KULR Technology (NYSE: KULR) stock is fighting off broader market bearish sentiment, holding near its multi-month high despite a weakening sector backdrop. On Thursday, KULR was trading at $1.94, shy of the highs set in October but still up by about 51% since the start of last month. While the rally started in October, it's been fueled by recent updates, with solid Q3 performance and bullish guidance helping send shares about 17% higher.
Recently announced deals are also adding to the bullish momentum, including an update regarding add-on orders from at least two global business leaders. One came from Lockheed Martin (NYSE: LMT), and the other is speculated to be from emerging Metaverse giant Facebook turned Meta (NASDAQ: META). While there's no verification that Meta is the "unknown client," reading between the lines suggests they could be the ones KULR is designing innovative company-specific solutions for. If not, then what’s certain is that a global leader is indeed signed with KULR, which still presents a potentially massive deal once evaluations are completed.
Indeed, the sum of KULR’s parts supports the bullish sentiment. In Q3, KULR posted a 133% increase in comparative quarterly revenues, held $16.2 million in cash at the end of the quarter, and noted that the quarter was an inflection point for the company as record-setting revenues will expedite the transition to its next chapter of company growth. Of course, past earnings are history -but that doesn't mean history can't repeat. And with KULR focused on near and long-term revenue drivers to facilitate record-setting operational performance, it certainly can.
Inking A Deal With Largest U.S Auto Manufacturer
They are off to a great start to make that happen. Last week, KULR announced entering into an agreement to provide its internal short circuit ("ISC") battery safety and testing device to the largest automotive manufacturer in the United States. The excellent news there is that while it’s a big deal already, it has the potential to become exponentially larger once evaluations are completed. That’s not only because it's an excellent product, but also because KULR may be the only company able to offer it.
By all measures, it's a product that could capture significant demand by being the only internal short circuit testing solution that reliably creates thermal runaway in lithium-ion battery trigger cells in controlled laboratory conditions. Its differences are its advantages. Unlike most other evaluation methodologies, the device does not rely on mechanically damaging the battery exterior to activate the short. It instead triggers a true internal short, which makes it possible to accurately pinpoint and fix problems that can lead to malfunctions. It also provides superior testing methods that allow KULR and its customers to more effectively assess the next generation of EV batteries, which could help bring safer and more reliable battery systems to market in a faster and more cost-effective manner.
The technology isn't going unnoticed. KULR's ISC technology received the prestigious R&D 100 Award in 2016 and was the runner-up for NASA invention of the year in 2017. It’s gained further attention in 2022 as the electrification movement becomes a more intense global initiative. That initiative is currently led by at least one global automotive company, a client of KULR’s that has fully embraced the strategic value of better testing for designing the next wave of EV battery systems. While the safety of these super-powerful and compact batteries has always been a concern, that focus has intensified in the wake of Hurricane Ian and the continued destruction caused by the explosion of EV batteries in areas affected by the storm.
Those unfortunate events have brought attention back to KULR's solutions, including its ISC device, which is becoming more recognized as a potentially essential integration for ensuring consumer safety across various industries. Revenue-generating opportunities go well beyond the EV sector; electric vertical takeoff and landing aircraft (eVTOL), maritime, drone, consumer products, and other markets are also in play. Thus, KULR’s deal with the unnamed global automotive company could be the first of many, especially with the need for companies to stay ahead of the regulatory and legislative curves.
Still, while billions may be in play from the EV sector, KULR has plenty more revenue-generating firepower in its arsenal.
The KULR Valuation Disconnect Exposed
In fact, KULR and its investors are positioned to enjoy multiple shots on goal. While they don’t all contribute to revenue streams as quickly as some hope, the bottom line is that the groundwork laid, new contracts, add-on deals, and strengthening infrastructure have positioned KULR to build upon its record-setting performances in 2022 and have an enormous growth spurt in 2023. And with KULR declaring Q3 of this year as an inflection point for the company, the coming quarters could deliver exponential revenue growth as well as a strengthened bottom line.
KULR's strong cash position, robust sales pipeline, and continued product validation from global business giants certainly don’t take from that presumption. To the contrary, they support the case for KULR's growth to appreciably accelerate. Moreover, the case continues to strengthen, a contributing factor being KULR’s announcement that it’s commenced Phase 2 development of passive propagation resistant ("PPR") battery systems for the Lockheed Martin Corporation, following a successful Phase 1 trial. In addition, they secured a deployment order for over $500,000 from a leading Department of Defense ("DoD") contractor, noting that future opportunities inherent to that agreement could be worth several million in 2023. That's not all.
KULR also announced securing two orders from a leading Fortune 20 e-commerce and cloud computing company for its next-generation Li-ion battery-powered commercial drone delivery fleet, as well as an order from a top Fortune 500 commercial aviation company for its suite of battery design and safety solutions. This deal targets opportunities for developing that client's new electric vertical takeoff and landing aircraft ("eVTOL"), keeping potentially significant add-on deals in the queue. There's more.
KULR also announced scoring a production prototype order from a top-tier power tool manufacturer for its KULR SafeCase, a reusable and safe transportation and storage solution for high-energy batteries. The SafeCase technology was also instrumental in KULR receiving approval from the Department of Transportation ("DoT") to increase the energy levels in three special permits from 2.1 kWh to 2.5 kWh, expanding usage applications for the SafeCase product and technology. Acquisition activity is also fueling the value proposition.
Acquisitions Enhance The Value Proposition
Most recently, the company acquired VibeTech and announced the subsequent launch of KULR VIBE, an AI-driven vibration reduction solution utilizing proprietary sensor processes with advanced learning algorithms to achieve precision balancing solutions and successfully predict component failure based on its comprehensive database of vibration signatures. That cutting-edge technology leverages enhanced AI learning algorithms that pinpoint areas where excess vibrations cause energy loss, leading to system malfunctions, weakened performance, and maintenance issues.
The busy quarter also included KULR presenting at the Federal Aviation Administration's Tenth Triennial International Fire and Cabin Safety Research Conference on the necessity of a holistic battery safety strategy for electrical aviation. As a platinum member, they also joined the battery industry's most recognized trade association for developers, manufacturers, suppliers, and users of battery technology in North America.
While all the above present an excellent series of updates, there was still more done in Q3 and so far in Q4 for investors to appreciate.
Collaborations With Global Business Leaders
Investors responded enthusiastically to KULR announcing continuing development work with the Andretti Racing team and the inclusion of the No. 98 KULR Technology Honda for the 2023 Indianapolis 500®. Follow-on contracts from global business giants added to the bullish sentiment, as guidance about those deals indicate revenues could be pushed significantly higher as additional validations of its specialized products open new doors of opportunity.
Some of those validations could come sooner than later, with its SafeCase technology solution able to leverage special permits from the U.S. Department of Transportation for the safe shipping of lithium-ion batteries up to 2.5 kilowatt-hours. Incidentally, SafeCase is the only known product providing standard and customized case sizes while incorporating a reusable, sustainable, and cost-effective design, a distinction likely to keep the competitive landscape thin. Adding to the exclusivity is that KULR is the only known company in the world with a product approved by the DoT for storage and transport of lithium-ion batteries managing up to a capacity of 2.5 kWh for recycled, prototype, and damaged, defective, and recalled batteries.
That's more than a distinction; it's an advantage. And it's one that should be more appropriately factored into KULR's valuation.
Supporting The Case For Higher Valuations
So should other deals, especially those inherent to its SafeCase and energy management platform, a seamless fit in providing battery safety applications for many markets. Those include companies like EV giant Tesla (NYSE: TSLA), defense companies like Boeing (NYSE: BA), consumer products manufacturers like Proctor & Gamble (NYSE: PG), and every other company and sector needing lithium-ion technology to power their products.
Thus, to suggest that KULR isn't ideally positioned to maximize its opportunities in a thin competitive landscape is a shortsighted conclusion. By all measures, they absolutely are, a sentiment supported by a suite of innovative technologies that provide essential thermal management and safety system solutions to just about any sector in business using lithium-ion power.
Bullish Momentum In Q4 And Into 2023
All the above help support the presumption that KULR may be in its best operating position in history to capitalize on a slate of diversified opportunities. Indeed, recent trading indicates that the KULR bull run still has legs to carry share prices significantly higher. And even after a more than 90% increase since mid-October, the sum of KULR's parts still exposes a valuation disconnect. Not only could that close quickly, but the culmination of its latest and upcoming developments doesn't rule out a run toward its 52-week high of $3.69, representing a more than 85% gain from current levels.
In fact, considering its operational strength, KULR stock could run even higher than that. Remember, KULR offers best-in-industry, and in some cases, the ONLY-in-industry, products capable of meeting cutting-edge battery safety demand and needs. Thus, breaching resistance at its highs could set the stage for a considerably more powerful move higher as revenue updates begin to circulate. And because millions of products need the types of energy storage and thermal management solutions KULR sells, those revenues may be more than strong; they may appreciably surprise to the upside. If that's the case, then KULR, similar to how it helped the Perseverance Mars Rover ready for takeoff, may have positioned its shares to do the same.
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