We came across a bullish thesis on Aspen Aerogels, Inc. (ASPN) on Substack by Ben Chambers. In this article, we will summarize the bulls’ thesis on ASPN. Aspen Aerogels, Inc. (ASPN)’s share was trading at $13.48 as of Dec 5th. ASPN’s trailing and forward P/E were 674 and 31.35 respectively according to Yahoo Finance.
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Aspen Aerogels (ASPN) has delivered a significant upside surprise with its preliminary Q3 financial results, reaffirming the bullish outlook for H2 2024. Revenue for the quarter came in at $117 million, outperforming expectations of ~$95 million by 23%, while adjusted EBITDA of $25 million beat estimates by a staggering 78.5%. These results highlight the company’s robust operational performance and its ability to capitalize on the growing demand for its advanced aerogel products. Although ASPN reported a net loss of $13 million, this was largely due to a $27.5 million debt extinguishment charge, an expense tied to prudent financial restructuring.
The announcement also brought an additional catalyst: a conditional commitment for a $670.6 million DOE loan to fund the construction of Aspen’s second aerogel production plant. This new facility, aimed at scaling up the production of PyroThin® thermal barriers for EV batteries, is projected to add $1.2 to $1.6 billion in revenue capacity. Once operational, the company’s total production capacity could grow to $2.0-$2.5 billion, positioning Aspen to meet surging EV demand. This aligns with management’s prior guidance of expanding current capacity from $650 million to $850 million, reinforcing the long-term growth trajectory.
Market reaction to these developments was swift, with the stock initially soaring from $22.50 to $29 before consolidating at $26 by the close. This volatility underscores the importance of strategic patience; while early gains were substantial, pullbacks to $24-$25 provided an excellent opportunity to add to long-term positions. This disciplined approach underscores the value of buying on dips during periods of sharp upward momentum, especially for investors with high conviction in Aspen’s growth prospects.
Looking ahead, Aspen’s growth story remains compelling. The DOE loan represents not just additional production capacity but also validation of the company’s role in the EV supply chain. Furthermore, the pending confirmation of a new German OEM partnership could serve as another positive catalyst, signaling continued demand for PyroThin® solutions. With a base case revenue target of $1.5 billion by 2029, Aspen is now well on its way to surpassing these benchmarks, particularly as the new plant accelerates its timeline to meet market demand. For long-term investors, Aspen offers an attractive risk/reward profile, bolstered by strong execution, expanding capacity, and growing market share in the EV and energy sectors.
Aspen Aerogels, Inc. (ASPN) is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 18 hedge fund portfolios held ASPN at the end of the third quarter which was 22 in the previous quarter. While we acknowledge the risk and potential of ASPN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ASPN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
