Profit ratio

Should you buy strong power on the dip?

Solid Power, Inc. (SLDP) is a manufacturer of pure-play solid-state battery cells. The company’s products have applications in electric vehicles. It went public through a reverse merger with blank check company Decarbonization Plus Acquisition Corporation III on December 9, 2021, raising $542.90 million in gross proceeds. As of December 9, 2021, SLDP is the only pure-play solid-state battery company to trade on public markets.

Commenting on this, SLDP Co-Founder and CEO Doug Campbell said, “Solid Power has spent the past decade developing all-solid-state battery technology designed to deliver the increased performance that automakers demand. and consumers. We are delighted to have completed our business combination with DCRC and look forward to our future as the only pure-play semiconductor company trading in the public markets.

However, the company said in a Press release that its low-cap business model through vehicle integration is expected to occur in 2026. SLDP shares have fallen 45.8% since listing on Nasdaq. Additionally, the stock has fallen 19.3% year-to-date and 8.3% in the past five days. SLDP’s bleak financials and growth outlook and general pessimistic market sentiment have caused the stock to lose momentum since its public debut.

Here’s what could shape SLDP’s performance in the short term:

dark finances

SLDP’s revenue increased 357.5% year-over-year to $2.20 million during the first fiscal quarter ended March 31, 2022. However, the total operating expenses of the business increased by 183% over the same period last year to reach $13.50 million. As a result, operating loss increased by 163.5% from the prior year quarter to $11.31 million. Pre-tax loss worsened 44.1% from a year earlier at $10.37 million, while net loss widened 44.9% year-on-year the other at $10.34 million. The loss per share was $0.06.

In addition, net cash and cash equivalents used by operating activities increased by 294.4% compared to the same period last year to reach $14.37 million. The cash and cash equivalents balance was $450.41 million as of March 31, 2022, compared to the balance of $513.45 million as of December 31, 2021.

Premium Assessment

SLDP’s trailing 12-month P/E multiple of 112.63 is 777.4% above the industry average of 12.84. In addition, the stock is futures EV/Sales multiple of 173.94 is significantly higher than the industry average of 1.11.

Its 12-month price-to-book ratio of 2.36 is 7.2% above the industry average of 2.20. Additionally, SLDP is currently trading at 299.68 times its forward sales, 31,298.2% higher than the industry average of 0.95.

POWR ratings reflect bleak outlook

SLDP has an overall rating of D, which translates to Selling in our own POWR Rankings system. POWR ratings are calculated by considering 118 separate factors, with each factor weighted to an optimal degree.

SLDP has a D rating for value and quality. The stock’s stretched valuation relative to its peers justifies the quality rating. In addition, the last 12 months of the company Gross margin and ROTC are negative by 3.64% and 7.4%, respectively, in sync with the quality score.

Of the 93 shares of industrial equipment group, SLDP is ranked #75.

Beyond what I said above, check out SLDP Ratings for Growth, Momentum, Sentiment and Stability here.

Conclusion

SLDP is a leading developer of solid-state battery cells for electric vehicles. However, given the constraints of the global supply chain and the shortage of lithium, SLDP’s operating costs have increased significantly. As the unfavorable macroeconomic conditions persist, the company is expected to face severe production and cost headwinds in the near term. So the stock is best avoided now.

How does Solid Power (SLDP) compare to its peers?

Although SLDP has a D rating in our proprietary rating system, one might consider looking at its industry peers, Standex International Corporation (SXI), Company of preformed products (PLCC), and Belden Inc. (BDC), which have an A (Strong Buy) rating.


SLDP stock closed at $6.90 on Friday, down -$0.15 (-2.13%). Year-to-date, the SLDP is down -21.05%, compared to a -17.67% rise in the benchmark S&P 500 over the same period.

About the Author: Aditi Ganguly

Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the dos and don’ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing stocks. After…

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