Shares of PureCycle Technologies (PCT 3.47%) rocketed 24.2% today as of 11:49 p.m. ET.
PureCycle is a young company founded 10 years ago, which has technology that can recycle waste polypropylene and turn it into pure plastic resin, which can then be turned into plastic feedstock for all kinds of end-use cases.
Today, the company announced a big investment from some high-profile investors, leading to a big surge in the stock.
NASDAQ: PCT
Key Data Points
PureCycle looks to expand
Today, PureCycle announced it had raised $300 million in the form of convertible preferred stock, which pays a 7% coupon to the holders and converts to common equity at a 30% premium to the stock's 10-day volume-weighted average price prior to yesterday. Among the investors in the preferred shares are Sylebra Capital Management and Samlyn Capital, LLC, which participated in a prior financing round last September. In addition, other hedge funds and family offices, including Stanley Druckenmiller's Duquesne Family Office, will also participate in the current funding round.
In conjunction with the capital raise, PureCycle also announced the expansion of its second U.S. facility in Augusta, as well as the construction of two new international recycling plants in Thailand and Antwerp. The funding will go toward building these new facilities, which will come online over the course of the next few years. Once they are fully constructed, PureCycle believes it will be able to generate $600 million in EBITDA (earnings before interest, taxes, depreciation and amortization) annually by 2030.
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PureCycle is a stock to watch
Investors bid up the stock nearly all the way to the preferred shares conversion threshold today, likely encouraged by the robust expansion plans, financial targets, and participation from a famous investor.
After today's run, the company has a market cap around $2.6 billion, although that will go up by another $300 million if and when the preferred shares convert to common stock.
An enterprise value around 5 times that 2030 projected EBITDA would certainly still be a cheap price to pay for PureCycle, but remember, EBITDA figures leave out some real costs, especially in capital-intensive industrial businesses, and there is also the time value of money to consider, as the future profit projections need to be discounted back a good five years.
