Hyliion Holdings Corp

Hyliion Holdings Corp (NYSE: HYLN) produces electrified powertrain systems for commercial vehicles. The company focuses on reducing the carbon intensity and greenhouse gas emissions of the transportation sector by providing electrified powertrain solutions for Class 8 commercial vehicles at the lowest total cost of ownership. It is currently developing two powertrain systems: Hybrid system and Hypertruck ERX system.

Key highlights

• Partnered with Detmar Logistics LLC for fleet electrification: Recently, the firm announced a partnership with Detmar Logistics LLC, a prominent frac sand solutions supplier, in which it would collaborate closely with Detmar as they begin the electrification of their fleet over the next five years. Detmar owns and runs 127 trucks, transporting more than 200 tonnes of fracking sand every day. The logistics firm has made its first order for ten Hyliion Hybrid Electric units, marking the first step toward powering its whole fleet with low-emission technologies.
• Expects to recognize revenue soon: During the first quarter, the business installed ten hybrid electric powertrains. Furthermore, the company anticipates 2021 to be a critical year, with the first income from its upgraded Hybrid electric powertrains coming in the second part of the year and Hypertruck ERX demo units on track for exhibiting with fleets by the end of the year.
• Minimizing losses on sequential basis: Thanks to agile management along the prudent steps taken by them, helped in minimizing the net loss on the sequential basis, a key positive. The company posted a net loss of USD 16.5 million in Q1 2021 V/s USD 20.5 million in Q4 2020.

•  Hypertruck ERX, a game-changer: Hyliion is building the first units of Hypertruck ERX demo vehicles right now, which is a major milestone on its path to commercialization. Along with the formation of the Hypertruck Innovation Council, its Hypertruck ERX program is gaining operational momentum, and the company expects that it will ultimately drive significant demand for this game-changing electric powertrain solution.

• Breakout of the horizontal channel pattern: On the daily chart, HYLN stock price witnessed a breakout of the horizontal channel pattern at USD 11.14 level on June 02, 2021. Prices registered a decisive break out of the channel pattern that suggests a change in the trend from sideways to upward. The momentum oscillator RSI (14-Period) is trading at ~65.29 levels, indicating the bullish momentum. Moreover, the stock is trading above its 50-period SMA, which may act as a crucial support level for the prices. 

Financial overview of Q1 2021 (In thousands of USD)

Source: Company 

• The company did not generate any revenue in the reported period.
• On the back of higher R&D expenses and higher SG&A expenses, the company increased its operating loss to USD 16.7 million in the reported period, against USD 3.3 million in the previous corresponding period. The company is investing in R&D to execute its product development roadmap, while SG&A expenses increased due to personnel and public company related costs.
• Net loss stood at USD 16.5 million in Q1 2021, against USD 5.5 million in pcp, partially offset by interest income.
• Cash and cash equivalents stood at USD 334.7 million, while short and long-term investments stood at USD 289.6 million at the end of March 31, 2021.

Risks associated with investment

In the short term, the Company’s financial performance is exposed to the COVID-19 pandemic, causing an unprecedented level of disruption. The adverse US federal income tax regimes and fluctuating exchange rates could also affect financial performance.

Stock recommendation

The Company has entered 2021 with strong financial and operational resources. Moreover, the Company is optimistic about its prospects as it expects to derive future revenue from its Hybrid systems and Hypertruck ERX system. The management is focused to position the Company for long-term growth by capturing the market for the electrification of class 8 vehicles. Furthermore, the Company would be introducing new products in 2021, which will derive the Company's top and bottom line. Also, technical indicators are suggesting a trend reversal in the stock. Based on the above rational, we recommend a "Buy" rating on the stock at the closing price of USD 11.75 as on June 2, 2021.

One-Year Technical Price Chart (as on June 02, 2021). Analysis by Kalkine Group

Electrameccanica Vehicles Corp Ltd.

Electrameccanica Vehicles Corp Ltd. (NASDAQ: SOLO) is a development-stage company which is engaged in the designing and manufacturing of electric vehicle (EV). The company operates with its flagship product SOLO, which is a single-seat vehicle, and was launched in August 2020 and currently operates through eleven retail locations across the U.S.

Key Highlights: 

• Bearish Technical Signal: The stock of SOLO is correcting since mid of February 2021 and corrected ~27% and ~40% in the last three months and six months, respectively. The stock is trading below the the long-term simple moving average (SMA) of 200-days and 150-days, respectively, indicating a bearish trend.

• Management Update: The company announced the appointment of Kevin Pavlov for the post of new Chief Operating Officer (COO). Kevin would be entrusted with overseeing operational growth as the company is planning to ramp up commercial production with a focus on enhancing profitability and efficiency.
• Increase in Shareholder-deficit: The group reported an increase in shareholder’s deficit to USD 110.51 million in Q1FY21, due to a continued net loss in the current quarter. An increase in share-holder’s deficit is not a healthy sign for the group.

Q1FY21 Financial Highlights:

• SOLO announces its first quarter result, wherein the company posted revenue of USD 0.18 million, increased from USD 0.08 million in the previous corresponding period (pcp).
• Operating loss widened to USD 8.93 million, from USD 5.14 million in Q1FY20 due to higher cost of revenue, elevated general and administrative expenses, higher research and development expenses, coupled with a surge in sales & marketing expenses, partially offset by lower stock-based compensation expense.
• The period was marked by higher interest expense, a higher loss from Changes in fair value of warrant derivative (USD 8.67 million v/s USD 2.97 million in pcp).
• Net loss lowered to USD 0.18 million from a net loss of USD 1.42 million in Q1FY20.

Q1FY21 Income Statement Highlights (Source: Company Report)

Risks: The company has reported a surge in input costs, which has dampened the company’s profitability. Continuation of the above trend is likely to drag the overall performance of the group.

Stock Recommendation:

The company has launched its single-seat vehicle, SOLO and has produced 53 vehicles since August 2020, while 23 units are being manufactures in Q1FY21. The long-term prospects of the Electric Vehicle industry remain bright, as most of the developed nations are moving towards clean sources of energy. Notably, the company has in-house production capability and has an extensive in-house development R&D unit. The company is focusing on developing a two-seater sports car Tofino, which is planning to introduce at USD 50,000 to USD 60,000. The company has reported higher losses in the recent past. Though, the prospect looks bright, the company is yet to report stable revenue from the operations. Any deviation in the project execution timeline would affect the business prospect. Moreover, technical indicators are also not showing any strength in the price. Hence, considering the aforesaid facts, we recommend a ‘Watch’ rating on the stock at the closing price of USD 4.13 on June 02, 2021.

One-Year Technical Price Chart (as of June 02, 2021). Analysis by Kalkine Group

*The reference data in this report has been partly sourced from REFINITIV.

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