KULR Technology Group (NYSE-AMER: KULR) stock may have given back some of its October surge, but expect the weakness to be short-lived. There are simply too many simultaneous positives driving value the value proposition. Couple that with record-setting earnings posted last week and the likely near-term result is something investors should appreciate- higher share prices.
Here's the better news. Despite profit-taking following a momentous run, KULR stock is still trading higher by an impressive 43% since the start of October. Thus, while a small handful of short-timers may be holding higher prices, the vast majority are enjoying substantial gains as the stock touched 52-week highs in November. Still, those currently underwater shouldn't get rattled; KULR is in its best operating position ever to not only recapture its highs but to add considerably more value in the process. At that point, except for short-sellers, everyone at the KULR party can celebrate together.
And deservedly so. KULR is, after all, creating value to justify its recent stock price surge. Better still, it's making deals that add more than near-term value; they are setting up 2022 as a breakout period for the company.
A Surge In Q3 Activity Sets Stage For 2022 Breakout
Better still, clues to that happening are there to see. Earlier this month, KULR announced a surge in comparative quarterly revenues, with its Q3 income soaring by over 300% over last year. And more important than those gains from a historical perspective is that they came with a commercialization tailwind in each of its core business segments. Not only that, management commentary is decidedly bullish, noting in its Q3 report that investments made in all business segments may be paying off sooner than expected. In fact, a ramp of new partnerships and product development initiatives puts Q4 in a position to generate consecutive record-setting performance.
But, while records in Q4 are in the crosshairs, investors should be more excited about what's in store for 2022. While not having a 100% accurate crystal ball to foretell the future, it does show that KULR is indeed doing business in the right markets at the right time. Also coming through clear is that with KULR's appreciable increase in investment into new technology developments, including smart battery platforms, battery cell screen testing automation, and fast charging battery architectures, new revenue streams will not only be created but will add diversification too. Remember, too, beyond taking advantage of a spike in customer demand in those sectors, KULR continues to stamp its revenue-generating footprint into the aerospace and defense businesses, which remain a core contributor to its success.
In fact, its most recent partnerships announced with Clarios and Retriev Technologies are only the tip of the revenue-generating iceberg to expedite KULR's go-to-market initiatives. Beyond those new and diversifying deals, KULR maximizing value from its recently received special permits from the U.S. Department of Transportation ("DoT"). Those hard-to-get and valuable permits authorize the transportation of damaged, defective, and recalled ("DDR") lithium-ion cells, batteries, or lithium metal cells contained in or packed with KULR's proprietary Thermal Runaway Shield ("TRS") packaging. Reading between the lines, it's a validation of its core technology.
Still, as KULR is showing, they are now well beyond expanding a single but impressive technology. They are proving their ability to develop a business interest in multiple directions in an accretive way.
Creating Multiple Revenue Streams
And investors are taking notice. Better yet, their bullish interest is aligned with a KULR growth strategy that shows no signs of slowing down. That combination is what could add rocket fuel to an already impressive YTD rally. Keep in mind, while KULR may be growing at warp speed, they are still far from reaching its ultimate goal of providing total battery safety solutions for more efficient battery systems, increased sustainability, and end-of-life battery management. Thus, accounting for both milestones and catalysts along the way, investors taking positions at current levels and even at the highs are looking smart.
Timely, too. Heading into Q4, KULR had more than $11 million in cash, putting them in its best financial and operational position ever to grow its business and execute its near-term objectives. Those objectives, by the way, are likely to turn into catalysts. So, while 2021 should close out as its best period ever, 2022 can be the transformational one. And that road is partly paved already.
That's because, during Q3, KULR made some pretty good deals. In particular, they partnered with Heritage Battery Recycling ("HBR") to provide safe transportation of HBR's battery collection operations across North America through its KULR-Tech Safe Case. That deal shouldn't be underestimated. In fact, it can become an enormous value driver with HBR, through its subsidiary interests, maintaining access to over 100,000 customer locations, 2,500 employees, and a fleet of over 1,300 power units and 108 facility locations across North America.
Moreover, that partnership expands services already in place with HBR due to their merger with Retriev Technologies. The deal between those two created the largest lithium-ion battery recycler in North America. The better news- KULR can tap into their success.
Thus, in addition to the massive revenue-generating opportunities from existing e-bike and scooter customer programs related to battery safety, KULR can extend value-enhancing services to provide safe transportation logistics to Retriev's battery collection operations throughout North America.
Still, while that deal is substantial, so is the one made with Clarios, the largest global producer of lead-acid batteries. It, too, can generate a potentially massive revenue-generating windfall by targeting opportunities in the U.S. Department of Energy lithium-ion battery life cycle initiative. That program intends to develop processes to safely manage and reuse lithium-ion batteries and their chemical elements in the U.S. Undoubtedly, the initiative's scope can lead to near exponential increases in revenue. And with the two intending to provide safe transportation of lithium-ion batteries within the entire battery management life cycle, from manufacturing through recycling and reuse, don't underestimate the potential return from that interest and position.
Remember, too, those deals add to KULR earning a special permit from the DoT authorizing the transportation of DDR lithium-ion cells, batteries, or lithium metal cells contained in or packed with KULR's proprietary TRS packaging. They also received authorization for expanded battery coverage to the existing DoT special permit, which upgraded its current special permit to expand its scope of opportunity, and revenue generation, by authorizing KULR to transport reused, refurbished, and retrofitted batteries for recycling.
Thus, on the public sector side of the business, KULR is locked and loaded to create massive shareholder value. The more excellent news is that they are from the private sector as well.
A Who's Who Of Client Relationships
There, KULR is doing business with a "who's who" in business across multiple sectors. In fact, they are working with NASA and its Perseverance Mars 2020 Rover, Andretti Enterprises, Leidos (NYSE: LDOS), Lockheed Martin (NYSE: LMT), and Marshall Space Center. Those industry behemoths, by the way, are only a small representation of its global customer list.
Other big names and agencies are also partnering with KULR to utilize its state-of-the-art thermal management technologies. And it's not by coincidence. They recognize that KULR has created next-generation battery safety solutions that make batteries cooler, more efficient, safer, and lighter for usage. Most importantly, KULR technology mitigates the risk of fire and explosion in these lithium-ion batteries. Thus, with multi-billion dollar projects in play and with their own reality of having to prove success across the board, relying on any shortcut when it comes to battery safety would be foolish. And apparently, they aren't.
And that growing client list is much more than a nice-looking roster; it's generating revenues. As noted, its Q3 revenues were preceded by a Q2 that reported a 212% surge in comparative revenues that left KULR with the highest cash balance in its history. And as expected, KULR put that money to work, accelerating partnerships and agreements made earlier in 2021. What's now in play? A lot.
Foremost, KULR is ideally positioned to take advantage of opportunities created from a lithium-ion battery market expected to grow into a $116 billion opportunity by 2030. Even better, factoring in an expected 12% AGR, its addressable market can easily double by 2040.
More important to KULR is that battery safety will remain a vital part of the conversation, especially with lithium-ion batteries becoming more potent while housed in significantly smaller packages. Notably, few, if any, deny that having substantially more power packed into a smaller space is a recipe for disaster. So, expect the calls for enhanced battery safety to get louder, with KULR's hope that best safety practices be put in place for products that include everything from battery-operated tools to hypersonic missiles. KULR technology is an ideal solution for those two products and everything else in between.
Energizing A Lithium-Ion Battery Sector
So, it's not surprising to see KULR attracting so much attention. Moreover, KULR is earning additional credit by developing a battery cell screening and automated testing system for its Department of Defense and Aerospace customers. Those clients have a dual wish list- extend strategic battery reserves and implement safety thermal runway technology to reduce the risk of fire and explosion.
Here's the better part. KULR is showing that despite its small-cap size, it can do big things. This project is being built from the ground up through an open-source flight control system. The pilot system being tested is expected to be finished in the first half of 2022, with the company anticipating processing up to 1.2 million 18650 and 21700 cylindrical battery cells per year. Positive results from the pilot initiative could have a tremendous impact on future revenues.
Another high-profile project has KULR intending to show that its carbon-fiber technology can do more than make lithium-ion battery technology safer and faster. They also expect to demonstrate that its carbon-fiber technology can enable lithium-ion batteries to charge faster and last 20 times longer than before. Updates on both programs could come in early 2022, if not sooner. Again, the intent is to turn milestones reached into catalysts.
Indeed, passing over a potential deal that could make KULR an overnight revenue-generating juggernaut would be irresponsible. While there isn't a whole lot of detail in the public forum, KULR noted in a presentation that the FAA is evaluating its battery-safety system and technology for in-flight use on aircraft. Undoubtedly, it goes without saying that an FAA recommendation, or mandate, to include KULR battery safety technology on aircraft would be transformational. It would be.
But, the better part of that being on the KULR investor's wish list is that it's not cost-prohibitive to add to the existing fleet. Moreover, a directive would follow the FAA mandate to ensure the safety of passengers and cargo. Frankly, the FAA has asked for more that does far less. So, keep that project on the valuation radar. But, also keep in mind that trading ahead of a positive update could be a portfolio game-changer.
KULR In 2022 Is A breakout Candidate
So, while kudos to those investors that took a profitable ride in 2021, the stage is set for more appreciable growth next year. And with its new NYSE-American listing, impressive balance sheet, and KULR earning business and attention from global industry giants, the next leg higher could come sooner than even the most optimistic bulls expect.
Furthermore, there is so much happening that this article barely touched on other deals, including one with Andretti Technologies to co-market valuable EV battery technology or about discussions to include its technology into millions of consumer products
Still, keeping those potentially massive wins for KULR on the "what if" list gives investors more reasons to speculate and be optimistic about 2022. Although "what ifs" today, the deal with Andretti is in progress, and a consumer products battery safety deal is said to be in discussions. Know this- monetizing only one of those deals to its fullest adds exponential value. Hitting on both could be like a lotto win for KULR and its investors. Revenues would likely go from exponential increases to astronomic ones.
Thus, while KULR's recent gains give its investors reasons to celebrate, the holiday season may provide additional news-related fuel to sustain and accelerate its rally. And management will likely deliver.
They have quite a bit in the hopper and even more happening on the ground. So, keeping a lid on it all until 2022 may be difficult. Better yet, if updates are announced before the end of the year, expect them to be significant. Remember, news from KULR is invariably good, unlike that from biotechs and other sectors where investors hold their breath before each headline. Bottom line- when KULR talks, investors want to listen.
And with KULR moving forward in an enviable position to become the leading provider of lithium-ion battery safety solutions, taking a stake and holding it for the long term may be a wise consideration.
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