Why Microvast Stock Soared Today

The supplier of battery solutions is riding the growing need for lithium-ion battery cells.

The supplier of battery solutions is riding the growing need for lithium-ion battery cells.

What happened

Shares of battery-technology company Microvast Holdings (MVST 19.05%) soared more than 28% early Tuesday after the company reported its first-quarter update last night. Those gains retreated some, but the stock held onto a gain of 16.5% as of 3:35 p.m. ET. 

So what

Revenue in the company’s first quarter soared 145% versus the prior-year period. While that performance exceeded its own expectations, the company maintained its full-year revenue outlook for growth ranging from 35% to 45% compared to 2021. Investors seem to be taking that in stride and could be seeing Microvast as simply being conservative. The company noted that guidance “could be impacted if the macro backdrop of increasing inflation, supply chain disruptions, conflict in Ukraine and COVID restrictions in China deteriorates further.”

Electric vehicle with battery plug showing full charge.

Image source: Getty Images.

Now what

Investors are apparently satisfied with the order backlog and with the progress of Microvast’s manufacturing capacity expansions in both China and Tennessee. That capacity should begin coming online in Q4 in the case of the Chinese plant. The U.S. facility will begin ramping up its increased battery production in 2023’s Q3.

Another factor in today’s share-price spike was the recent stock performance. Prior to today’s bounce, Microvast stock had dropped 40% since the start of 2022. But Microvast is sitting on an order book that grew 85% compared to 2021’s Q1 as of March 31, 2022. Management also said it is “very optimistic” regarding incoming orders during the rest of 2022.

Investors seemed to think the business outlook means the stock had dropped enough, and it was a good time to buy in.

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