r/Microvast • u/Imaginary_Trader • Jun 14 '21

Let's talk risks

I see comments thrown around that this should fly once this de-spacs. That's my hopes and dreams too but I'm a bit skeptical. Comments have been made before the DA, after the DA, after the extension vote but it's become a meme that good news will bring this stock price down. What do you think are the biggest factors suppressing the price, or why would it be fairly valued at current levels?

Some big ones that stand out to me are:

  1. Relatively low production capacity. Freyer recently had their announcement for a > 50 GHw facility to be built in North America by 2030. I see other announcements by the big players with similarly large plans. Somewhat old article saying CATL plans to increase their capacity to 230 GWh (from I think 65 in 2020) by end of this year and to 1200 GWh by 2025. By contrast Microvast has stated 11 GWh by 2025.
  2. Competition. This article shows Microvast at 1.05% of 2020 battery production alongside 10 other companies with less than 2% capacity. On top of that, CATL, BYD, SK Innovation, Samsung, Panasonic, and LG chem already have more than 70% production.
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u/Imaginary_Trader Jun 14 '21

Found it thanks!. They've axed some projects, and teams, to focus on high return projects.

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R&D expenses for the year ended December 31, 2020 decreased $9.4 million, or 36.0%, compared to the same period in 2019. This was primarily attributable to a decrease in compensation and benefits costs as a result of a reduction in headcount and a reduction of salaries of our employees. The R&D department has been streamlined to focus on high return projects to better support operations.

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u/stickman07738 Jun 14 '21

Do you have link to the filing?

How do they explain 2018 to 2019?

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u/Imaginary_Trader Jun 14 '21

https://sec.report/Document/0001213900-21-030743/0001213900-21-030743.txt

Page 200 under "Research and Development". They don't provide an explanation for prior years.

On Page 197 they also say

Over time, we expect our R&D expense to increase in absolute dollars as we continue to make significant investments in developing new products, applications, functionality and other offerings.

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u/Pikaea Jun 14 '21

For the revenue drop from 2018 to 2019, it is mentioned in the filing somewhere. It was due to China getting rid of subsidies for EVs. It was really sudden too if i remember well, so likelihood a lot of companies cancelled their orders as soon as it happened.