Amprius Technologies: Strategic Breakthroughs Achieved (Rating it Buy).

Introduction

Amprius Technology (NYSE: AMPX), a leading high-energy lithium-ion battery manufacturer, produces the most well-known energy-density cells. The company has continuously shown its commitment to research and development in its manufacturing. The company Q2-2024 has recorded progress in its fundamental and technological advancements, as discussed below.?

Based on this record progress, the company has increased its sales forecast and improved its state of affairs, which, in this regard, we rate it as a Buy.?

Technology Update: Commercialization is on the pick. ?

After years of research and development, Amprius has refined its fully-fledged prototype production line. The US Army contracted the company to develop SiMaxx batteries, which replace graphite with silicon and achieve an energy-to-weight ratio.?

The SiMaxx battery cells have passed development and qualification, and Amprius has announced its capability to supply them. The chief technology officer at Amprius states that the SiMaxx is a power source for most systems a soldier carries to replace brick-like batteries held in a backpack.?

SiMaxx is a milestone ahead in the journey of ultra-high-density batteries to power next-generation soldiers. Silicon anode has 10 times the power storage of lithium ions. This battery pack is set to be used in other industries, tapping into silicon-anode batteries with ultra-high-density storage options, such as better batteries for electric vehicles.??

Fundamental Perspective

Appointment of an independent director?

Tony” Satterthwaite's appointment as an independent director at Amprius raises confidence in its stock. Mr. Tony has 30 years of experience in the power generation and transportation industries.?

The company projects Mr. Tony to provide valuable development and customer engagement strategies for Amprius. He commits to the company that as electric mobility continues to pick up, developing a differentiated customer approach and strategic relationships will spur growth for companies in the EV industry.??

amprius.com

Mr Tony's appointment has soared Aprius stock from $1.05 to around $1.15. This follows his acumen in advising senior management on the company's next growth. For example, he is currently the Director of IDEX Corporation, The Chemours Company, National Association of Manufacturers, and Cummins Foundation. He is also a vice president at Cummins, where he is responsible for providing solutions to challenges aligned with business progress. All the companies he is leading are profitable.?

For instance, IDEX corporation's Q2- 2024 net income is US$ 0.141 Billion.?

Source: macrotrends

Increasing Cash Burn?

Notably, at US$12.52 million cash burn, Amprius Technology accrues revenue gain to cash burn. In 2024, the company's cash burn has surged to 147% due to heavy investment in the business operations. Truly, the company's revenue grew by 260%, which justifies the expenditure. With the changing clean energy transition worldwide, the company fares well with the growth in battery demand.?

Rumping up cash burn has boosted the implementation of the Army’s SiMaxx next-generation wearable battery packs. The SiMaxx is achieved by integrating battery cells to provide as much energy density as possible without adding weight.?

Amprius CEO Dr Kang Sun?affirmed that the company is committed to advanced manufacturing processes and is laying a foundation for a giga-scale factory that is?expected to be operational by 2025.

Image: CleanTecnica

Significant Partnerships?

With the rising demand for next-generation lithium-ion batteries, Amprius announced in the second quarter that it had signed a partnership with Silicon Anode Platform. This partnership is a strategic unity to manufacture SiCore rapidly and meet global production capacity. Since the partnership, the company has recorded increased demand for large quantities of cells, providing a reason for accelerating SiCore production through increased cash burn.?

Fast-forward to 2019, and Amprius will gain access to 10 million pouch cells and 125 million cylindrical cells every year. Forward-looking statements reveal the company’s position in benefitting from global mass production, ensuring timely delivery, and maintaining quality.?

Technical Perspective?

Expanded production facilities.

The company plans to spend over US$1 to US$2 million on equipment to start operations at Fremont and finalize the Colorado facility. This is part of a strategic intention to optimize the SiMaxx production process and achieve a 2-megawatt run rate by the end of 2024.?

This explains why the company has a high cash burn. The impact on cash burn was felt in Q2-2024, with revenue soaring by a record 105% year-to-year at US$3.3 million. Increased revenues are aligned to US $7.6 million on new sales during the quarter.?

In Q2, the production of SiMaxx and SiCore products increased with customer orders. For SiCore, the company partnered with large-scale manufacturers in Asia to attain the capacity of producing 500MWh for both cylindrical and pouch battery cells.?

Valuation?

Amprius stocks bottomed to 80% in the second quarter, against the S&P's gain of 9%. However, the company's stocks gained from increased sales of SiCore and SiMaxx Lithium-Ion batteries following a strategic partnership with Silicon Anode Platform.?

As pointed out above, AMPX's high selling price is due to its scaling up operations to meet the increasing demand for batteries.

Looking at competitors, the companies are at par with peers. They have a high cash burn due to significant investments at an early stage to scale up their production. For example, Amprius is still overvalued at an 8.41 P/S ratio even though its competitor Quantum Scape is ahead by a 10.46 P/S ratio.?

Data from Seeking Alpha.?

With the Q2-2024 release, analysts forecast stock performance by 2025 at US$7.17. This is based on the company's strategic breakthroughs, such as technical and product development, commercialization, and extended production. These developments are set to spur revenues to?US$60.16 million?by 2026 and the stock to trend at a US$14 stock level. This is why the stock is upgraded to Buy.?

Investment risks?

Technology Obsolensce—Lithium-ion batteries are in mass demand due to the uptake of cell phones and drones. However, Lithium-ion may be overtaken by lithium-metal batteries when companies such as QauntumScape develop light lithium-metal batteries that compete with Lithium-Ion.?

High Cash Burn—The significant increase in cash burn required to scale up production capacity could position an investor at a loss if the anticipated revenues fall from unexpected occurrences. The company cannot sustain its current operations without additional funding during its initial stages, reporting a net loss from its operations.?

High volatility-? Due to a sharp demand for batteries, Amprius Technologies stock is highly volatile. The company lost its stock position by 80% in 2024. Such a decline places investors at a high risk of losing their investment, with uncertainties around existing batteries.?