Stock markets have decided to go on a small year-end rally, which is very pleasing for us all, as it lifts the Christmas spirit. In the long run, however, the stock market will enable you to make double-digit returns with value stocks, as I have often written to you. But our soul also knows the second heart: the desire for a quick, high return. A current case could be FREYR Battery. The share price has risen by more than 35% in the past few days. Is this an opportunity for you?

Batteries and battery cells: the future for you? The company develops batteries and battery cells, so it is active in the energy market. This could be an opportunity – thematically. Recently, FREYR Battery reported a success. It was about „operational progress (…) in the customer qualification plant in Mo i Rana“. To be honest, such reports usually put me off. They are water level reports that no investor with some distance can assess.

Economic values do not result from such reports. A look at the facts is much more sobering, even if the share price has gained 36% recently. The company is expected to generate less than 3, or even less than 2 million dollars in sales according to the current market forecasts.

This is contrasted with a net result of more than -80 million dollars loss. This would be acceptable if the growth were to be visibly gigantic. Judge for yourself: the market expectation for the coming year is just over 20 million dollars in sales, and the net result should fall into the three-digit million range. So the company is still losing more capital.

Speculation on growth Nevertheless, FREYR Battery could of course make good business in the future. However, Warren Buffett and the late Charlie Munger emphasize that the capital flows should make an investment profitable within a few years. I could not assume such growth for FREYR Battery without a lot of hope.

In other words, the risk of overestimating the company’s growth even with goodwill is much too great. So I currently assume that this is simply a hype. On Monday, almost 970,000 papers were traded on the Munich Stock Exchange. That is more than five times as many as in the days before.

The share price gains have simply acted like a magnet. Now almost everyone wants to join in – I don’t. I will also continue to monitor this stock for you. But from a distance. If you want to invest in the energy sector, old school dividend companies such as Shell are the better calculable option.

FREYR Battery: The stock market is gambling – WKN: A3CT9J – ISIN: LU2360697374 Source: https://fundamental.aktienscreener.com/LU2360697374/05/freyr-battery/data

Stock markets have decided to go on a small year-end rally, which is very pleasing for us all, as it lifts the Christmas spirit. In the long run, however, the stock market will enable you to make double-digit returns with value stocks, as I have often written to you. But our soul also knows the second heart: the desire for a quick, high return. A current case could be FREYR Battery. The share price has risen by more than 35% in the past few days. Is this an opportunity for you?

Batteries and battery cells could be the future for you. The company develops batteries and battery cells, so it is active in the energy market. Recently, FREYR Battery reported success regarding “operational progress (…) in the customer qualification plant in Mo i Rana”. However, such reports do not provide economic value and a look at the facts is much more sobering. The company is expected to generate less than 3, or even less than 2 million dollars in sales according to the current market forecasts, with a net loss of more than -80 million dollars. This would be acceptable if the growth were to be visibly gigantic, however, the expectation for the coming year is just over 20 million dollars in sales, and the net result should fall into the three-digit million range. So the company is still losing more capital.

Speculation on growth may be possible, however, Warren Buffett and the late Charlie Munger emphasize that the capital flows should make an investment profitable within a few years. This could not be assumed for FREYR Battery without a lot of hope. On Monday, almost 970,000 papers were traded on the Munich Stock Exchange. That is more than five times as many as in the days before, and the share price gains have simply acted like a magnet. Now almost everyone wants to join in – I don’t. If you want to invest in the energy sector, old school dividend companies such as Shell are the better calculable option.