Hyliion Is Difficult to Judge Without Quantitative Metrics

Discussion from investors about Hyliion (NYSE:HYLN) stock seems endless. That may be because it’s one of many stocks that are popular with the r/WallStreetBets crowd. It’s also a company with an intriguing story in the electric vehicle (EV) sector.

A 3D rendering of a green truck in front of a blue sky.

Source: Shutterstock

However, it’s important to note that Hyliion is a pre-revenue company. It’s also about a year away from going into production. And more competitors are entering the EV space, including mature established companies. One such competitor for Hyliion is Cummins (NYSE:CMI), which has introduced a 15-liter natural gas engine in China. If Cummins decides to market the engine in the United States, it would be formidable competition for Hyliion’s ERX hybrid.

The extent to which any of this matters will depend on whether Hyliion can capture its fair share of the Class 8 vehicle market. But so far, the company has nothing newsworthy to report on the revenue front. However, with some other EV companies in hot water over misrepresenting pre-orders, Hyliion CEO Thomas Healy can be forgiven for exercising some caution.

Unfortunately for Healy, it gives writers like me precious little to go on. But that’s nothing an earnings report couldn’t change. It will likely be early August 2021 before that happens. In the meantime, here are my thoughts on what we do know.

The Stock Price Isn’t the Focus

In an interview with FreightWaves, Hyliion CEO Thomas Healy was quoted as saying that he advises his growing team of employees to focus on the big picture. “To be worrying about the share price day in and day out is not the right focus,” he said. “It’s a longer-term play here. And ultimately staying head down and accomplishing things is what’s going to make the company successful.”

For the most part, I agree with Healy, but I can’t let him off the hook completely. I’ve heard many professional sports coaches say their team’s win-loss record doesn’t matter. But in professional sports, a team’s win-loss record will always matter. It’s up to the team ownership and its fans to decide just how much it should matter. As Hall of Fame football coach Bill Parcells legendarily said, “You are what your record says you are.”

Healy’s message may resonate with employees, but it’s very much on the mind of investors. Because when investors have skin in the game, the stock price matters quite a bit. It’s probably not a coincidence that Hyliion and one of its competitors Lordstown Motors (NASDAQ:RIDE) have about the same level of both institutional ownership and short interest. Therefore, it’s probably not also much of a coincidence that HYLN stock and RIDE stock have similar share prices.

And so it is that Hyliion’s stock price does matter. It’s up to investors of both the institutional and retail variety to determine how much.

Many Outcomes Are Possible For HYLN Stock

There has been no substantive news to change my mind since I last wrote about Hyliion. With that in mind, I’ll side with those who advocate for patience. A range of outcomes are possible for Hyliion. But at this point, holding on to your shares seems like a prudent move. The company appears to be well capitalized, and if it produces legitimate pre-orders, HYLN stock will go higher.

And let’s face it, if you bought the stock when it was at $20 or even at $50 (though I hope you didn’t), that’s the kind of good news you’re looking for. But make no mistake, news like that is Healy and Hyliion’s responsibility to deliver and nobody else’s.

Hyliion is not a get-rich-quick stock. But many HYLN stock investors have a get-rich-quick mindset. If you’ve invested money that you won’t need for awhile, Hyliion may reward you handsomely. Or it won’t. At this point, with no revenue to report on, it’s anyone’s guess.

On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for InvestorPlace since 2019.


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