Hyliion (NYSE:HYLN), a company that manufactures hybrid truck powertrains, went public through its merger with Tortoise Acquisition Corp. in October. Thus, Hyliion stock was brought to the New York Stock Exchange and a star was born.
Soon, however, Hyliion stock would be a falling star. This might be surprising, considering the buzz and enthusiasm surrounding the electric vehicle market in 2020.
The stock’s decline is rather shocking as Hyliion is a highly ambitious company. CEO and founder Thomas Healy asserted that Hyliion’s powertrain solutions “are designed to significantly reduce greenhouse gas (GHG) emissions and total cost of ownership, enabling our customers to meet both their sustainability and financial objectives.”
That sounds exciting, but it’s emotionally difficult to invest in Hyliion stock while it’s in a state of decline. So, could there be a justification to hold the stock and perhaps even add to one’s position?
A Closer Look at Hyliion Stock
Suffice it to say that October was a horrendous month for holders of Hyliion stock. Watching the share price slide from $45 to $20 was gut-wrenching, to say the least.
It was the complete opposite of August and September, when Hyliion stock charged up from $20 to $45 and sometimes even higher than that. At its absolute peak, the shares were trading at $58.66. (Back then, folks were trading the company via SHLL stock.)
Is this a reason to dump one’s position in Hyliion stock and accept a substantial capital loss? If you truly believe in the company, it’s reasonable to hold on and possibly even add to your position as the price is more attractive now.
All of that being said, it’s important to keep your total position size in Hyliion stock moderate. The broader electric vehicle space is still experiencing growing pains. Hence, a certain measure of share-price volatility should be expected.
When Short Sellers Attack
Analytic firm and short seller Citron Research doesn’t hold back when it goes bearish on a company. You might recall the time Citron posted a scathing tweet targeting Nikola (NASDAQ:NKLA), saying, “Congrats to Hindenburg for exposing what appears to be a total fraud… [Nikola’s] response warrants an SEC investigation to maintain integrity of EV mkt.”
More recently, Citron went full-scale bearish against Nio (NYSE:NIO). Evidently, Citron believes that current Nio stock price could “never be justified” by the Chinese electric vehicle market.
Citron further opined, “It is time for investors to rotate out of NIO,” and even set a price target of $25 on Nio stock. With that, electric vehicle stocks broadly declined, including Hyliion stock.
A Gift from the Market
As of this writing, Citron hasn’t launched a verbal broadside against Hyliion in particular. Besides, powertrain and electric truck maker Hyliion specializes in a different niche than economy carmaker Nio. If the Citron report caused nervous shareholders to dump Hyliion stock, that’s irrational and it presents a ripe opportunity to buy the shares at a reduced price.
These gifts from the market are rare and can be quite lucrative for bold investors. With $7.6 million in cash and equivalents as of September, Hyliion is a company on solid financial footing.
In other words, there’s nothing fundamentally wrong with Hyliion as a company. Sure, the stock price got ahead of itself for a while. Citron was the pin that popped the bubble, but now the shares are more reasonably priced.
Besides, let’s not forget about Hyliion’s Hypertruck ERX, which will use a fully electric drivetrain. Set to go on sale next year, this monster will have a range of over 1,000 miles and should have a full recharge time of just 10 minutes. Clearly, the Hypertruck could change the landscape for the electric truck industry.
The Bottom Line
It’s not always easy to catch a stock while it’s falling. You have to be able to see a brighter future for the stock and the company.
Hyliion stock could be a real wealth builder for bold investors. The company’s ambitious vision could transform the electric vehicle domain. And with the share price at a more attractive level, it’s a great time to get involved.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
