WBX Stock Is a Great Contrarian Opportunity
Technology and growth stocks have been caught in a horrible downtrend this year, but compelling opportunities for risk traders have been surfacing. Take the electric vehicle (EV) space. EV stocks have been devastated lately. Their valuations, while still high, are much more attractive now.
One EV stock that’s worth a look is EV infrastructure company Wallbox NV (NYSE:WBX), down by 52% in 2022. The company has developed vehicle-to-grid (V2G) technology that enables electricity to move from EVs to the electrical grid and from the grid to EVs.
The global V2G market could expand to $28.1 billion by 2026. (Source: “Vehicle to Grid (V2G) Market – Forecast(2022 – 2027),” IndustryArc, last accessed October 14, 2022.)
Wallbox NV is an early-stage company, but its revenues have been soaring. Wallbox stock’s price deterioration presents a solid risk/reward opportunity for contrarian investors.
Wallbox NV to Ramp Up Its Revenues
Wallbox has ambitious plans to increase its revenues in EV markets around the world. The results so far have been stellar.
The company’s revenues grew by 806% from $9.0 million in 2019 to $81.5 million in 2021. There were two straight years of triple-digit growth. (Source: “Wallbox N.V. (WBX),” Yahoo! Finance, last accessed October 14, 2022.)
Analysts estimate that Wallbox NV’s revenues will continue to grow in the triple digits for the next two years. Their consensus estimate is that the company will grow its revenues by 115.3% to $186.2 million in full-year 2022 and by 104.4% to $380.6 million in 2023.
Based on its recent financial results and current focus on revenues, Wallbox NV is likely several years away from producing positive earnings before interest, taxes, depreciation, and amortization (EBITDA); adjusted profits; and free cash flow.
Why Wallbox Stock Could Double
After witnessing the scale of the recent selling of WBX stock, the potential for a big bounce is high, especially when the market sentiment toward risk-on trade improves.
Wallbox stock shot out of the gate after debuting in October 2021. But with the reversal in market sentiment toward technology and growth stocks in November of that year, WBX stock found itself in a nasty downward channel, failing to attract buying support.
At this point, given its decline, Wallbox stock needs to find a base to work off of and give investors some confidence there’s a bottom.
First up for WBX stock is the 50-day moving average (MA) of $8.89, followed by the 200-day MA of $11.12.
Chart courtesy of StockCharts.com
If shares of Wallbox NV can attract sustained buying, they could mount an attack toward $14.00 and the first Fibonacci retracement line at $15.08, followed by $17.45, which would represent more than a double. The downside risk is the $7.55 low and $6.51, which implies a good risk/reward opportunity.
Insider ownership of Wallbox NV is extremely high, at 75% of the company’s outstanding shares. I’m not surprised, given the degree of the recent selling and the reality that Wallbox stock’s initial investors aren’t keen on selling at a major loss. The low share price will provide an incentive for insiders to improve the company’s financials.
I suggest taking time to look further into EV stocks like WBX stock on their price weakness, given the current bullish tailwinds.