What happened
The penultimate trading day of 2022 brought a sigh of relief for investors in shares of Enovix (ENVX 0.45%), QuantumScape (QS 2.56%), and ChargePoint Holdings (CHPT 1.15%). As of 11:45 a.m. ET Thursday, while QuantumScape and ChargePoint stocks were trading 6.3% and 7.2% higher respectively, Enovix stock was up a solid 13.7%.
There's a common link between all of these stocks: All three are young companies related to the high-potential electric vehicle (EV) industry in some way.
NASDAQ: ENVX
Key Data Points
So what
With fears of a recession looming large, economic data is being watched more closely than ever now. This morning, the U.S. Department of Labor reported only a marginal increase in the filings for unemployment insurance for the week ending Dec. 24.
Applications for unemployment benefits are often considered a precursor to a downturn as they also serve as a proxy for layoffs. A small increase in applications for last week has, therefore, seemed to have allayed some of the investors' fears, at least for now. That's partly the reason why stocks across sectors rose today, with shares of young companies trying to make a mark in high-growth industries stealing the limelight. Enovix, QuantumScape, and ChargePoint Holdings all fall under that category.
All three stocks have fallen sharply this year, but there's a reason why Enovix stock trumped others today.
Now what
ChargePoint and QuantumScape are purely EV-focused companies. While ChargePoint is the largest EV charging infrastructure company in the U.S., QuantumScape is trying to make a major breakthrough in EV batteries with its solid-state lithium metal batteries.
Enovix, on the other hand, has a broader profile and dabbles in more than just the EV markets, which may explain why its stock rose a lot higher than the other two today. The company makes silicon-anode lithium batteries using 3D technology for higher density, and is currently focused on markets for wearables and consumer electronics like smartphones and laptops. Enovix is also building a 3D battery cell technology for the EV and battery storage markets.
The company already commenced commercial production and generated its first revenue in the second quarter of 2022. That milestone validated the commercial viability of Enovix's technology to a large extent. As of the end of the third quarter, Enovix had nine customers that have already approved the use of its battery cell in their products. To top that, Enovix had a revenue funnel of nearly $1.4 billion, meaning it could generate that much in revenue in a full production year if it can convert all of its existing customers that are either evaluating its technology or have already validated it and are designing a final product.
Comparatively, while QuantumScape also wants to tap the consumer electronics markets in the future, it is focused on EVs for now and could still be years away from generating its first revenue.
Among the three stocks, though, ChargePoint stands out from an operational point of view. The stock recently took a hit after the company announced the departure of its chief technology officer, but that doesn't change the fact that ChargePoint is an already established player in the EV industry that saw its revenue surge 93% year over year in the third quarter. Encouraged, management even upgraded full-year revenue guidance to $480 million at the midpoint.
If I were to choose between the three stocks to buy today, I'd pick Enovix and ChargePoint over QuantumScape.
