Frey Stock Forecast is $20
FREY Stock Forecast for the next 12 months is $20
Frey Battery Stock Latest Price
FREYR plans to issue 13.5 million shares with the intention of using the funds received from the proceeds to be used for development expenditures for Giga artic facilities and general corporate purposes. It also expects to grant additional 2 million common shares for the 30-day option to be part of this offering round.
- The company has recorded no revenue ever since its inception.
- Research and development expense for Q3 was $3.2 million whereas in Q2 it was $3 million.
- It incurred a net loss of $93 million whereas the net income of $4 million in the 2nd quarter.
- EBITDA was reported in a deficit of $28.9 million in Q3.
- The EPS for the same quarter was -0.8.
Frey Stock Forecast: Bull Case
The company is based in Norway- For a start, the best destination for an energy company can be Norway. The reasons being Norway offers some of the lowest costs of energy in Europe and too greener energy. This is going to significantly reduce the operating cost of factories for producing green energy. Norway is a very rich resource of Lithium battery raw materials like Cobalt and Graphite. Add to it, the transportation to the factory locations from mining partners is also much simpler, which will reduce the costs and boosts the profitability of the company.
The sales agreement with Nidec – Nidec is an energy storage solutions (ESS) company and on Tuesday, August 30th, 2022, Freyr Battery announced the sales agreement with the company under which the former company will supply 38 GWh worth of battery cells from 2025 to 2030. Additionally, the two companies promised to set up a joint venture aimed at supplying energy at an industrial level. The deal is worth $3 billion over the period of five years. Nidec deal will provide the required financial impetus to complete the construction of the Giga factory in Norway and kick start the production. Sales agreements of this scale even before starting production should be a big boost for the company and potential investors.
Agreement with Hana Technology – On 25th August, Freyr Battery announced that it has selected Hana Technologies for equipment and automation solutions for the development of the company’s Customer Qualification Plant (COP) based in Norway. Freyr Battery expects to kick start the sample cell production in the first quarter of 2023. Also, Freyr reported that Hana Technologies will help Freyr to develop additional planned gigafactories.
Upgrade from Goldman Sachs- The recent rally in the stock is also due to positive commentary by analyst Philipp Koenig, who has upgraded the buy from neutral and lifted the target price from $11 to $19. The stock has already crossed $11 and is currently trading at $12.94 (as of 11.09.2022) and the target price means a 46% upside from here, which is a very good sign for investors.
To sum up, the positive side of Freyr Battery is that sales agreements are lined up before even starting production. The company is spending to accelerate the start of production along with the development of other factories and all of this is getting the attention of analysts.
Frey Stock Price Prediction for the next 12 months
|Average FREY Stock Forecast for the next 12 Months||$20|
|Credit Suisse Group||$16|
Frey Stock Forecast: Bear Case
Commodity Prices- Battery production is a material-intensive business and Freyr has been eyeing the exponential growth trajectory. For such kind of growth, there is going to be exponential demand for raw materials like Nickel, Graphite, and Copper. In a scenario of global supply chain constraints, war, inflation, and various other factors can lead to pressure on battery raw materials. Miners are always winners and consumers like Freyr Battery can feel the heat every now and then.
Global Geopolitics – As Norway is the place of production, Norway’s local economy and -dynamics play a major role, and similarly the politics of rest of the Europe. Russia- Ukraine war has taught us a lot about how an event can impact Europe politics. Russia has stopped the gas supply to Europe via Nord Stream 1 pipeline. Similar things can happen in the future and that is what makes Freyr Battery’s future vulnerable.
Financial Risks- Currently, Freyr Battery has $560 million on the balance sheet, and a lot of it is going to be spent in the next two years on Capex. For maintaining the cash flow, the company needs to start production at an industrial scale as quickly as possible. If the production scale is not enough, it will burn out more cash, and then capital raise, equity dilution, and debt can evaporate the equity share value of the company.
Frey Stock Forecast Today
|1. Market's Wisdom||Neutral|
|1a. Market Data||Neutral|
|1b. Technical Recommendation||Neutral|
|2. Crowd's Wisdom||Neutral|
|2a. Social Media Buzz||Neutral|
|2b. Social Media Sentiment||Neutral|
Frey Stock Forecast: Buy, Sell or Hold
Freyr Battery has delivered on the expectations till now, especially for a SPAC company that made lofty promises, but that does not guarantee that it will continue to deliver in the future. True that the company has made a sales agreement before even starting production and is expediting the production of the first batch of the battery, but the fact is that it is still a pre-revenue company that has not been tested in the market.
The next few years will be the testing period for the company and that can make or break the company. Concept, location, and strategy look good on paper, but it needs to be out in the market to sustain the external uncertain forces like geopolitics and scarcity of resources.
Freyr batteries are for those investors who are willing to take extreme risks. It is an extreme risk, extreme reward stock with a potential upside that can not be ignored. Investors can make a small allocation of capital for the next couple of years and then can increase the allocation based on the performance of the company.
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