When you first look at ASPN (Aspen Aerogels), you'll probably notice the bad fundamentals right away. -25 PE ratio, YoY revenue growth is down over 30% (but this may be due to supply chain issues), and a price to book ratio over 12. So why am I talking about this?
I was looking for major insider buys, and I stumbled across something very interesting. After two years of constant insider selling, the company director, Robert Gervis, made a $4.5M purchase of company stock last week.
So why would the company director buy stock in a company with shitty fundamentals?Aerogels are usually used in the oil industry and rocket ships, but when you go to Aspen's company website, they had a product that stuck out to me. They have a special aerogel made for insulating the batteries on EVs called Pyrothin. Accroding to the website its “Starting at only 2mm thickness, our thermal runaway barriers can be tailored to perform in critical applications, including:
- Cell-to-cell thermal runaway propagation
- Battery pack and module barriers”
Now, if you live in the midwest, you probably know that EV's are bad here, the cold weather reduces battery life in the winter, and the hot summers damage the battery. Owning an EV here is an expensive money pit, and you'd save more time and money driving a BMW on our salt covered roads. Aerogels are great insulators, and if applied to a lithium battery, it would stop the batteries from A) starting fires, and B) make the battery life last longer and keep more consistent range.
On top of that, if you go to their investor page, the company CEO had some comments on their Pyrothin Aerogel:
Mr. Young commented, “We are projecting solid revenue growth in each of our principal markets during 2022, including a tripling of our EV thermal barrier revenue to $20.0 million for the year. We are also increasing our investment levels during the year to keep pace with our rapidly growing e-mobility opportunities. This investment will be focused on establishing an automated fabrication operation in Mexico and enhancing the technical, commercial and operational teams and associated resources supporting our thermal barrier and carbon aerogel battery materials businesses.”
Mr. Young continued, “While these planned investments will expand our Adjusted EBITDA loss and net loss in 2022 versus 2021, they position us for strong growth in revenue and profitability through the decade. Based on customer forecasts and our thermal barrier quoting activity, we are targeting to double our revenue to nearly $240 million by 2023 and to triple revenue from that level by 2025; and have the opportunity to deliver strong revenue growth thereafter through the decade with continued growth in demand for our PyroThin thermal barriers, the strong potential of our Aspen Battery Materials business and with other new business opportunities created by leveraging our Aerogel Technology PlatformTM.”
Now, I don't know for sure if GM will be that contractor, but it seems pretty likely. GM has said that it wants to produce 30 new EV cars by 2025, and wants to go all electric by 2035. On top of this, I think GM has already done some business with ASPN, and even named them one of their 2021 Overdrive award winners. GM is also planning to make fully electric Equinoxes, Silverados, and Blazers in 2023, and if you don't know, those are pretty much the only cars people buy from GM in the midwest, and if they can make these cars have a usable range and battery lilfe, people here are gonna buy these up.
What do you think?
Disclaimer: I have no position in this company (yet).
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