Hyliion (NYSE: HYLN) stock has been on a downward trend losing 54.64% in value over the past month. The sell off incurred shortly after the SPAC merger was finalised on the 28th of September. Hyliion hasn’t been the only EV listed company who has seen short selling. WKHS and even Tesla have lost 33% and 8% value respectively over the past month. With Hyliion currently staggering at $18, analysts price targets are now suggesting greater upside potential. This article will breakdown what analysts are saying about Hyliion stock.
What are analysts saying about Hyliion stock?
According to CNN and NASDAQ data, the current 12 month price targets by 2 analysts averages at $24.50. This suggests an upside potential of 31% from the current trading price. The price target coverage is from two large institutions – JP Morgan and Goldman Sachs. The JP Morgan coverage has a neutral rating with a 12 month target at $27 (44% upside potential). Whilst the Goldman Sachs coverage is more conservative with a price target of $22 (17% upside potential).
Both of these targets were set in the later half of October suggesting both analysts see potential in this recent sell off. Although these targets are limited in coverage, we can coincide that both large institutes feel neutral about their price targets above the current price.
Hyliion revenue forecasts moving into 2021
Firstly, the long term revenue guidance released by Hyliion is based upon the success of its technology as well as its ability to reach its target demand figures. Hyliion forecasts “revenue of $344 million in 2022, $1.019 billion in 2023, and $2.091 billion in 2024”. These are impressive improvements which would see Hyliion’s EBITDA improve dramatically alongside its ability to free significant Cash Flow. However, these forecasts are not reflective of the current business performance, mainly due to the company in the pre commercialisation phase.
How Hyliion stock tracking moving into 2021?
Hyliion has received 1,000 pre orders from its strategic partner Agility Logistics. Its worth noting Agility have a $39 million stake in Hyliion. Hyliion also announced on the 15 of October that they had entered a partnership with American Natural Gas which notes ANG will “pre-order up to 250 Hypertruck ERX vehicles, allowing for early availability of Hyliion’s fully electric powertrain to ANG and its fleet customers.” The partnership will also provide Hyliion customers discounted Renewable Natural Gas. The partnership also includes new ANG fueling stations built closer to Hyliion customers.
“A robust and highly scalable infrastructure is critical to the adoption of our electrified solutions. That’s why we’re working with ANG to reduce costs and enable us to offer our customers refueling stations where they are needed. Hyliion customers can continue their journeys to electrification with confidence that RNG will be available at a price that can reduce their ownership costs over the lifetime of their vehicles.”said Thomas Healy, CEO and founder of Hyliion
What is the bear argument?
The Bears argue that the stock will continue to fall as we move into 2021. The main argument is that the companies technology is still under scrutiny. Bonitas Research published an article regarding the inefficiencies of Hyliions technology. According to Bonitas Research, the company does not reduce fuel costings by 10% as the company claims. I will leave the link to the research article here for those who are interested. It is definitely worth noting Bonitas Research publishes speculation based upon their research.
This research publication alone sparked uncertainty amongst investors, primarily for speculators and short term shareholders. We have seen this occur recently with Nikola and a short seller publication from Hindemburg Research. These allegation side effects on the share price tend to be short lived assuming SEC does not get involved.
YIG’s take on Hyliion moving into 2021 – will Hyliion stock bounce back?
In conclusion, the bears case seems to sustain similar counter arguments for all emerging EV companies in the market. I can remember clearly writing articles on Tesla over a year ago and the Bears were imminent that the stock price was overvalued at $200. I strongly believe the way of valuing EV stocks is outdated and the industry as a whole will remain over valued 5-10 years from now. In saying that, not all companies will be a Tesla equivalent. It is in my opinion the best valuing method is to understand the competition as well as what the company can bring to EV.
In regards to Hyliion, the ERX model is most certainly differentiated from the EV manufacturers. Its also worth noting the company can bring a solution for many fleet companies who cannot afford (lack the Cash Flow) to move over to EV vehicles. However, the imminent risks facing the stock including market volatility will impact the stock price moving forward (opinion not advice – see disclaimer below).
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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.