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
- Hyliion 2021 stock forecast – bullish arguments
- Hyliion 2021 stock forecast – bearish rebuttals
Hyliion 2021 stock forecast and beyond – Bullish side
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.
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.
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.
TD Ameritrade Networks Interview with Thomas Healy.
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 Tesla 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.