In 2021, 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 MVST Stock Forecast over the next few years.
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 Revenues To Hit Guidance Target for 2021
In comparison to the majority of SPAC mergers, the fact that Microvast is generating strong revenue provides better clarity to investors.
Microvast confirmed in January that they expect to hit their revenue guidance target of $145-$155 million. This represents 42% growth compared to $108 million for the fiscal year ended December 30, 2020
“We are pleased to close out 2021 with a strong revenue performance in the fourth quarter and a promising backlog heading into 2022. I am proud of our team’s accomplishments and ability to grow top line revenue against the backdrop of a challenging year. We look forward to carrying this positive momentum into 2022 as we continue on our electrification journey,”said Yang Wu, Microvast’s President and Chief Executive Officer.
However, Microvast originally 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.
MVST Stock Forecast on Wallstreet
Piper Sandler analyst Greg Tuttle initiated coverage of Microvast with a Neutral rating and $8 price target. The analyst discussed in a research note that Microvast is poised to continue growing its business model via “bespoke” solutions and component sales.
However, the analyst highlighted that there is risk in providing new technology into the battery supply chain and the tectonic plates of the model “are shifting below our feet,”. Overall, the analysts target implies a slim upside from the current trading price.
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 MVST 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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