Liquidity Risk Model: Best short candidates
ChargePoint (CHPT) - Burns $400m annually, a figure which is rising fast. Expected to run through most of its cash balance by early to mid-2024. Forecasts expect sales to continue slowing. Not expected to breakeven until 2026.
Floor & Decor (FND) - Requires nearly immediate outside financing, primarily due to very high capex spending. Net debt $1.8bn (vs. $200m in 2018). Sales are expected to slow further during 2023.
Natera (NTRA) - Diagnostics company will run out of cash by Sep having burned $700m+ in the past year. Not expected to breakeven until at least 2028. Trades at 5x 2023 and 2024 sales.
Edition: 155
- 03 March, 2023
Industrials
Market leader with asset light model - CHPT boasts a 70% share of networked L2 charging ports in North America (7x its competitors). It has a capital-light business model with a built-in Subscription business (100% initial attach rate and +95% resubscribe rate) which provides recurring (high-margin) revenue and a significantly clearer path to cash flow positivity than many of its early-stage peers. Michael Webber models revenue at a ~50% CAGR through 2025 and ~25% through 2030 with gross margins doubling by 2024. TP $31 (50% upside).
Edition: 125
- 10 December, 2021