What happened
Shares of battery company Enovix (ENVX 0.84%) dropped as much as 44.4% in early trading on Wednesday after it reported third-quarter 2022 results. Shares are still trading down 40.2% on the day at 12:30 p.m. ET.
So what
For the third quarter of 2022, revenue was $8,000 (you read that right) and net loss was $82 million, or $0.53 per share. Management said it expects revenue for 2022 to be between $6 million and $8 million, primarily from service revenue.
Investors weren't expecting a profit in 2022 and revenue guidance is in line with expectations, but they weren't expecting an announcement the company will put more effort into Gen2 technology over improving Gen1 technology. This likely means that revenue scaling will take longer than expected.
Now what
In a letter to shareholders, management said that Gen2 production is expected to start in late 2023 at best. This means the company will need to survive on the $349 million in cash on the balance sheet until then, which may be a stretch. The company has used over $91 million in cash in the first three quarters of the year and will spend more on installing capacity next year.
Investors don't like delays and they don't like the prospect of being diluted in future stock offerings. Given the trajectory Enovix is on, it wouldn't be surprising to see a long wait before production reaches scale and that likely means more stock sales are in the future.
