ENVX - Enovix: Zombie Firm On Declining Liquidity And Heavy Cash Burn

2024-04-02 11:33:28 ET

Summary

• Enovix's declining liquidity poses a structural problem to its long-term bull case.
• The company's cash position has significantly dipped over the last two quarters and its negative cash flow suggests it may struggle to raise further capital without dilution.
• Short interest in Enovix remains high and the stock will likely continue to decline.

I'm now bearish on Enovix ( ENVX ) on its declining liquidity position, debt burden, and murky pathway to commercialization of its consumer gadget batteries. The company held total cash and cash equivalents of $306.8 million at the end of its fiscal 2023 fourth quarter, down a material $64.5 million sequentially and from a peak of $409.2 million just two quarters ago at the end of the 2023 second quarter. ENVX is essentially a near-zero revenue firm, hence, timelines for commercialization are still just timelines as continued quarters of cash burn look set to push the ticker into a zeitgeist defined by falling investor sentiment and an increasingly shorter cash runway. To be clear, this is a $1.35 billion firm that generated a negative gross profit of $10 million and a net loss of $60 million during its fourth quarter....

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