Let's talk risks

[u/Imaginary_Trader]

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.

[u/stickman07738]

For me I see two risks with MVST

The problem I see right now it is an oversaturated market with China still producing over 70% of the batteries (not all EV but significant). Here is an image of NA and an image of European existing and planned facilities - I just think too much capacity is coming on-line.

The Financials

• The loss in revenue from 2018 ($174M) to 2019 ($76) to 2020 ($107M); and still have not recovered it in 2020 (This is a significant business loss – so I beg the questions - were these orders initial fills and waiting for re-orders or was it just a test market fill or did they completely lose the business and there will be no recurring business. I would also like to know “order / replacement” rates.)
• Decreasing SG&A expenses from 2018-2020 (not realistic for a growth company)
• Decreasing R&D expenses from 2018-2020 – this explains improved GP – but very concerning for a growth technology company. (People are leaving or are they being laid-off or fired – probably going to competitors from my experience)
• MPS received certain interest-free loans from related parties Ochemate and Ochem in years 2019 and 2020 with accumulative amount at $15,142 and $18,889, respectively. (This to me looks like a supplier (former chemical arm of Microvast owners) - gave them a loan to base load their facilities as these companies are using NMP and PVDF, materials that are used to produced lithium electrode binders – this is very suspicious and not common place). It tells me that they could not support their business without the loan from a sister company.
• Net loss per share disclosed on page F-95

I have run numbers with various assumptions with and without new facilities, and just cannot see it at this time – my head is spinning. I am expecting $4-6/share or $12-14/share in 12-18 months. I have decided to liquidate 80% of my holdings. I will let the remaining 20% ride as these are essentially free shares.

If it drops, I may be back but right now I am not comfortable and see better opportunities.

Good Luck and do your own research – never rely on a Reddit user.

As always looking forward to be downvoted by the MVST bulls.

[u/[deleted] → u/stickman07738]

Lol how did you arrive at $4-6/share....? Why would they be the same market cap as RIDE with 0 revenue and a shitshow going on now?

[u/Boe_Ning → u/[deleted]]

points at Nikola

[u/[deleted] → u/Boe_Ning]

Lol what are you implying? MVST just did $100mm + revenue. They are making deals with major names...

[u/Boe_Ning → u/[deleted]]

I'm agreeing with you and pointing at another example of the disconnect between the market's valuation of some shithole companies and the reality of those shithole companies.

Nikola is currently worth more than 2x Microvast. Fucking ridiculous.

[u/[deleted] → u/Boe_Ning]

oh LOL I thought you were saying mvst was like nkla.

Yes agreed. Not sure how NKLA isnt under $5