Earlier this year, Lithium battery manufacturer Microvast (NASDAQ:MVST) completed their highly anticipated merger with SPAC company Tuscan Holdings (NASDAQ:THCB). Microvast Stock has struggled since its debut on Wallstreet, currently trading below its PIPE offering price of $10. MVST is not alone, a strong majority of post SPAC stocks have struggled to maintain the momentum we saw in 2020.
Nevertheless, investors are still confident the stock can bounce back as Microvast maintains a first mover advantage as 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 dive into the Microvast Stock Forecast over the next few years.
Table of contents
What the THCB 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.
“As an established battery technology company with proven products and a robust pipeline of new technologies, we are excited by the industry demand and validation of our battery solutions. I am pleased to report that we have won several new multi-year contracts with leading OEMs, driving substantial growth in forecasted contracted revenue since the business combination was announced in February 2021″.said Yang Wu, Microvast’s President and Chief Executive Officer.
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 provides better clarity to investors.
Microvast reported $100 Million in revenue for the fiscal year of 2020 and expects this to grow to $145 million to $155 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 was likely a driving factor in the bullish sentiment we saw in THCB stock earlier this year. In Microvast’s investor presentation, the company forecasts $2.3 Billion in revenue for 2025. However, Microvast has already cut its 2021 revenues from $230 Million to $150 Million suggesting their forecasting models for future years will be impacted.
Nevertheless, 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)
Despite the companies early flare, Wallstreet remains Bearish on Microvast Stock with Morgan Stanley analyst Adam Jones covering Microvast Stock with an Underweight rating and a $6 price target. Jonas said he felt Microvast’s vertically integrated model carried “greater execution, competitive and in-sourcing risks.”
As MVST stock has only been trading for a short period, Morgan Stanley is the only analyst to cover the stock so far. Therefore, it may be too early to tell how the majority of Wallstreet views the Microvast Stock Forecast through to 2025.
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. In saying this, recent set backs in revenue growth and execution risks may pose a threat to the companies long term revenue goal.
The Bottom Line – Microvast Stock Forecast
In summary, the Microvast stock forecast remains up for debate as we await coverage from more Wallstreet institutions. Nevertheless, the companies high revenue visibility and positive growth despite some setbacks is still driving some investor interest.
Furthermore, the $700 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 lack of post-SPAC stock interest is likely going to continue to have some influence on the Microvast Stock Forecast.
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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