Ever since the company Hyliion went public through a merger with Tortoise Acquisition Corp. in October, Hyliion (NYSE:HYLN) has earned its share of fans and critics. Lately, though, there seem to be more critics as HYLN stock has declined sharply.
Late last year, I recommended that investors should ignore the haters and consider Hyliion as an out-of-favor investment with strong upside potential.
My timing wasn’t exactly spot-on with that call, I’ll admit. Nevertheless, I’m sticking to my guns with my bullish take on HYLN stock.
Make no mistake, this isn’t the type of stock that you should put your life savings into. Instead, just consider it a speculative stock that could just as easily go to $50 or zero. Either way, it will be a wild ride.
A Closer Look at HYLN Stock
Speaking of wild rides, let’s go ahead and perform a checkup on HYLN stock’s recent price action.
As you may recall, the stock went through a couple of hype phases. The first one took place last summer when the shares from around $10 to more than $30.
There was a brief cooling-off period, followed by a massive bull run in August and early September of 2020. That move brought HYLN stock to an astounding 52-week high of $58.66 on Sept. 2.
It didn’t happen overnight, but the long-term shareholders ended up giving up most of those gains. This morning the stock will open at about $13.25.
Prospective investors could view this in a couple of different ways. They could observe that the trajectory is to the downside and avoid HYLN stock altogether.
Or, they could see the stock as a bargain, especially if they can find something to like about the company. So, let’s do some digging now.
Robust Revenue Projections
I’ll grant that informed investors should take any company’s multi-year projections with a grain of salt.
This is particularly true when a company is making forecasts about its own future revenues. After all, it’s certainly possible that the company will inflate its expectations.
Still, Hyliion’s vision of future growth is quite compelling. According to the company, Hyliion’s estimated revenues will proceed as follows:
- 2021: $8 million
- 2022: $344 million
- 2023: Over $1 billion
- 2024: Over $2 billion
Along with that, Hyliion estimates that its total units sold will increase from just 300 this year to 34,500 in 2024.
Similar growth trajectories are anticipated for Hyliion’s gross profit and EBITDA.
As easily as these could be overestimates, but they also might actually be underestimates. For instance, $2 billion in 2024 revenues would only represent around 2% of the $94+ billion total addressable market.
Hence, we could have a hyper-growth company on our hands with Hyliion, even if the investing community doesn’t see it that way right now.
Hyliion bills itself as a “leader in electrified powertrain solutions for Class 8 commercial vehicles.”
As InvestorPlace contributor Joseph Nograles explains, these powertrains can be used to convert existing diesel trucks into electric or hybrid vehicles.
The company has been in the powertrain business for a while, but this year Hyliion announced the introduction of a next-generation battery module.
Is it possible that Hyliion’s seeking to become not only the powertrain king but the electric-vehicle battery king as well?
I’ll let you peruse through the features of Hyliion’s new battery module and decide for yourself:
- Capable of up to five times as much cycle life as a conventional electric-vehicle battery
- Improved heat dissipation allows for higher battery charging rates as well as longer sustained power output
- Can be recharged in under eight minutes, thus comparing favorably to other electric-vehicle battery solutions
- Reduced operating temperature of the cells for an enhanced safety profile
The battery module’s design has already passed UN 38.3 battery testing procedures, so don’t be surprised to see it someday in a Class 8 truck near you.
The Bottom Line
In a time when stocks in the vehicle electrification space can be pricey, HYLN stock could be viewed as comparatively cheap.
Sure, there’s risk involved if you choose to invest in Hyliion. Yet, at least you’ll be betting on a company with no shortage of ambition and power-packed revenue growth potential.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.