year-to-date, the SLDP is down -21.05%, compared to a -17.67% rise in the benchmark S&P 500 index over the same period.
About the author: Aditi Ganguly
Aditi is an accomplished content developer and financial writer with a passion for helping investors understand the do’s and don’ts of investing. She has a keen interest in the stock market and has a fundamental approach to analyzing stocks.
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