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Stock Analysis & Ideas

Why Are Top Insiders Buying Enovix Stock?

Story Highlights
  • Insiders have bought ENVX stock this month.
  • Enovix started commercial production for a tech company in the wearable segment.
  • The company is on course to recognize first product revenue.

Enovix (NASDAQ:ENVX) designs and manufactures next-generation 3D silicon lithium-ion batteries, which have wide applications in various consumer electronics. While Enovix has strong growth potential and a large addressable market, it is yet to report product revenues. 

Notably, ENVX stock has dropped more than 66% this year. The broader market selloff and investors’ negative sentiment on stocks amid increasing macro headwinds like high inflation and rising interest rates weighed on ENVX stock. 

While Enovix has trended lower, its top insiders have accumulated its stock. Per TipRanks’ Insider Trading Activity tool and its recent SEC (Securities and Exchange Commission) filings, its director and chairman of the board, Thurman Rodgers (holding more than a 10% stake), acquired ENVX shares worth $3.56 million this month.

Moreover, another director, Daniel McCranie, and chief legal officer, Edward Hejlek, acquired ENVX stock worth $268,500 and $89,900. 

What stands out is that each of these transactions was an Informative Buy. Notably, an Informative Buy is a transaction where the insiders have bought shares with their own capital, which signifies their greater confidence in the company’s future. 

The move comes at a time when Enovix is moving towards commercial production from its Fab-1 facility. Moreover, the company is on track to recognize its first product revenue in Q2. 

In a letter to its shareholders, the company announced that it had begun production for a tech company in the wearable segment, which will help it to recognize its first product revenue in Q2 of this year. 

Bottom Line

The move toward commercial production, strong demand, unique battery architecture, and insiders accumulating its stock instill confidence in the company’s prospects. 

Further, opportunities in the EV segment could give a significant boost to its TAM (total addressable market) and financials.   

ENVX stock also has positive indicators from analysts and hedge fund managers. Enovix sports a Strong Buy consensus rating based on four unanimous Buy recommendations. Moreover, the average price target of 36.75 implies 298.2% upside potential. Further, hedge funds have increased their holdings by 467K shares in the last quarter. 

Overall, ENVX stock has a maximum Smart Score of 10 out of 10.

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