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Why Hyliion Stock Dropped Today

By Howard Smith - Feb 12, 2021 at 2:45PM

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Some investors are selling after a huge jump in the shares yesterday.

What happened

Shares of truck electrification company Hyliion Holdings (HYLN 0.57%) soared more than 30% Thursday after the company announced more efficient, higher performance battery technology for battery-electric semi trucks. 

Investors cheered the next-generation batteries, but some of those gains disappeared as shares were down 11.4% as of 1:40 p.m. EST on Friday. 

So what

Hyliion's redesigned battery module "features advanced cooling technology to enable longer battery life, higher charging rates and improved safety," according to a statement from the company. 

But today, investors may be wondering if the news was worth the $800 million increase in market capitalization it prompted yesterday. 

Hyliion battery module

Hyliion battery module. Image source: Hyliion Holdings.

Now what

Hyliion became publicly listed on Oct. 1, 2020, after completing a merger with a special purpose acquisition company. The company is working toward commercializing its Hypertruck ERX and hybrid electrification systems for class 8 semi trucks. 

It plans a net-carbon-negative product using renewable natural gas to fuel a generator that charges its battery-powered drivetrains. The company believes there is a market opportunity worth about $800 billion for semi truck conversions. 

The news of a next-generation battery system seems to show progress for the company. But until that translates to a leading market position, the kind of valuation bump the stock realized yesterday may have some investors wondering if it was too sharp a move.

Investors should look for an update on the company's business fundamentals when it reports earnings on Feb. 23 to see if the long-term strategic plan is closer to panning out.

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