We came across a bullish thesis on Microvast Holdings, Inc. (NASDAQ:MVST) on Value Investing Subreddit Page by Crazerz. In this article, we will summarize the bulls’ thesis on MVST. Microvast Holdings, Inc. (NASDAQ:MVST)’s share was trading at $2.07 as of Dec 31st.
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Microvast (NASDAQ:MVST) is a compelling investment opportunity, currently trading at a steep undervaluation despite robust fundamentals. With a market cap of $390 million and $400 million in annual revenue, the stock presents a rare chance to buy a profitable company valued below its revenue. In Q3, MVST reported $101.4 million in revenue, a 26.6% YoY increase, alongside an impressive gross margin of 33.2% and net profit of $13.2 million, highlighting its ability to scale profitably. For 2024, the company projects 15-18% revenue growth with gross margins of 25-30%, driven by its innovations in solid-state batteries and silicon-based cells.
Compared to peers like KULR, whose market cap-to-revenue ratio is 7.5x, MVST’s current valuation implies significant upside potential. A similar valuation would suggest a market cap of $3 billion, or a 10x return from current levels. Historical precedents of underappreciated growth stocks re-rating quickly further support this bullish thesis.
Short-term catalysts include Q4 earnings, where MVST has guided revenues between $90-$95 million, and its continued expansion into the EU market, which now accounts for 60% of revenue, reducing its previous reliance on China. While concerns about potential dilution and sequential revenue declines exist, MVST’s profitability ensures any capital raised will fuel growth rather than sustain operations. Moreover, seasonal fluctuations do not overshadow the company’s long-term trajectory.
Trading at $1.20, well below its book value, MVST offers an asymmetric risk/reward opportunity. Support around $1 and resistance at $1.40 indicate a potential breakout fueled by earnings momentum. With a diversified customer base and strong fundamentals, MVST could reach a $10 target, delivering massive returns for early investors.
Microvast Holdings, Inc. (NASDAQ:MVST) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 7 hedge fund portfolios held MVST at the end of the third quarter which was 14 in the previous quarter. While we acknowledge the risk and potential of MVST as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MVST but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.