Shares in Novonix Ltd (ASX: NVX) have been out of favour this year — in stark contrast to last year.
By this time last year, the battery technology company had already climbed approximately 90% in value. Whereas in 2022, the Novonix share price has gone the other way. The company which was formerly surrounded by an avalanche of optimism is now down 41% year-to-date (YTD).
The tectonic shift in sentiment prompts a look at what has been bubbling away inside the $3 billion battery developer.
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Excitement now turns to execution
From the speculative small-cap sitting at 20 cents per share to the $6.22 per share battery tech titan of the ASX today, Novonix shares have ridden the wave of excitement built on a booming electric vehicle market.
However, the wind in Novonix's sails appears to have subsided since the company's share price reached its all-time high on 2 December 2021. Although perhaps this indicates shareholders are looking for some results before bidding the Novonix share price higher.
For context, even with the retracement in valuation, the battery tech company holds a market capitalisation of $3.03 billion. In February, Novonix reported $4 million of revenue from contracts with customers in the first half. That took revenue for the 12-month trailing period to around $6.9 million.
In other words, the company is trading at 439 times price-to-sales (P/S). There are few multi-billion-dollar companies on the ASX trading at such multiples. Hence, shareholders might be looking for further confirmation that Novonix shares are worth the valuation.
In its half-year financial report to 31 December 2021, Novonix said it is aiming to grow its synthetic graphite production capacity to 10,000 metric tonnes per annum (tpa). Subsequent goals include 40,000 tpa by 2025 and 150,000 tpa by 2030.
Is this the first time Novonix shares have fallen steeply?
In short, this is the most significant fall that Novonix shares have suffered in recent times. However, the high-flyer is not unaccustomed to volatility.
As shown in the chart above, the Novonix share price has fallen more than 40% on two prior occasions in the past year. Prior to the recent landslide, the battery tech player's share price took a sudden 23% step downwards before charging up to its all-time high.
Finally, shares in the company remain 165% higher compared to a year ago.
