$MVST Microvast – Set up for a short squeeze!

MVST has been touted on r/wallstreetbets as a meme stock, which are seen as jokes by serious investors. However, when I read up on this company, I found it to be legit. It’s a cutting edge lithium battery company with both a U.S. and Chinese counterpart. The batteries are for electric cars and charge up extremely fast, last longer, more durable, safer. With its Chinese counterpart, it is easier for this company to source the raw lithium, which is mined in China. And now, this company has a high short interest, so now is a perfect time to get in before the short squeeze (potentially gamma squeeze). With so much new hype, this could be the next GME or AMC except the fundamentals are far better, making it a potential long term investment.

Amazing Growth Potential

·   MVST expects to post revenue of $230 million in 2021 and $2.3 billion in 2025. That's 10x revenue growth

·  Their star product are their lithium titanate (LTO batteries) which can charge from 0 to 100% in only 10 minutes. It can handle 10,000 charge cycles while retaining 90% of its capacity, making it ultra durable

·  They are also researching solid lithium batteries, which would promise ultra high density (double the range of a car plus it doesn’t explode). While there are several competitors who are also in this race, MVST is the only one to have their own manufacturing capacity

·  MVST was requested by the Department of Energy to build a factory in the US for their largest order to date, which has not yet been revealed.

·  MVST has an incoming USPS/OshKosh deal allowing for as many orders they want for 10+ years.

·  If you believe that electric vehicles will one day take over (it’s already far cheaper to operate than gas), MVST will benefit from selling the batteries that go into them. There is a shortage of lithium batteries. I strongly believe the world is going green. The world is changing and lithium batteries are winners. Investing in oil companies is for losers. Biden administration push to have 50% of vehicles produced by 2030 be zero emissions.

 

Led by respected people with proven records

·  The founder of Microvast Yu Wang sold the last company he founded to Dow Chemical for a 50X + return. Dr. Stanley Whittingham, who won the Nobel Prize in Chemistry in 2019 for his work on lithium-ion batteries is on the board of directors. Dr. Mattis heads up R&D in Orlando, a brilliant woman with a load of patents. the USA COO Shane Smith is an ex submariner Naval academy and worked in the tech industry and their German COO Sascha is an accomplished business development person. Daimler is rumored as a potential partner along with others mentioned above and many not mentioned yet.

 

Short Interest

The short interest has been climbing but as far as the latest data, we can only deduce it. We know this because the margin for short selling it is basically 100%, and they are out of shorts to sell.

 

Risks

If MVST is not able to source enough lithium to make their batteries, then they will be limited in how many they can make and sell. There is a shortage of lithium starting and people are trying to invent new battery technology that doesn’t require lithium (but it’s not happening anytime soon). Any move away from lithium is bad for MVST.

 

When to sell the stock after buying in

When to sell the stock depends on whether there is a squeeze and it quickly becomes way overvalued (lock in profits), or there is a steady climb (long). The company might also get bought out before it goes to the moon, making for some quick profits anyway. It’s not possible to value a company with so many big things going on, but it’s certainly much higher than it is now.

A good alternative to buying the stock is to sell puts on it. The premium is very good. It's low risk as you either collect the fee or own the shares at a great price (while still collecting the fee). All in all, if I was expecting this stock to go to the moon, it's better to just buy the shares outright.

[Chart]

It’s a nasty looking chart, but there is sign of recent momentum. Keep in mind that July 26, 2021 (at $8) is when it started trading as ticker MVST, so ignore whatever is before it. Right after MVST started trading, the China crackdown happened and MVST, doing their production in China, got some negative sentiment. Then Morgan Stanley gave MVST a $6 price target, saying that they might have problems with execution, so that’s when the first short squeeze happened. The next one is being set up at the time of this writing. It’s at $11 now, let’s see where it is in 3 weeks. Even if the short doesn’t happen, you are left holding a quality growth company for a low price.

Update on September 7, 2021:

It did short squeeze 16% today, but is now back to $11. I was 3 weeks early but now I am getting better at predicting short squeezes.