Hi there,
HPQ is one of several companies benefiting from the renewable energy boom. Silicon is a key material in renewable energy products/systems and its objective is to " target objective is to produce high value speciality Silicon products using technologies that will reduce energy consumption, GHG's, and carbon footprint."
I cannot speak to the viability or commercial potential of the products as I am certainly no expert in the area. However, their value proposition does look interesting. The question is - can they take these concepts and turn them into viable commercial products. In the end, this is all that matters to shareholders.
This is a company that has been publicly listed since 2016 and has gone pretty much nowhere until this year. I am always extra cautious with these companies. We see so many tied to the renewable and EV spaces doing the exact same thing. Mired in obscurity but with the big interest in renewables, it seems every single stock is getting bid up as investors look to strike it rich. This makes it very difficult investment environment.
Attempting to weed out the long-term winners from those who will ultimately disappoint investors. SInce HPQ does not generate revenue, it is even more speculative than most. Likewise, since it hasn't commercialized its products yet, it will need cash to continue to operate. I like to zero in on cash burn for these types of companies.
Last quarter, it burnt through cash at an accelerated pace (OCF of -$3.5M) and had to issue stock to continue operations. It exited the quarter with $1.5M in cash, which should be enough to last it a few quarters if it reverts to previous quarters cash burn. If it is anything like last quarter, expect another share issue soon. This is the problem with companies that don't generate cash, they need to dilute shareholders through offerings to continue their R&D. It's not being used to acquire new revenue streams, but to continue product development.
All this to day - be very careful with such companies as they are more speculative than most. This is especially true after the current run up in price. Personally, i prefer to stick with companies that have a viable product/service and proven business model.
Mat