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Why Solid Power Stock Surged Today

By Keith Noonan – Jan 14, 2022 at 12:05PM

Key Points

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Investors are feeling the charge after a recent SEC filing.

What happened

Shares of Solid Power (SLDP -2.16%) soared on Friday. The solid-state battery company's stock was up by as much as 12.4% in the session and ended the day up roughly 9.2%.

The big gains for the company's shares seem to stem from a Form 4 filing on Thursday with the Securities and Exchange Commission (SEC) showing that CEO Doug Campbell had exercised options to purchase more than 5.09 million shares of the company's common stock.

A person charging an electric vehicle.

Image source: Getty Images.

So what

Campbell exercised his purchase option on Jan. 12, and the subsequent disclosure is being interpreted as a bullish signal for the stock. As famous investor Peter Lynch has said, "Insiders might sell their shares for any number of reasons, but they buy them for only one: They think the price will rise." Even with recent gains, Solid Power stock is still down roughly 38% since it went public by merging with a special purpose acquisition company in December.

Now what

Solid Power now has a market capitalization of roughly $1.37 billion and trades at roughly 465 times this year's expected sales. That's an astronomically growth-dependent valuation, and it sets the stage for volatile price fluctuations in the near term, but the company has a path to delivering explosive performance. 

Battery technology is at the heart of the electric vehicle revolution, and it will play an important role in other major renewable energy and technology trends. Solid Power's solid-state batteries appear to be offering major leaps forward in terms of charging speed, longevity, and other key factors, and the company has attracted investment from automotive industry leaders including Ford and BMW.

Solid Power definitely looks like a high-risk stock, but its current share price could come to look very cheap if the company becomes a major components provider for leading auto players. 

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool recommends BMW. The Motley Fool has a disclosure policy.

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