Why Is Embark Technology (EMBK) Stock Up 80% Today?

  • Embark Technology (EMBK) is exploding higher on the day, with EMBK stock up more than 125% at one point.
  • Shares are rallying on better-than-expected second-quarter results, as the company curbs spending and stock-based compensation.
  • Management expects tighter operational control to improve free cash flow and expenditures.
EMBK Stock - Why Is Embark Technology (EMBK) Stock Up 80% Today?

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Embark Technology (NASDAQ:EMBK) shares are trending on Friday, as the stock explodes higher on the day. At its high, EMBK stock was up almost 126% in the session. At last check, shares are up about 86%.

So what’s driving this crazy move higher? Earnings.

The company reported its second-quarter results after the close on Aug. 11, losing three cents a share. Despite the bottom-line loss, the company beat on expectations by 10 cents a share. However, management also delivered new guidance on free cash flow spend and investors are cheering for it.

The company lowered its free cash flow spend outlook for the year to a range of $100 million to $115 million from its previous forecast of $125 million to $140 million. That said, management also lowered its stock-based compensation guidance to $60 million to $65 million from $70 million to $75 million.

Regarding these new outlooks, the company said:

“Revised 2022 Cash Flow Spend Guidance Reflects Process Improvements and Extends Operational Runway. Operational process improvements, focused hiring and efficiencies enable us to remain on track to achieve our targeted 2022 milestones and AV commercialization.”

Is EMBK Stock Out of the Woods?

For the investors who don’t know, “Embark is the longest running self-driving truck program in America.” Further, “by concentrating exclusively on the software and associated services that will power self-driving trucks, Embark offers transformative operational savings and collaborates rather than competes with carriers, truck manufacturers, and tier 1 suppliers.”

Today’s surge of more than 80% is occurring on monstrous volume, with more than 150 million shares changing hands. The previous highest reading was 26.8 million shares, which occurred earlier this month. The surge also sent EMBK stock back above the $1 mark for the first time since June 9.

The fact management expects free cash flow spend to improve and is honing in on expenses is a huge positive for Embark. That’s particularly true, as EMBK stock has suffered a peak-to-trough decline of more than 96%.

The problem? Embark doesn’t generate any revenue yet. That will have to change in order for the stock to find sustainable upside momentum. But with more than $220 million in cash and short-term investments and a market capitalization of roughly $500 million, this may be the news that investors needed to hear. Now, it’s all about delivering on those promises.

Unfortunately for EMBK stock, all of this is occurring amid a bear market. During tough times, there’s little love for companies without profit, and particularly for those without revenue. We’ll see if this earnings report changes anything.

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On the date of publication, Bret Kenwell 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.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.


Article printed from InvestorPlace Media, https://investorplace.com/2022/08/why-is-embark-technology-embk-stock-up-80-today/.

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