The Novonix Ltd (ASX: NVX) share price has disappointed investors in the years since its 2021 meteoric rise.
The battery materials and technology company rode the wave of investor excitement for the sector, surging nearly 650% in 2021. But that all came crashing down the following year.
Rampant inflation, multiple interest rate hikes, and dissatisfaction with the company's earnings appear to have dragged the stock more than 92% lower than its record high of $12.47.
Today, the Novonix share price is trading at 96 cents.
Can the stock ever return to its previous peaks? Let's take a look.
The Novonix share price has tumbled over the last 18 months
It wasn't long ago that Novonix was one of the market's favourite growth stories. But the broader economic environment proved tiresome for the stock and those of many of its peers.
The cost of debt jumped on the back of rate hikes, leading the market to turn its back on up-and-coming tech shares. Sadly for hopeful investors, Novonix shares were among the hardest hit.
Its performance also wasn't helped by the increasing losses felt by the company in financial year 2022.
While Novonix saw its revenue increase 61% to $8.4 million last financial year, it also saw its losses plunge to $71 million – down from $18 million the prior year.
That was said to be in line with management's expectations and, as growth typically comes with a cost, might not have surprised some market watchers.
Commenting on the Novonix share price's suffering, chair Admiral Robert Natter said in April:
Clearly, the performance of stock has not reflected the considerable work that is being done with customers and in progressing our graphitization technology and related materials and process technologies.
Fortunately, a company's share price generally moves in line with its earnings. Thus, I think there's hope Novonix could recover much of its share price losses if it can rake in enough cash in the future.
Could the ASX tech stock regain its losses?
At this point, readers might be wondering when the company will post a profit. Sadly, as I don't have a crystal ball, I can't answer that question.
However, its balance sheet could provide insight into how far it might have to go before achieving positive cash flow.
Novonix brought in US$3.1 million of receipts from customers in the quarter ended 31 March. That marked a 47% jump on that of the prior comparable period, but it didn't do much to offset costs.
For example, the company forked out double that – US$6.3 million – on staffing costs alone last quarter.
On a more positive note, it ended the period with US$78.7 million in cash – enough to fund an estimated six further quarters.
Meanwhile, it still appears to be early in its growth journey. That means realised earnings will likely continue to be funnelled into growth for the years to come. Thus, profitability will likely allude the company for some time still.
Admiral Natter continued at Novonix's annual general meeting (AGM), saying "as the board and management team, we cannot control the share price":
What we can control are the decisions we take to ensure we have a sound strategy, and that management is executing that strategy to deliver on our long-term goals … if we continue to deliver against our key operating milestones, the share price will respond appropriately over time.
Only time will tell if the Novonix share price can return to its previous highs. No doubt, plenty of spurned investors will be watching on in hopes it can.
