WBX - Wallbox: Impressive Sales Growth - And Significant Turmoil

Summary

• Today, we take our first look at electrical vehicle charging manufacturer Wallbox N.V.
• The company is seeing sales more than double on an annual basis but that has not translated into profitability.
• There also has been a lot of news flow around this 'Busted IPO' in recent months.  Enough to "buy the dip"? An investment analysis follows in the paragraphs below.

A writer who is afraid to overreach himself is as useless as a general who is afraid to be wrong. ”? Raymond Chandler.

Today, we put Wallbox N.V. ( WBX ) in the spotlight for the first time. This European based electric vehicle ("EV")-related concern is experiencing huge revenue growth and is projected to see losses drop in the year ahead. Despite this, the shares find themselves deep in " Busted IPO" territory. Is the selloff overdone or more pain ahead? An analysis follows below.

Company Overview:

Wallbox N.V. was founded in 2015 and is based in Barcelona, Spain. The company designs, manufactures, and distributes charging solutions for residential, business, and public use. Home charging solutions currently make up just over 80% overall sales. Pulsar Plus is Wallbox's best-selling charger worldwide and one of the smallest smart universal EV chargers. The company operates in three core regions: Europe-Middle East Asia, North America, and Asia-Pacific.

Wallbox came public in early October of 2021 via business combination with Kensington Capital Acquisition Corp. II, a special purpose acquisition company. This debut was on the tail end of a massive IPO/SPAC craze that was fueled to a large degree to the easy monetary policies of the Federal Reserve at the time. It ran from the second half of 2020 through the late summer of 2021. Outside the Internet Boom and Bust more than two decades ago, few periods have seen more shareholder destruction.

Like most EV concerns birthed this way, WBX has seen a great deal of shareholder value dissipate since it came public. The shares currently trade near $5.50 a share and sport an approximate market capitalization of $950 million.

Third Quarter Results:

Wallbox N.V. reported third quarter numbers on November 9th. Revenues came in at €44.1 million, an increase of 140% compared to the third quarter of 2021 as the company sold 67,000 chargers during the quarter. This was up 93% from 3Q2021. The company had an operating loss for the quarter of nearly €30 million.

Management guided to full-year 2022 revenue in the range of €154 million and €164 million. This would represent a year-over-year growth rate of between 115% and 130%. The stock sold off on this revised sales view, as previous FY2022 guidance was in the €181 million to €202 million range.

Leadership also noted that:

automotive capacity constraints are delaying electric vehicle deliveries, which in-turn has a near-term effect on the company's European and home charging businesses .

The company did start production at its first U.S. factory in Arlington, Texas during the quarter and sales in U.S. jumped 535% from the prior year period, albeit off a low base. The facility in Arlington has the capability to produce over 250,000 charger units in 2022 and projected to expand to over one million unit capacity in 2030.

Fisker Inc. ( FSR ) also named Wallbox as its global partner for home EV charging solutions in late September. This will allow Fisker EV owners to purchase Wallbox's EV chargers via Fisker's website in the U.S., Canada, and European launch markets. Wallbox also received its first orders for its Hypernova product. This is a 400kW DC fast charging station that is designed to satisfy current U.S. government subsidy requirements.

The company also expanded its relationship with Uber Technologies (UBER) in early November, a partnership dating back to the fall of 2021.

Recent Turmoil

The company has seen some volatility/change since its last quarterly report. Wallbox appointed a new Chief Marketing Officer to begin December. Then to start off 2023, the company announced that it was laying off approximately 15% of its overall workforce and initiating other cost saving measures. These efforts are projected to save approximately €50M on annual basis and move up Wallbox's journey to profitability by one year.

Analyst Commentary & Balance Sheet

The analyst community has remained sanguine on Wallbox's prospects. Since third quarter results posted, a half a dozen analyst firms including Stifel Nicolaus and Credit Suisse have reiterated Buy/Outperform ratings on the stock. Albeit half of these had downward price target revisions. Price targets proffered range from $7 to $14 a share.

Approximately three percent of the outstanding float in the shares are currently held short. The company ended the third quarter with just over €87 million of cash and marketable securities on its balance sheet against €36 million of debt. Leadership then raised an additional $43.5 million worth of funding via a private placement in the first half of November.

Verdict

The current analyst firm consensus has the company losing 51 cents a share in FY2022 even as sales soar some 120% to $172 million. Sales are expected to more than double in FY2023 as well, while losses are expected to fall below 40 cents a share within a wide range of estimates (between a loss of 7 to 91 cents a share currently).

Soon after Wallbox came public, UBS stated the shares should be valued at ten times the company's 2023 sales projections. Such was the state of hyperbole in the EV space as 2021 came to a close. This would put the shares around $20 a share under those assumptions.

Obviously that valuation paradigm have shifted significantly since that bit of hyperbole in hindsight. It is hard to find many reasons to be optimistic right now around Wallbox despite huge revenue growth. Guidance has been ratcheted down for FY2022 as has the projections for overall EV purchases in Europe, the company's biggest market. The company has a new head marketing officer and just announced significant layoffs that will need to be implemented effectively.

The company is making a big bet in expanding its fast charging capacity in North America, a wager that may pay off in the long term. Given the significant operating losses, current uncertainty in the EV space, downward price target revisions by analyst firms, and the recent turmoil at the company, there are not a lot of compelling reasons to invest in Wallbox N.V. at the present time. In addition, a fresh set of data points should be available to digest when the company reports fourth quarter results shortly.

Truthful hyperbole’ is a contradiction in terms. It’s a way of saying, ‘It’s a lie, but who cares? ’ ” ? Tony Schwartz.

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