The Enovix (NASDAQ: ENVX) stock price jumped by over 14% in the pre-market session after the company issued a strong earnings report. The shares jumped to a high of $11.52, the highest point since October 3rd. They have risen by more than 38% from the lowest level in November.
Enovix details strong progressEnovix is a $1.2 billion company that does R&D and develops batteries that are essential in the smartphone and appliances industry. The company’s research has helped develop smaller batteries that smartphone firms can use.
It is solving a big problem in this case. In the past decade, smartphones have boosted their capacity by increasing the sizes of their batteries. But now, smartphones are in a stage where they cannot get any bigger. As a result, its EX2 battery can have 1,000 cycles and also charge at a faster pace.
The company recently announced the realignment of Fab1, a process that will cut its operations costs. In its statement, the management said that the alignment will help it to cost about $22 million.
Its cost of revenue came in at $16.8 million in the third quarter, up from over $14.2 million in the last financial year. Its operating expenses was $33.8 million. As a result, it ended the quarter with more than $371.3 million in cash and short-term investments.
In its guidance, Enovix said that its revenue will be between $3 million and $4 million. It also reduced its operational cash use forecast to $110 million. The company said:
“We remain on track to move to high volume production in Malaysia in 2024 and deliver an industry-leading battery that enables our customers to launch compelling new products.”
There are several catalysts for Enovix stock price. First, the company will start ramping up production in 2024, which will lead to more revenue growth in the future. This growth will come at a time when demand for silicon batteries is soaring.
Second, the company has room to expand its production in the company to expand its business to other industries like EVs and IoT devices. Further, Enovix has a strong balance sheet and is reducing costs.
Enovix stock price forecast
The daily chart shows that the ENVX stock price has been in trouble in the past few months. This decline happened after the stock formed what looks like a double-top pattern at $23.82. In price action analysis, the double-top pattern is usually a bearish sign.
Enovix share price has also dropped below the 50-day and 100-day Exponential Moving Averages (EMA). Now, the stock has formed a break and retest pattern by retesting the crucial resistance at $11.52, the lowest point on May 19th.
Therefore, the shares will likely continue falling as sellers target the key support at $8.30, the lowest point this month. This price was in line with what I predicted in my past Enovix forecast. A break below this level will see it continue falling to the next support at $6.45.
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