To say Hyliion (NYSE: HYLN) is a 2020 EV spectacle would be an understatement. What started as the hype behind the SPAC SHLL is mutating into EV truck fever for Hyliion. Mainly because SHLL/HYLN posted a monstrous 425% share price growth in three months. Bulls are now leading the charge in the Hyliion 2021 stock forecast. However, the fairytale story is not without hurdles as the bears raise valid counterarguments. This article will break down the bearish and bullish forecasts for 2021 and provide a summary at the end.

Table of contents 

  1. Hyliion 2021 stock forecast – bullish arguments 
  2. Hyliion 2021 stock forecast – bearish rebuttals 
  3. Summary 

Hyliion 2021 stock forecast and beyond – Bullish side

Analysts 

Analysts are relatively bullish on Hyliion come 2021 and beyond. For example, Wallet Investors forecasts HYLN to reach $112.573 and $717.578, in 2021, and 2025, respectively. If true would translate to a 278%, and 2313% gain, respectively.

Product Pipeline

Hyliion’s product pipeline is different from that of other EV truck competitors Tesla and Nikola. First, The latter companies intend to build their EV trucks from the ground up. Contrast that to Hyllion’s retrofit business model where they make the powertrain engine for fleets to incorporate into pre-built trucks. Hyliion’s two main products include the hybrid-electric drivetrain and the hybrid truck ERX solution. The production distinctions allow Hyliion’s products to capture a unique segment in the market. For example, Tesla is targeting the everyday consumer like Henry Ford. In contrast, Hyliion is serving the Fleet market such as JB Hans, Amazon, and UPS. Not to mention that Hyliion is travelling down the renewable natural gas route. Bullish investors interpret Hyliion’s unique product offering to mean a growing market share come 2021 and beyond.

Financials

Despite the red flags of unprofitability, negative operating cash flow, and insignificant revenue, the projections are showing strong bullish signals. Not to mention most fast-growing EV companies burn through cash on their product offerings, to begin with, to create long-term financial prosperity. Hyliion forecasts “revenue of $344 million in 2022, $1.019 billion in 2023, and $2.091 billion in 2024”. Moreover, Hyliion expects earnings before interest, taxes, depreciation, and amortisation (EBITDA) to “grow from $8 million in 2022 to $602 million by 2024”. Overall, the strong revenue growth suggests Hyliion is well-positioned to receive price-sensitive contracts, orders, and capitalise on the growing EV industry. (opinion not advice). However, investors must remember Hyliion’s financial estimates are just that estimates.

Leadership flows from the top. 

Thomas Healy is the founder and bullish visionary of Hyliion. Healy alongside his executives is setting a positive tone in the areas of patent protection, and revolutionising the EV truck space. Hyliion already has 30 patents surrounding its flagships products, the ERX, and hybrid-electric drivetrain. However, the intellectual property portfolio will only look to grow as Hyliion’s leadership team holds an “aggressive approach on filing patents around their two solutions”. Hyliion looks to pave the way for EV trucking through renewable natural gas. RNG not only creates net negative emissions but is also a unique offering in comparison to competitors. The leadership team is putting Hyliion in a strong growth position. Especially as a fair chunk of the trucking market is using RNG. For example, 80% of the natural gas used in vehicles within California comes from RNG.

Hyliion 2021 stock forecast and beyond – Bearish side

Social media exposure 

A minor criticism is the lack of social media presence Thomas Healy holds in comparison to twitter EV giants Elon Musk and Trevor Milton. Especially in terms of promoting the products and their timeline to the main street in the masses. Consequently, fewer retail investors are aware of the growing green EV company. While there is an imbalance, Healy is ramping up the number of interviews, which are receiving strong engagement on Youtube. The recent interview with TD Ameritrade is a perfect example. Overall, it remains a minor criticism for now but something that will likely be fixed with more interviews, and more twitter activity.

 

Financials

Despite the hype around the stock price, Hyliion does have a few gaping holes in their financial scorecard. These include negative operating cash flow, a lack of profitability, and insignificant revenue levels. Hyliion remains unprofitable mainly because of its cash burn on producing the Hybrid electric drivetrain and ERX solution. The current revenue projections indicate that Hyliion is capable of turning their current financial nightmare into prosperity come 2021 and beyond.

Competition and the future EV industry 

Some investors believe the cut-throat EV industry could work against Hyliion. First, Nikola, Workhorse, and more so Telsa are lapping up a significant amount of market share. However, Thomas Healy sees each EV Truck leader Tesla, Hyliion, and Nikola, achieving a respectable market share for their value propositions. Hyliion is going after a different part of the pie, renewable natural gas, and retrofit. Contrast that to Tesla and Nikola’s aspirations of building their trucks from the ground up. Overall, Hyliion respects the competition for its different offerings but has a clear long-term future for the renewable natural gas segment.

Second, is the competing philosophies on which energy method is the most ecologically sustainable. Trevor Milton stated on Twitter, ” I don’t believe anything with emissions will survive regardless if carbon neutral… they will need their own chassis as OEMs circumvent them. Retrofit won’t work”. Hyliion is apart of the retrofit model and thus, is being put under the microscope with Trevor’s statement. However, Thomas Healy explains how Hyllion achieves net negative emissions by using renewable natural gas (RNG). The use of an RNG profile offsets the manufacturing emissions. Moreover, Healy explains how most EVs might produce zero emissions, but the manufacturing of electricity produces a negative environmental footprint. Because “the electricity could come from coal”.

Summary – YIG Takeaway

Before I begin, I remind our viewers that this is not financial advice. Instead, the information above is an investment commentary from extensive research.

Overall, Hyliion is in a bullish position come 2021. (opinion not advice) Especially in the areas of revenue/earnings growth, developments in their product pipeline, and potential contracts with fleeting companies. Understanding the difference in business models between Hyliion, Tesla, and Nikola is vital before investing. Because it will provide you with an excellent insight into what is realistic market share growth during 2021 and beyond. However, it might not be all sunshine and rainbows early in 2021 as the bears do raise valid arguments. In particular, the depressing financials and any potential delays in COVID-19 vaccine developments.

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The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

Written by Patrick McLoughlin, Senior Manager of YIG.

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1 Comment

  1. One wonders what the cost of renewable fuels will be in the future, who can afford them and how truck makers will survive in a future a decade from now which is largely unknown. When HYLN says the fuel will be renewable fuel but what is renewable fuel and how will it be manufactured and what will be the cost. Renewable fuel will not be from field crops grown today as these crops are already devoted to food production to feed people. The below analysis concerns a competitor to HYLN but this apparently insurmountable challenge may well apply to both companies.

    Hydrogen Fueling Fantasy….Nikola Corp. CEO Mark Russell believes that making hydrogen at fueling stations by electrolysis of water is the new way of trucking. Russell explains that producing fuel at a hydrogen fueling station can produce hydrogen fuel below the cost of diesel. Russell says the cash cost to manufacture one kilogram of hydrogen at fueling stations is 100 times the cost of a kilowatt-hour of electricity. He says a gallon of diesel selling at $2.42 has about the same energy content as a kilo of hydrogen, then hydrogen is less costly only where electricity cost is less than 2.42 cents per kwhr. But electricity cost averaged $0.077 per kwhr for 32 states in 2016, so where can inexpensive electricity be found in the U.S. and where can Nikola manufacture hydrogen at less cost without support by federal or state subsidy? Russell implies by his statement that hydrogen is not an economical alternative in the U.S. without subsidies because electricity averages $0.077/kwhr which translates to cost of hydrogen at $7.70/kg or equivalent to paying $7.70 per gallon of diesel, so the hydrogen is three times more costly than diesel, the fuel that Nikola plans to replace. In Arizona, California and Germany where Nikola will locate operations the cost of industrial scale electricity is three-fold more expensive where it sold for $0.075 to $0.105 to $0.36 per kwhr respectively in 2016.

    California and other states in the U.S. want to be carbon zero emitters in a few years which translates to an electricity price on par with that of Germany at 36 cents or Australia at 44 cents per kwhr, but prices of electricity in these countries reflect a “price pain” of one-quarter of the pathway to zero-carbon. No one knows the cost of at zero carbon electricity. Using Russell’s rule that hydrogen fuel will cost 100 times the cost of electricity, which translates to cost of hydrogen at $36,00 to $44.00 per kg if one uses today’s electricity in Germany and Australia. With a kilo of hydrogen and a gallon of diesel containing the same energy as he says, will hydrogen be able to compete with the cost of diesel that today is $2.42 per gallon? Transport Topics, Jun 22, August 17 2020

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