I’m back! And for the first time ever, I have a LONG DD (well not in the sense of length, this one is pretty short in fact)! Let’s get this out of the way first: No, I didn’t "invent" this play. I’m not trying to claim paternity of anything. In fact, pretty much all my DDs come from other people’s ideas that I dig deeper and when my own research come to the conclusion that it’s a high potential play, I go on with a DD. Is this another Marc Cohodes idea like CVNA? Well, yes, my original "tip" for this play came from Cohodes but my passion for CVNA came way before he jumped on the bandwagon, thanks to my bae u/LordBrosephYoloson. Oh and I'm ABSOLUTELY NOT interested in the loss porn you might incur with this stock, so put on your big girls pants! Ok, now that we got this out of the way, let’s get to it.
What they do Enovix design, develop and manufacture advanced silicon-anode lithium-ion batteries for a variety of usages. Their unique patent allows for higher-density, faster charging and their BrakeFlow technology that prevents overheating and thermal runaway that you see in lithium-ion incidents where batteries catch fire. Enovix is also developing its 3D cell technology and production process for the electric vehicle and energy storage markets.
Management Enovix current CEO, Raj Talluri, joined the company in January 2023. He previously was senior vice president and general manager of the Mobile Business Unit at Micron and before that, Senior Vice President and General Manager of Qualcomm’s IoT business unit. Recently hired, Raj has already made some major moves since his arrival: received approval of their Gen2 Line and made multiple investors presentations.
There's a new sherriff in town
You may also hear a lot about their chairman, legendary T.J. Rodgers who was CEO of Cypress Semiconductor for 34 years. He currently owns more that 20,000,000 shares of ENVX and regularly adds significant positions over time.
The Stock Enovix was established in 2007 and became public in 2021 through a SPAC (I know, I know). They currently have a market cap of about $1.6B. The stock has been trading between $6.50 and $39.48, the former being early in 2023 when the previous CEO held a pretty bleak investors’ presentation and the later at the peak of the market in late 2021. Let’s get back to the recent moves: in January, the previous CEO held an investor’s presentation where he pretty much laid all the potential risks on the table: challenges of scaling production, challenges in having reliable production, potential need for additional capital, delays in the Gen2 production line. Some might argue they kitchensinked it to be able to restart from a clean slate (with a new CEO). Then in February, ENVX reported earnings and the message delivered by the new management was a lot more positive: they have enough cash to cover operations for a bit and are working on partnerships to fund production, they would get approval for Gen2 Line by March 15th and provided production forecast of doubling production every quarter for the rest of the year. Before going any further, note that this stock is VERY volatile. Swings of 5%-10% are relatively common.
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Big drop on that investors' presentation, followed by slow recovery
A DD is impossible without mentioning short interest: Short interest for ENVX is 18% and S3 Shirt Interest is 15%. It’s still somewhat elevated for this type of stock with about 3 days to cover on current volume. Not great, not terrible.
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Not great, not terrible
Valuation No, this is NOT a value play. Market cap of $1.6B, revenue of $6M (you read that right), EBITDA negative at -120M and negative FCF at -82M. All that adds up to an EPS of $-0.91. Gah!! Good news is that they don’t have debt. So you can see that this is a very speculative play entirely based on their growth but even more on their ability to scale their production while maintaining output reliability. The other asset that they have as a high tech company is their patents. There are currently no competitors that have a similar combination of technologies allowing for high-density, fast changing and overheating/fire safety.
Potential Alright, this is where the juice is. I don’t know for you, but when I watch those Apple events about new iPhone, all I’m thinking is "I don’t need one more camera on my phone, I don’t care if it’s 1 micron thinner, I just want the battery to last a full day of usage without having to charge it". Whether you do long flights, spend the day in an hospital waiting room or whatever else. I’m a big Apple fan but I don’t have an Apple Watch because no way I’m taking off and charging my watch every day. And it’s also why I’m shopping a new ICE engine car instead of an electric one. Needless to say, if they are able to pull off production, we’re talking of about 30% more battery capacity AND much faster charging in a use case for phones. One place they also excel is in wearables: even smaller batteries, that does not get too hot. They also have a technology that allows for multiple form factors that could be used in applications like VR glasses or smartwatches. There is also the security component: while traditional lithium-ion batteries are subject to overheating and sometimes catching fire, you can literally drill through an Enovix battery while it’s being used with almost no noticeable impact. A side benefit of batteries not catching fire is that it would be possible for ENVX batteries to be shipped through cargo planes. The other aspect of Enovix potential is EV batteries. While they are not planning on any production before 2025-2026, they are working on the development and samples of EV batteries. Of course, Enovix as a car battery would represent a significant leap both in terms of capacity and security (remember those Teslas catching fire). Still, even if EVs have been on their roadmap even before they went public, Enovix is first and foremost a mobile battery play.
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Drill baby, drill!
Clients So, who are the clients? Well, believe it or not, it a complicated question. We do know of some current clients: Garmin, Dell, Department of Defense,.. However, up until recently, ENVX were very flexible with prospective clients, signing NDAs even preventing of identifying the clients. All that investors would get is generic sector these prospects are in and a ballpark of their market cap. Names that were rumoured are Apple, Meta and Samsung among others. It is likely that Samsung is expecting samples from Gen1 Line to potentially submit firm orders from Gen2 Line.
Catalysts For the stock to really climb up, the catalyst that the market is waiting for is news/development about their new production line in Malaysia. Subsidies/tax breaks from the Malaysian government, partnership with a client for the first productions, news on timelines, inauguration, etc. After that, any client announcement would be a big deal but it’s impossible to predict the timing on this. For smaller catalysts, there are of course analysts price targets/ratings and insider purchase (their chairman of the board buys A LOT of shares). Earnings are absolutely not a catalyst unless they happen to announce new clients at that moment.
Risks / Bear case Since this is a very speculative and high risk play, you can of course expect a lot of bear cases. I think there are two main risks above all the smaller one inherent to non-profit generating companies. First, ENVX could run out of cash. In fact, if they decide to scale up using their current model, they WILL run out of cash and will need to raise capital. The new CEO however has been clear: he wants to develop partnerships with potential clients to help inject liquidity in the company and thus offer clients a product fully customized for their needs. But what if no potential client bites? Well, in that instance, the only way for Enovix to get out of the situation would be to raise capital, likely through a share offering. The second one is less likely but has much bigger impact: what if they go through all of this, set up their Gen2 line, get a partnership or two, start production and then realize that they can’t reach their scalability goals, either due to supply chain issue or just insufficient yield? If that happens, I think the stock is toast. There is also just one thing that hurt me a bit when the new CEO joined the company: the decision to manufacture in South East Asia (Malaysia) instead of in the US. This type of manufacturing is pretty sophisticated but if TSMC can manufacture in the US and get all the benefits of it, why not Enovix? I guess the rational answer is in the level of maturity of Enovix and that they will eventually get to a point where it will make sense to manufacture in the US. It’s hard to find other obvious bear cases. Maybe if a competitor comes up with a battery that also higher-density? It’s not impossible and would likely not come with all the benefits of ENVX technology but maybe no one would care and would just go with that "other" new technology. Finally, their previous CEO still has 1.3M shares and since the split with the company was maybe a bit tense, I can see him sell his position over time.
Price Target I personally don’t do price targets. I give very little value to analysts targets but in case you’re curious, PTs for ENVX vary between $19 and $100. All ratings are either "Buy" or "Overweight"
That's A LOT of Copium here...
Positions Shares, a small truck of it for now. Wouldn’t play options on it, but if I would have to, I would go with something like ATM leaps I guess. After a big run recently, I would expect a pullback in the $10-ish. And before you SirJack all-in. please, please read the Risk section of their latest 10-K, I'm sure it will change your mind!
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Links: Enovix 10-K

This is my updated loadout, I went from shotgun only to wanting both a shotgun and AR build. I'm using the just buster(shotgun) and the siege breaker AR with the gagets adrenaline rush and slow field, I don't have Rex Jonsey so k cand use bftp although I have the perk and the armour constructor. I'm in canny valley right now so how is this build?