Microvast Stock to Benefit From Potential $37-Billion Electric Bus Battery Market

MVST Stock Is Compelling After Sell-Off

The electric vehicle (EV) industry has been under extreme pressure due to its supply of raw materials being disrupted. EV stocks are trading well below their euphoric levels of 2021, which I view as a contrarian opportunity.

While some investors might be writing off EV stocks, the EV industry’s long-term outlook is bullish. In particular, the global EV battery market could grow to $154.9 billion by 2028, up from $27.3 billion in 2021. (Source: “Electric Vehicles/Electric Vehicle Battery Market,” Fortune Business Insights, last accessed August 4, 2022.)

A segment of the EV industry that many investors seem to ignore is the electric bus and commercial vehicle segment, which is expected to grow significantly. The global electric bus market is forecast to grow to $37.1 billion by 2028. (Source: “Electric Bus Market,” Vantage Market Research, last accessed August 4, 2022.)

To play this, investors might want to consider Microvast Holdings Inc (NASDAQ:MVST), a manufacturer of lithium-ion battery solutions for commercial and passenger EVs, energy storage, and consumer electronics. (Source: “Home Page,” Microvast Holdings Inc, last accessed August 4, 2022.)

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As of this writing, Microvast stock is trading below $3.00, down by 82% from its 52-week high of $15.91 and down by 89% from its record $25.20 in February 2021. Microvast Holdings Inc’s record share price wasn’t warranted; it was driven by euphoric buying.

With its significant price deterioration, MVST stock currently looks like it has a decent risk/reward trade-off.

Significant Upside for Microvast Stock

I’m going to evaluate MVST stock based on its technical situation and present what I feel are its prospects.

The two-year price chart below shows shares of Microvast Holdings Inc being caught in a steady downward trading channel since their record high. Microvast stock has held channel support but has failed to break above channel resistance, which has extended the selling.

The recent move below $3.00 led shares of Microvast Holdings Inc to decline to $2.00 on July 25, prior to bouncing by nearly 50%.

Chart courtesy of StockCharts.com

Whether $2.00 represents the bottom for MVST stock is unclear, but investors might want to look at moves toward this level as an entry point.

Microvast stock is a speculative investment, but the company appears to operate in a nice niche. Long-term investors could accumulate shares of Microvast Holdings Inc on the price weakness and wait.

MVST stock is hovering around its 50-day moving average at $2.95. If the stock holds at that level, watch for it to move toward the channel resistance and the 200-day moving average at $5.95.

A breakout from the channel could drive shares of Microvast Holdings Inc toward the next pocket of congestion at $10.00–$14.00.

Analyst Take

Company insiders have been buying Microvast stock to the tune of 5.6 million shares over the last six months. (Source: “Microvast Holdings, Inc. (MVST),” Yahoo! Finance, last accessed August 4, 2022.)

My bullish thesis for Microvast Holdings Inc is supported by the global push toward electrifying mass transportation vehicles. The current market penetration rate is extremely low, so there’s tons of potential.