Lithium battery manufacturer Microvast (NASDAQ:MVST) recently completed their highly anticipated merger with SPAC company Tuscan Holdings (NASDAQ:THCB). Microvast’s debut on Wallstreet has been turbulent, down 19.40% for the week.
Nevertheless, investors are still confident the stock can bounce back as Microvast is a global leader in providing next generation battery technologies for Electric vehicles.
Microvast aims to target an addressable market of $30 Billion. Furthermore, the companies next generation batteries are now operating in over 30,000 vehicles across 19 different countries. With plenty to breakdown, this article will discuss the Microvast stock forecast for 2021 and beyond.
What the completed merger means for the future of Microvast
Firstly, the benefit of the THCB merger is the combined company has raised capital from PIPE investors to fund their future expansion strategies. Microvast plan to utilise the $822 Million cash raised to achieve three main objectives.
1) Microvast aim to expand their Manufacturing facility buildout both in the US and Europe.
2) Fulfillment of current customer demand which includes a pipeline of contracted revenue worth between $1 Billion – $1.5 Billion according to the company.
3) Lastly, the company aims to use the proceeds to reduce the current Debt.
Microvast’s current partnerships equate to over $1.5 Billion in contracted revenue through 2027. The strong visibility of contracted revenue is a driving factor in positive investor sentiment.
Microvast revenue forecasted to reach $6.8 billion by 2030
In comparison to the majority of SPAC mergers, the fact that Microvast is generating strong revenue presents an upside for shareholders.
Microvast reported $100 Million in revenue for the fiscal year of 2020 and expects this to double to $230 Million in 2021. For the current year, contracted revenue is expected to drive 19.1% of the total revenue forecasted. On average, contracted revenue will retain a quarter (25%) share of total revenue from 2021-2025 according to Microvast.
We can see a pattern of strong revenue inclination, which is likely a driving factor in the current bullish sentiment we saw in THCB stock. In Microvast’s investor presentation, the company forecasts $2.3 Billion in revenue for 2025.
Microvast expects 60% of the 2025 revenue to derive from Commercial Vehicle battery sales and 26% from battery components. The company also aims to target the “Rapidly growing (energy storage solution) market driven by storage applications, energy shifting and data centers”. Microvast expects energy storage revenue to grow to $254 Million by 2025 according to the companies forecasts.
Microvast stock forecast (NASDAQ:MVST)
As the company has only recently listed as a combined company, we are yet to see Wallstreet cover the companies valuation and earnings forecasts. However, as one of the leaders in lithium battery technology we can expect stock coverage within the next few weeks.
After a tough week for MVST investors, the stock price is currently hovering around $8.02. This means the stock is currently trading 20% lower than the PIPE price, which will likely drive up demand in shares from Microvast Bulls.
Interestingly, if analysts do price MVST above its current valuation we may see a swing in investor sentiment.
Microvast stock vs QuantumScape stock
In comparison to QuantumScape, Microvast holds a clear revenue advantage. Quantumscape expects to first generate revenue in 2024, which places Microvast vastly ahead of its competitor in terms of revenue.
By 2025, Microvast expects to generate $1.462 Billion while Quantumscape forecasts $39 Million in revenue for the same year. Here’s where it gets interesting. By 2028, Quantumscape expects revenue to grow exponentially to $6.4 Billion. This seems to even the playing field as Microvast expects to generate $3.831 Billion in 2027.
Nevertheless, the real advantage for Microvast stock is the companies high visibility in contracted revenue.
The Bottom Line – Microvast stock forecast for 2025
In summary, the Microvast stock forecast remains up for debate as we await coverage from Wallstreet institutions. Nevertheless, the companies high revenue visibility and positive growth is a gold token for shareholders.
Furthermore, the $822 Million boost in cash will provide Microvast the funding needed to address manufacturing, demand of its technology and to reduce the companies debt.
However, it is worth noting the current instability of the tech market is likely to influence the share price in coming weeks/months. Overall, Microvast stock is one to watch in 2021.
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.
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