Shares in a little known ASX-listed maker of battery technology for electric vehicles and energy storage systems have gone on a tear in recent weeks amid twin rumours of a deal with Tesla and the US government.
Loss-making Novonix’s market capitalisation has jumped from $69 million, or 41 cents a share, at the start of June to $345 million (or $1.30 per share) on June 10, according to Bloomberg data.
Driving the share price were rumours on social media and stock forums that Tesla would announce at its “battery day” it would be using Novonix’s technology in its new batteries.
But as the rumours dissipated and Tesla delayed its battery day to later this year, Novonix’s market capitalisation ramped down to just over $230 million, with its shares closing on Friday down 9 per cent at 90 cents. On Monday the stock shot up again, this time 17 per cent to $1.07 the same day two executives told The Australian Financial Review it was working with “some folks in Washington on understanding the opportunity” for its products in the wake of limits on Chinese made products by the Trump administration. Its shares closed 8.4 per cent lower at 98¢ on Tuesday.
Novonix is backed by the wealthy St Baker family from Brisbane and includes Washington H Soul Pattison’s small cap fund and Regal Funds Management as significant shareholders. According to its annual report, Corporate Travel Management boss Jamie Pherous is a top 20 shareholder while former Dow Chemical chief Andrew Liveris is a director. Yet despite its lofty market capitalisation, Novonix reported half-year revenue of $2.67 million and a loss for the half of $6.97 million.
Novonix’s shares took off shortly after it announced it was tapping its shareholders in a fully underwritten $58.28 million raising by issuing new shares at 29 cents, a 56 per cent discount to the last traded share price. It said this week the raising was oversubscribed
The issue of new shares helped to increase its market cap. The raising included a placement to St Baker Energy Innovation Fund, led by Trevor St Baker, the father of Novonix managing director Phil St Baker. Novonix directors also participated in the capital raising.
Novonix’s shares nearly doubled from 68¢ to $1.21 on June 9 after it announced a “breakthrough” that would improve electricity density of EVs batteries and produce longer-lasting batteries
Regal Funds Management was a key beneficiary of the recent share price rise after picking up 6.76 per cent stake on June 5 at between 29¢ and 68¢.
Asked by The Age and The Sydney Morning Herald last week about when the board was in receipt of the information that led to such a large share price surge and whether that was before the capital raising was launched, Mr Phil St Baker said: “Public communication relating to the technology update of June 9, 2020 to which you refer started on November 21 last year at the company AGM.”
The November 21 statements failed to excite Novonix’s shares which fell 1¢, or 3 per cent, to 36¢. Novonix did get a 8.6 per cent boost to its share price in December when it announced that it had sealed a supply deal with Samsung SDI which in turn supplied batteries, but that share price jump was still far below the June 9 spike.
Novonix also held an investor briefing on June 9 after announcing its “breakthrough” where chief operating officer Chris Burns was asked about the Tesla rumours.
“There’s a lot of coverage around Tesla’s expansion toward being vertically integrated and building their own cells. And so they would certainly fall in this list of companies that would be interested in working with us on our materials,” he said in response to a question that had been emailed in by an investor and read out by a representative of a communications firm assisting with the briefing
Mr St Baker said the group had had confidentiality agreements in place with a number of players when asked about the Tesla rumours. “Battery cell makers supplying the automakers are the companies you need to be doing deals with if you’re a battery materials company and that’s exactly what Novonix is doing,” he said.
“Publicly available information shows that Tesla buys its battery cells from the established makers, while they are working toward potentially making their own cells in the future.”
Tesla did not respond to requests for comment.