Longer range, extended life and improved safety. That’s what Colorado-based Solid Power (NASDAQ:SLDP) promises with its unique electric vehicle batteries. Investors in SLDP stock are counting on this small company to disrupt the increasingly competitive automotive battery market.
Of course, Solid Power isn’t the first player in the EV battery space. Yet, the company sees a $300 billion market opportunity and isn’t afraid to compete with more established names in the industry.
Granted, it’s not an easy time to buy SLDP stock now. The price has been in a state of decline for a while, and applying the “buy low, sell high” principle is psychologically difficult to do.
Nevertheless, I would encourage EV market investors to strengthen their contrarian muscles and give Solid Power a chance. Years from now, you might have a triple-digit stock on your hands. And you’ll be glad that you took a position before the crowds rushed into the trade.
A Closer Look at SLDP Stock
Going back to the beginning, on Dec. 9, 2021, Solid Power debuted on the Nasdaq exchange after the company completed its SPAC (special purpose acquisition company) merger with Decarbonization Plus Acquisition Corp. III.
SLDP stock traded at around $14 on that first day. However, early investors weren’t rewarded for holding on to their shares.
Before 2021 was finished, the stock had already broken below $10 and even $9. Fast-forward to mid-January 2022, and the Solid Power share price was only slightly above $8.
A reliable support level hasn’t been established with SLDP stock yet, unfortunately. Therefore, investors should understand that this is a highly speculative stock and substantial capital loss is entirely possible.
On the other hand, Solid Power could eventually revisit $14 or even go higher than that. Ultimately, it’s a question of whether the automotive market will accept Solid Power’s unique batteries.
With the aforementioned SPAC merger, Solid Power became (according to the company) the only pure-play solid-state battery company to trade on the public markets.
In making its EV batteries, Solid Power replaces the flammable liquid electrolyte of a conventional lithium-ion battery with a sulfide-based solid electrolyte.
With that, Solid Power’s all-solid-state battery cells could potentially offer a number of advantages over lithium-ion batteries:
- Safer and more stable across a broad temperature range
- Provide an increase in energy density compared to the best available rechargeable battery cells
- Enable less expensive, more energy-dense battery pack designs
- Compatible with traditional lithium-ion manufacturing processes
Moreover, Solid Power is well capitalized as the company, upon closing of the merger transaction with Decarbonization Plus Acquisition Corporation III and following a shareholder meeting, received around $542.9 million in gross proceeds.
Patience Is Required
That $542.9 million represents a sizable head start, financially speaking, as the company works diligently toward getting its solid-state batteries ready for broad-market commercialization.
However, SLDP stockholders will need to be patient. They’re not likely to see a stock-price moon shot tomorrow or next week.
Reddit traders could target SLDP stock for a short squeeze, though. After all, they seem to like low-priced stocks.
Yet, waiting around and hoping for a short squeeze isn’t an ideal investment strategy. Really, what sensible investors should want to see is Solid Power’s batteries in vehicles, on roadways throughout the nation.
That’s not going to happen overnight, however. Solid Power co-founder and CEO Doug Campbell, referring to the SPAC transaction, stated, “We plan to use the proceeds… to fund our capital-light business model through vehicle integration, which we expect to occur in 2026.”
Therefore, Solid Power’s shareholders should keep their expectations low when it comes to near-term revenue and profits. This is a business with a vision for the future, and that future is years away.
The Bottom Line
Solid Power’s batteries have disruptive potential. There’s no doubt about that. However, the company’s efforts might not bear fruit until several years have passed.
Consequently, SLDP stock is meant for true believers in solid-state battery technology. Plus, the shareholders will need to be extremely patient and have a years-long investment time horizon.
If you’re on board with that, then feel free to consider a position in Solid Power. For all we know, the sub-$10 share price might turn out to be a once-in-a-lifetime bargain.
On the date of publication, David Moadel 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.