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Should You Buy Solid Power on the Dip?

Solid Power (SLDP) made its inventory market debut in December of 2021 as the one publicly traded pure-play solid-state battery producer for electrical autos. However, the inventory has declined greater than 45% since as a result of its bleak financials amid an prolonged market correction. Given the rising demand for EVs worldwide, will SLDP be capable to rebound quickly? Read extra beneath….


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Solid Power, Inc. (SLDP) is a pure-play solid-state battery cell producer. The firm’s merchandise have functions in electrical autos. It went public by means of a reverse merger with clean examine firm Decarbonization Plus Acquisition Corporation III on December 9, 2021, elevating $542.90 million in gross proceeds. As of December 9, 2021, SLDP is the one pure-play solid-state battery firm to commerce on the general public markets.

Regarding this, SLDP Co-founder and CEO Doug Campbell stated, “Solid Power has spent the last ten years developing all-solid-state battery technology that is designed to deliver the increased performance demanded by both automakers and consumers. We are excited to have completed our business combination with DCRC and we are looking forward to our future as the only pure-play solid-state company trading on the public markets.”

However, the corporate said in a press launch that its capital-light enterprise mannequin by means of car integration is anticipated to happen in 2026. Shares of SLDP have slumped 45.8% since their Nasdaq itemizing. In addition, the inventory plummeted 19.3% year-to-date and eight.3% over the previous 5 days. The SLDP’s bleak financials and progress prospects and pessimistic broader market sentiment brought on the inventory to lose momentum since its public debut.

Here’s what might form SLDP’s efficiency within the close to time period:

Bleak Financials

SLDP’s revenues elevated 357.5% year-over-year to $2.20 million within the fiscal first quarter ended March 31, 2022. However, the corporate’s whole working bills elevated 183% from the identical interval final yr to $13.50 million. Consequently, the working loss widened 163.5% from the prior-year quarter to $11.31 million. Pre-tax loss worsened 44.1% from the year-ago worth to $10.37 million, whereas internet loss widened 44.9% year-over-year to $10.34 million. Loss per share stood at $0.06.

In addition, internet money and money equivalents utilized by working actions elevated 294.4% from the identical interval final yr to $14.37 million. Cash and money equivalents stability stood at $450.41 million as of March 31, 2022, in comparison with the $513.45 million stability as of December 31, 2021.

Premium Valuation

SLDP’s trailing-12-month P/E a number of of 112.63 is 777.4% greater than the {industry} common of 12.84. In addition, the inventory’s ahead EV/Sales a number of of 173.94 is considerably greater than the {industry} common of 1.11.

Its trailing-12-month Price/Book ratio of two.36 is 7.2% greater than the {industry} common of two.20. Moreover, SLDP is at the moment buying and selling 299.68 instances its ahead Sales, 31,298.2% greater than the {industry} common of 0.95.

POWR Ratings Reflect Bleak Prospects

SLDP has an general ranking of D, which interprets to Sell in our proprietary POWR Ratings system. The POWR Ratings are calculated contemplating 118 distinct components, with every issue weighted to an optimum diploma.

SLDP has a grade of D for Value and Quality. The inventory’s stretched valuation in comparison with its friends justifies the Quality grade. In addition, the corporate’s trailing-12-month gross revenue margin and ROTC are unfavourable 3.64% and seven.4%, respectively, in sync with the Quality grade.

Of the 93 shares within the Industrial – Equipment group, SLDP is ranked #75.

Beyond what I’ve said above, view SLDP scores for Growth, Momentum, Sentiment, and Stability right here.

Bottom Line

SLDP is an industry-leading developer of solid-state battery cells for EVs. However, given the worldwide provide chain constraints and lithium provide scarcity, SLDP’s working bills have elevated considerably. As the adversarial macroeconomic situations persist, the corporate is anticipated to face extreme manufacturing and price headwinds within the close to time period. Thus, the inventory is greatest prevented now.

How Does Solid Power (SLDP) Stack Up Against its Peers?

While SLDP has a D ranking in our proprietary ranking system, one would possibly need to take into account taking a look at its {industry} friends, Standex International Corporation (SXI), Preformed Line Products Company (PLPC), and Belden Inc. (BDC), which have an A (Strong Buy) ranking.

SLDP shares closed at $6.90 on Friday, down $-0.15 (-2.13%). Year-to-date, SLDP has declined -21.05%, versus a -17.67% rise within the benchmark S&P 500 index throughout the identical interval.

About the Author: Aditi Ganguly

Aditi is an skilled content material developer and monetary author who’s keen about serving to traders perceive the do’s and don’ts of investing. She has a eager curiosity within the inventory market and has a basic strategy when analyzing equities.

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