How to Invest in Redwood Materials Stock

Looking for opportunities to prosper from the increasing presence of lithium-ion batteries, growth investors have set their sights on Redwood Materials stock. The company, created in 2017 by Tesla co-founder J.B. Straubel, is driving to advance a more sustainable future by recycling lithium-ion batteries, refining the battery materials, and remanufacturing them for future use.

The opportunity is considerable. According to one estimate, the lithium-ion battery recycling market is expected to increase at a compound annual growth rate of almost 31%, from about $6.5 billion in 2022 to $35.1 billion in 2031.

While it's still the early innings for Redwood Materials, the company has garnered attention from leading carmakers over the past two years. The company received a notable investment from Ford (F -1.92%) in 2021. In 2022, Redwood Materials partnered with Volkswagen to assist in recycling end-of-life electric vehicle (EV) batteries. More recently, Redwood Materials announced in 2023 that it will work with Toyota (TM 0.6%) to develop a recycling solution for its hybrid EV batteries.

For people looking to power their portfolios with Redwood Materials stock, there are a variety of things to consider, such as how to buy shares of Redwood Materials, when it will hold its potential initial public offering (IPO), and if there are alternative investment opportunities.

Is it publicly traded?

Is Redwood Materials stock publicly traded?

As of early 2024, Redwood Materials stock was not publicly traded, so investors looking to pick up shares are currently out of luck.

Besides the equity that insiders hold in the company, financial institutions like Goldman Sachs (GS 1.79%) and T. Rowe Price (TROW 4.77%) also hold stakes in Redwood Materials. After its latest Series D funding round, Redwood Materials had raised more than $2 billion in private investments.

When will it IPO?

When will Redwood Materials IPO?

For people interested in significant growth opportunities, IPO stocks represent unique options. So, investors who have an eye on Redwood Materials may be especially motivated to buy the stock during its IPO.

Unfortunately, for investors looking to charge up their holdings with Redwood Materials, there is no indication that the company plans to launch an IPO soon. While there are a variety of exciting companies that plan to hold their IPOs this year, Redwood Materials is not on the IPO calendar.

How to invest

How to buy Redwood Materials stock

Although people committed to buying Redwood Materials stock may be discouraged to find that this opportunity is unavailable since it's still a privately held company, there are other investment options to pique their interest.

Step 1: Open a brokerage account

Buying stock is easy, but it requires some work to get started. First and foremost, investors must have a brokerage account before buying shares of any stock. A variety of options exist from which investors can choose, but inexperienced investors may want to look for one like Fidelity, which offers zero-commission online stock trades.

Step 2: Figure out your budget

Deciding to invest in stocks is a great step towards building personal wealth, but successful investors carefully weigh their individual financial situations before clicking the buy button. A single stock purchase may be right for some, while others may choose to slowly build a position over time.

Step 3: Do your research

Investors have ample resources at their fingertips to investigate different potential stock purchases. Although Redwood Materials isn't an investment option for ordinary retail investors, there are similar companies that investors will find appealing.

1. Ford

People interested in Redwood Materials can gain indirect exposure to the company by picking up shares of Ford, which made a $50 million investment in Redwood Materials in 2021.

According to Ford and Redwood Materials, the companies "plan to work together on the best approach to collect and disassemble end-of-life batteries from Ford's electric vehicles for recycling and remanufacturing to help reduce the cost associated with battery repairs and raw materials to manufacture all-new batteries."

Ford is making a greater push toward expanding its EV presence. Including its commercial vehicle offerings, Ford plans to have a capacity of 2 million EVs by 2026 -- a big jump from the 100,000 EVs it had available in 2022.

2. LanzaTech

Instead of batteries, LanzaTech (LNZA 7.73%) focuses on the recycling of carbon. As of early 2024, LanzaTech operated seven commercial facilities where it captures carbon emissions and converts them into ethanol. After repurposing the emissions, LanzaTech provides the recycled carbon to companies that use the material in a variety of products, ranging from aviation fuel to apparel.

Illustrating how LanzaTech's recycled carbon products are in demand, the company has inked agreements with several prominent partners, such as leading apparel companies like Zara (owned by Spanish company Industrio de Diseno Textil SA) and H&M (HNNMY 0.53%). Besides clothing businesses, LanzaTech has partnered with chemicals company Dow (DOW 1.51%) and airline Virgin Atlantic (SPCE 3.15%).

3. PureCycle Technologies

Instead of carbon, PureCycle Technologies (PCT -1.39%) is dedicated to the recycling of plastics. In 2023, PureCycle Technologies commenced operations at its flagship polypropylene facility in Ironton, Ohio. The company is working toward ramping up operations to its annual production capacity of 107 million pounds of ultra-pure recycled (UPR) resin.

In addition to the facility in Ohio, PureCycle Technologies is in varying stages of development for several other plastic recycling facilities in Georgia, Belgium, South Korea, and Japan. PureCycle Technologies expects the facility in Georgia, the company's first with multiple lines of production, to commence operations in late 2024.

Profitability

Is Redwood Materials profitable?

Because Redwood Materials is a privately held company, it's not required to submit regulatory filings like publicly-traded companies. With the scant amount of information about the company's financials available, it's unclear whether it's profitable yet or not. With regard to the top of the income statement, it's possible that the company is generating revenue after it acquired Redux Recycling in 2023. Located in Germany, Redux is a lithium-ion battery recycling company that helps Redwood Materials in its pursuit of expanding its European operations.

The lion's share of Redwood Materials' future revenue will likely come from the $3.5 billion facility it's developing in South Carolina. When completed, the facility is expected to annually produce enough cathode and anode materials to power 1 million EVs. And Redwood Materials also has potential at the site to expand operations and generate battery parts each year to supply several million additional EVs.

Should I invest?

Should I invest in Redwood Materials?

Because Redwood Materials hasn't held its IPO yet, ordinary investors are not able to pick up shares. However, when the company does plan on holding its IPO, it will have to submit regulatory filings, providing investors with greater insight into its financials. At that point, investors will be able to better ascertain if an investment in the company is right for them.

ETFs

ETFs with exposure to Redwood Materials

Since Redwood Materials isn't a publicly traded stock, investors can't gain exposure to the company through an exchange-traded fund (ETF). They do, however, have the ability to gain exposure to stocks related to waste management, recycling, and EV batteries -- areas in which Redwood Materials operates.

• Global X Lithium & Battery Tech ETF (LIT 1.45%): Including companies that operate in various legs of the lithium-ion battery supply chain, the ETF includes stocks that address lithium mining, as well as lithium battery production. Albemarle (ALB 1.65%), one of the world's largest lithium producers, is the ETF's top position, representing about 10% of the fund's holdings. The ETF has an expense ratio of 0.75%
• Invesco WilderHill Clean Energy ETF (PBW 3.28%): Through its 75 holdings, this ETF provides investors with broad exposure to renewable energy-oriented stocks. Battery stocks like Solid Power (SLDP 4.27%) and Amprius Technologies (AMPX 8.07%) represent two of the fund's largest holdings, while Brookfield Renewable (BEPC 0.09%), which operates a diverse portfolio of green energy assets, also makes up a sizable position. The ETF has an expense ratio of 0.66%.
• VanEck Environmental Services ETF (EVX -0.43%): For investors interested not only in recycling but waste collection in general, the VanEck Environmental Services ETF is a worthwhile consideration. Besides industry stalwarts like Waste Management (WM -1.22%) and Republic Services (RSG -0.85%), the ETF includes recycling specialist Darling Ingredients (DAR -1.3%) among its top holdings. The ETF has a modest net expense ratio of 0.55%.

Related investing topics

The bottom line on Redwood Materials

In light of its considerable market opportunity, progress towards developing a sizable facility in South Carolina, and partnerships formed with industry-leading automakers, it's no wonder that investors are interested in Redwood Materials. They'll have to wait before they pick up shares, though. Since it's still a privately-held company and there's no indication that an IPO is on the horizon, investors will have to find alternative investment opportunities. Fortunately, though, there's no shortage of options -- from Ford to individual growth stocks like LanzaTech and PureCycle Technologies to various ETFs that focus on batteries, green energy, and waste management.

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