Shares of smart building technology solutions provider Applied UV (NASDAQ:AUVI) popped substantially higher on Friday on encouraging news. Earlier in the morning, management announced the launch of its groundbreaking Fighter Flex LED solution. Fundamentally, this disruptive technology could spark a paradigm shift in energy efficiency in heating, ventilation and air conditioning (HVAC) systems. Subsequently, AUVI stock swung north on the positive implications for multiple industries.
According to the official press release, Applied UV will showcase the Fighter Flex at the upcoming AHR Expo — an HVAC industry event featuring over 50,000 attendees — on Jan. 22. Currently, the company is finalizing distribution agreements with several major international smart building technology brands.
Per the release, the General Services Administration (GSA) and the Department of Energy (DOE) selected Fighter Flex for the GSA Green Proving Ground Program (GPG). Per the government agency’s website, the GPG program represents a collaborative effort to promote sustainability.
Naturally, Applied UV expressed joy for the underlying progress and the credibility boost. Company CEO Max Munn stated the following:
“We are delighted about the immense potential with this opportunity. Given the disruptive technology in our patented Fighter Flex LED products, we are confident in our ability to capture a significant share of this market. We believe this market holds an annual sales opportunity in the hundreds of millions of dollars.”
After a tumultuous cycle following early summer 2021, AUVI stock is enjoying much-needed momentum.
AUVI Stock Offers Relevance but Also High Risks
A key reason why AUVI stock popped higher centers on the implications beyond just rewarding Applied UV shareholders. Per the company’s statement, in the U.S., office spaces typically require between 50,000 to 75,000 British thermal units (BTUs) per year per square foot for heating. Notably, other factors — including building age, insulation quality and local climate — influence heating requirements.
Further, a standard office building in a moderate climate may require air conditioning costs that can reach approximately $2 to $3 per square foot annually. By utilizing the patented UVC LED system, which offers a refined alternative to traditional mercury vapor UVC bulbs, Applied UV offers the potential to reduce energy consumption by 5% to 15%.
For an owner of a 100,000-square-foot office space, the integration of this technology could translate to about $45,000 in energy savings in the first year alone. Therefore, investors jumped on the upside potential of AUVI stock.
Still, the problem is that Applied UV represents a high-risk endeavor. In the trailing 52 weeks, AUVI stock suffered a staggering loss of 98% of equity value. Moreover, the current market capitalization sits at less than $4 million. Even by nano-cap standards — where the threshold comes in at $50 million — AUVI is an extremely speculative idea.
Why It Matters
Unsurprisingly, according to TipRanks, no analyst presently covers AUVI stock. Effectively, it’s a narrative play. That said, the North America HVAC system market size reached a valuation of $44.53 billion in 2022, per Fortune Business Insights. Further, experts project that the segment could expand at a compound annual growth rate (CAGR) of 5.4%, offering relevancy for would-be speculators.
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On the date of publication, Josh Enomoto 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.
