For battery maker Enovix (NASDAQ:ENVX), the news was enough to pull a lot of the stock’s juice out of it. Shares saw a huge sell-off today, though after-hours trading is putting a fraction of that spark back. The biggest reason for Enovix’s plunge? Some substantial new production troubles emerged.
A presentation—given by T.J. Rodgers, Enovix’s Executive Chairman—revealed that Enovix is working on its Fab-1 improvements. Moreover, it expects to continue doing so into this year. However, there’s a significant problem with that. At the same time, Enovix is cranking up development efforts on its second generation of batteries. Thus, Enovix has an incomplete first-generation manufacturing operation while it’s working on the second generation of product.
This means a lot of uncertainty around the stock. Worse yet, reports note that Enovix will need further funding to get the second-generation production line going when it starts up in November of this year. This is leaving investors quite concerned about the stock’s overall trajectory.
Enovix is certainly working on a valuable product: high-end batteries that feature both lithium-ion and silicon-anode technology. However, the fact that it’s still working on its first-generation production facilities but planning to start building the second-generation battery may limit the market for the first generation. Who will buy the first when the latest is just a few months out?
Despite this, however, Wall Street is very positive about Enovix. Analyst consensus calls Enovix a Strong Buy, with seven Buy ratings. Additionally, the stock’s current average price target of $23.42 gives it an upside potential of 227.55%.
