Northvolt has come a long way since its founding in 2017 by two former Tesla (TSLA -4.04%) executives. The Swedish company is quickly becoming one of Europe's top battery makers for electric vehicles (EVs).
Northvolt has the backing of several of Europe's biggest automakers and some of Wall Street's most notable names. They've helped provide the initial funding to build out the company's manufacturing sites. It has grand plans to build more battery manufacturing plants and recycling facilities over the coming years.
Northvolt is hoping to tap the public markets for additional funding by completing an initial public offering (IPO), which could come as early as 2024. It could be one of Europe's biggest IPOs in recent years. Many investors are already starting to get charged up about its potential blockbuster IPO. Here's a look at what you need to know about Northvolt and how to potentially buy its stock ahead of its IPO.
IPO
Is it publicly traded?
Is Northvolt publicly traded?
Northvolt wasn't a publicly traded company as of late 2023. It was still privately held and counted several well-known companies among its investors, including Goldman Sachs (GS -0.14%), Volkswagen (OTC:VWAPY), and BMW (OTC:BMWYY).
When will it IPO?
When will Northvolt IPO?
Northvolt was getting close to putting its name on the IPO calendar in late 2023. The Swedish battery manufacturer had hired Rothchild & Co. to advise it on the IPO process. It had also invited investment banks to make a bid for a role in its IPO. Depending on market conditions, the company could go public as early as 2024, likely initially listing its shares on the Stockholm exchange.
How to buy
How to buy Northvolt stock
Since Northvolt isn't a publicly traded company yet, you can't buy shares of the EV battery maker in your brokerage account.
However, accredited investors (i.e., high-net-worth individuals or those with high incomes) can sometimes buy pre-IPO shares of companies like Northvolt on secondary platforms such as EquityZen or Forge Global (FRGE -2.45%). Accredited investors who really want to get in ahead of its upcoming IPO should check out those platforms to see if they have shares of Northvolt available to buy.
Nonaccredited investors will need to wait a little longer for the company to complete its IPO, which could come as early as 2024. In the meantime, those interested in the electric vehicle battery company could consider buying shares of one of its publicly traded rivals to start capitalizing on that market opportunity now. Here are three options to consider:
Tesla
Northvolt's founders left Tesla to build an electric battery company that could challenge their dominant former employer. Tesla is a leader in the space, building batteries for EVs and energy storage (Powerwall). It's also a leading EV maker and solar panel maker. Tesla is investing heavily in building additional battery manufacturing capacity in the U.S. and Europe. It's also investing in innovation to build better batteries at lower costs. Its 4680 battery cell design could reduce production costs by more than 50%.
BYD
China's BYD (OTC:BYDDF) is one of the world's leading producers of rechargeable batteries. BYD is an integrated company that also manufactures and sells hybrid and battery-powered cars, buses, trucks, and monorails. The company also has a very notable investor: Warren Buffett. His company, Berkshire Hathaway (BRK.A 0.95%)(BRK.B 0.9%), held almost $2.5 billion worth of BYD shares as of late 2023.
QuantumScape
QuantumScape (QS -2.9%) has worked to develop a better battery for more than a decade. It built a technology that makes batteries safer while charging faster and lasting longer than traditional lithium-ion batteries. The company started shipping its first prototype cells to customers at the end of 2022. It has since started developing its first commercial product, QSE-5, which it's working to launch with a potential customer in the automotive sector.
Those who want to invest in one of these Northvolt alternatives can purchase shares in any brokerage account. Here's a step-by-step guide on how to invest in stocks like Northvolt.
Open a brokerage account
You'll have to open and fund a brokerage account before buying shares of any company. If you haven't opened one yet, here are some of the best-rated brokers and trading platforms. Take your time to research the brokers to find the best one for you.
Figure out your budget
Before making your first trade, you'll need to determine how much money you want to invest. You'll then want to decide how to allocate that money. The Motley Fool's investing philosophy recommends building a diversified portfolio of 25 or more stocks you plan to hold for at least five years. You don't have to get there on the first day. For example, if you have $1,000 available to start investing, you might want to begin by allocating that money equally across at least 10 stocks and then grow from there.
Do your research
It's essential to thoroughly research a company before buying its shares. You should learn about how it makes money, its competitors, its balance sheet, and other factors to make sure you have a solid grasp on whether the company can grow value for its shareholders over the long term.
Place an order
Once you've opened and funded a brokerage account, set your investing budget, and researched the stock, it's time to buy shares. The process is relatively straightforward. Go to your brokerage account's order page and fill out all the relevant information, including:
- The number of shares you want to buy or the amount you want to invest to purchase fractional shares.
- The stock ticker (TSLA for Tesla, BYDDF for BYD, and QS for QuantumScape).
- Whether you want to place a limit order or a market order. The Motley Fool recommends using a market order since it guarantees you buy shares immediately at the market price.
Once you complete the order page, click to submit your trade and become a shareholder in a publicly traded company benefitting from the EV battery trend.
Investors would follow a similar process to buy an IPO stock like Northvolt when it goes public. Once shares become available, select Northvolt's chosen stock ticker to buy shares through your brokerage account.
Is Northvolt profitable?
Is Northvolt profitable?
Privately held companies like Northvolt don't need to disclose their financial results to the public. However, the company publicly released its 2022 annual report, which contained financial information.
Northvolt reported more than 1 billion Swedish krona (about $104 million) in net sales in 2022. That was up nearly 60% from 2021. However, the company posted a 3.3 billion krona loss (-$311 million) before taxes in 2022, triple its 2021 reported losses. The company is losing money as it scales up its battery manufacturing capacity, which should reduce costs over the long term.
The company's revenue should continue growing briskly. Northvolt signed contracts for a staggering $55 billion in future orders from key customers. Meanwhile, it secured more than $8 billion in financing to build additional manufacturing facilities and battery recycling sites. As the company builds additional capacity, its growing scale should reduce costs, which should enable Northvolt to get on the road to profitability in the coming years.
Should I invest?
Should I invest in Northvolt?
Most people can't invest in Northvolt yet because it hasn't completed its IPO. However, that could happen as early as 2024, giving people interested in investing in the battery company some time to conduct their research.
Research is an important step. It will either make you more confident that an investment can deliver outsize returns or change your mind about buying a stock.
To help jumpstart your research process, here are some reasons you might want to invest in Northvolt's IPO:
- You want to invest in a company capitalizing on the massive electric battery opportunity.
- You like to invest in founder-led companies.
- You think Northvolt can deliver accelerating revenue growth in the coming years.
- You believe the company will eventually turn the corner on profitability.
- You think the company's technology (sodium-ion batteries) will prove superior to existing battery technology based on lithium.
- Northvolt would help you diversify your portfolio by adding a non-U.S. stock.
On the other hand, here are some reasons you might decide not to invest in Northvolt when it goes public:
- You're not sure the company's technology will prove superior.
- You'd rather not invest in a company headquartered outside the U.S. that will likely list on a foreign exchange.
- You're not sure if the company will ever be able to turn the corner on profitability.
- You're concerned that Northvolt's pre-IPO valuation of $20 billion seems high for an unprofitable company that is not yet generating much revenue.
ETFs with exposure
ETFs with exposure to Northvolt
Since Northvolt was still a privately held company in late 2023, you couldn't passively invest in its stock through an exchange-traded fund (ETF) yet.
Exchange-Traded Fund (ETF)
However, people interested in investing in the EV battery space have a few lithium and battery technology ETFs they could consider buying to capitalize on the trends benefitting Northvolt. Two top options are:
- Global X Lithium & Battery Tech ETF (LIT 1.2%): The ETF invests in companies involved in mining and refining lithium and battery production. It held 40 stocks in late 2023, led by Albemarle (ALB -0.26%), TDK (TTDKY -2.56%), and Quimica (SQM -0.09%). The fund had a 0.75% ETF expense ratio.
- Amplify Lithium & Battery Technology ETF (BATT 0.13%): The ETF holds companies that make money developing, producing, and using lithium battery technology. The fund held shares of nearly 90 companies in late 2023, led by Tesla, BHP Group (BHP -0.23%), and Contemporary Amperex Technology. The ETF had a 0.59% expense ratio.
The bottom line
The bottom line on Northvolt
Northvolt holds a lot of promise. The electric vehicle battery manufacturing company has already booked $55 billion of future orders for its batteries, which should drive accelerated revenue growth in the coming years, so it's one of the more widely anticipated IPOs. If the company can deliver on its promise, Northvolt could provide investors with supercharged returns after it goes public.
Investing in Northvolt FAQs
Who does Northvolt supply to?
Northvolt has secured agreements to supply $55 billion in batteries to customers in the future. Some of its key customer supply agreements are with BMW, Volkswagen, and Volvo.
Who are Northvolt's competitors?
Northvolt's competitors are the leading battery manufacturing companies. The top five EV battery manufacturers in 2023 were Contemporary Amperex Technology, LG Energy Solution, BYD, Panasonic (OTC: PCRFY), and SK Innovation.
What does Northvolt do?
Northvolt is an electric vehicle battery manufacturer. The company developed a state-of-the-art sodium-ion battery, which is more cost-effective, more sustainable, and safer than traditional lithium-ion batteries. It supplies batteries to several European vehicle manufacturers.
