HYLN stock forecast

HYLN Stock Forecast: Will Hyliion Rebound After 50% Decline?

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. The companies stock hit an all time low of $3.33 in late February, however has bounce back by over 30% since.

The company has now made some ground on sales, with $200,000 in revenue recorded in Q4 2021. The main concern is the companies comparably high expenses which are expected to jump to $135 million- $145 million in 2022.

The heavy decline to now sees Hyliion trading at a market cap of $749.81 Million, which is 60% lower than its PIPE offering price when it went public. So can Hyliion Stock bounce back anytime soon? This article will break down the HYLN Stock Forecast as we move through this year.

Are Wallstreet analysts bullish on the HYLN stock forecast?

On February 1st, UBS analyst Steven Fisher upgraded Hyliion Holdings to Neutral from Sell with a price target of $4.00. The analyst noted that his prior view reflected expectations for 2023-24 sales being set too high given the challenges to ramping up production and demand.

Fisher added that with expectations for Hyliion having been reset to “more reasonable levels”, the analyst is less cautious following the company’s updates on the commercialization timeline for the Hypertruck and demand for the Hybrid.

In December, JPMorgan analyst Bill Peterson kept a Neutral rating on Hyliion Holdings after attending the company’s Ride and Drive event. Peterson noted the event left him with a favorable view of the vehicle given its “notable acceleration with less noise than a diesel counterpart.” He also had a favorable impression of Hyliion’s battery pack design, assembly, and testing.

The analyst added that Hyliion is “executing fairly well amid such constraints”, noting the wider markets supply constraint issues. Lastl, the analyst [ointed out that the key for Hyliion will be to continue to convert interest into orders in the coming few years.

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 EX and the hyper truck ERX drivetrain. 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.

Hyliion Revenue Analysis: What does Wallstreet expect vs. Hyliion

Despite the bears arguments of unprofitability, negative operating cash flow and insignificant revenue, the expectations for Hyliion have been reset following the stocks correction.

Hyliion is currently transitioning into a revenue generating business, however the delays on this had been a root cause of concern. For example, the average revenue forecast from analysts in October last year, expected Hyliion to generate $1.5 Million in 2021. In reality, the company generated $200,000 in 2021.

For the remainder of 2022, Hyliion expects full year 2022 revenue of $2 million-$3 million from Hybrid eX sales.

The transition to commercialisation for investors is significant, as the uptick in revenue will provide the business some relief from its current cash burn. The company currently has $258 Million in cash and equivalents, down $80 Million since our last article on Hyliion stock.

HYLN stock forecast

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. Strong leadership from top management funnels through into the outlook on the Hyliion stock forecast.

Road to profitability 

Despite the initial hype around the stock, Hyliion does have a long road to profitability ahead. The company still has a negative operating cash flow and insignificant revenue levels compared to operating costs. Hyliion remains unprofitable mainly because of its cash burn on R7D developments, which is to be expected in a infant stage Tech company in the Auto space.

The current revenue projections indicate that Hyliion is capable of turning their current financial situation into prosperity. Furthermore, Wallstreet analysts such as Steven Fisher from UBS are confident in the companies ability to take 6% share of the North America Class 8 market by 2030.

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”.

The Bottom Line – HYLN stock forecast

Overall, sluggish revenue/earnings growth, R&D costs and a lack of investor sentiment has hurt the companies stock over the past 12 months. However, as JPMorgan analyst Bill Peterson noted, the companies expectations have been reset following its initial hype phase. This allows the companies management to build from the ground up and focus on hitting key deadlines in the coming months.

Lastly, understanding the difference in business models between Hyliion and its sustainable energy counterparts is crucial. Because it will provide you with an excellent insight into what is realistic market share growth in 2022.

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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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1 thought on “HYLN Stock Forecast: Will Hyliion Rebound After 50% Decline?”

  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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