Hyliion (HYLN) stock forecast for 2022 – will the stock rebound?

Hyliion (NYSE: HYLN) stock has been trending downwards since the completion of its reverse merger in 2020. What first started as hype surrounding the SPAC company SHLL has now simmered down alongside the majority of the EV SPAC Industry. However, despite the downtrend in the stock price, revenue projections over the next 5 years suggest the company will turnover $2 Billion in revenue by 2024. Furthermore, the heavy decline now sees the company trading well below the average 12 month price target from Wallstreet analysts. This article will break down the bearish and bullish forecasts for 2022 and provide a summary at the end. 

Analysts forecasts for HYLN stock

Firstly, the general consensus amongst Wallstreet analysts is a Hold. According to CNN data, the median 12 month price target across 4 analysts sits at $17. This suggests an upside potential of 80% from the current trading price. These analysts include the likes of JP Morgan and Goldman Sachs Group. Analyst Paul Coster at JP Morgan listed coverage on HYLN stock with a neutral rating and a 12 month target at $27 (250%+ upside from the current trading price). Whilst the Analyst Mark Delaney at Goldman Sachs Group was more conservative with a price target of $12 a share (17% upside potential) and a Sell rating.

Hyliion’s 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 2022 and beyond.

Revenue forecasts

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.

“We enter 2021 with strong financial and operational resources and an established network of strategic partners. The powertrain technologies we have already deployed, and those that we will bring to market, further differentiate Hyliion and reflect our unique competitive advantages. We are delivering proven, cost-effective and eco-friendly solutions that we anticipate will electrify and revolutionize the commercial transportation industry.” Thomas Healy, Hyliion’s Chief Executive Officer on Q4 earnings release.

Leadership flows from the top. 

Thomas Healy is the founder and bullish visionary of Hyliion. Healy alongside his executives are setting a positive tone in the areas of patent protection, and revolutionising the EV truck space. Investors can see the patents Hyliion has secured here. 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 2022 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 giant Elon Musk. 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.

Road to profitability 

Despite the hype around the stock, 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 situation into prosperity come 2021 and beyond.

Competition and the future EV industry 

Some investors believe the cut-throat EV industry could work against Hyliion. Hyliion is going after a different part of the pie, renewable natural gas, and retrofit. Contrast that to Tesla 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.

Secondly, is the competing philosophies on which energy method is the most ecologically sustainable. 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

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, revenue/earnings growth, developments in their product pipeline, and potential contracts with fleeting companies look to be the argument for the bulls. Understanding the difference in business models between Hyliion and its EV counterparts is crucial. Because it will provide you with an excellent insight into what is realistic market share growth during 2021 and beyond.

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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 and Tyger Fitzpatrick

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One Reply to “Hyliion (HYLN) stock forecast for 2022 – will the stock rebound?”

  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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