What happened
Enovix (ENVX 3.25%) stock skyrocketed today and was trading 10% higher as of noon ET after surging a jaw-dropping 24% earlier in the morning. Enovix is a young company that makes silicon-anode lithium batteries using 3D technology for wearables, smartphones, and computing devices, and its latest updates suggest its products are in high demand.
So what
Enovix shipped its first commercial battery cell units in 2022, and the company is now striving to move from a research and development stage to production. In a letter to shareholders released alongside its fourth-quarter numbers yesterday, Enovix's management announced that the company shipped a record number of 4,442 battery cells in the fourth quarter, exceeding its own estimates.
Importantly, Enovix now plans to more than double its battery cell production sequentially to 9,000 units in the first quarter of 2023 and further maintain the trend in every quarter through 2023. If it hits its goals, the company could produce 180,000 wearable-size cells this year at its only existing manufacturing unit, Fab-1.
Meanwhile, Enovix also plans to start building pre-production smartphone-size cells in 2023 and send them for customer qualification. Although these cells will not generate any revenue for the company, it'll be a milestone as Enovix will enter its second market after wearables.
Now what
Enovix's focus in 2023 will be on capacity expansion as it adds a production line for customized battery cells at Fab-1 and sets up another manufacturing unit in Southeast Asia.
Enovix estimates its total addressable market (TAM) to be worth $23 billion by 2026. The company's current revenue funnel of around $1.42 billion is just about 6% of TAM. A revenue funnel indicates the potential revenue Enovix could earn in a full production year from all the customers that are evaluating its technology or have already validated it and are designing final products that will use an Enovix cell.
Enovix is also making customized cells and expects them to be an important component of revenue in 2024 and beyond. In Q4, it shipped custom cells to the U.S. army and a mobile communications customer.
Given the backdrop, Enovix looks like an intriguing company and its production guidance for 2023 is impressive, which is why the market bid the stock higher today.
