What’s Up with Graphene Stocks? Remember Graphene?
Over the past 4 years we’ve dedicated 27 articles to educating investors about “the graphene industry” and so far, we have to say it’s been a bigger disappointment than carbon nanotubes, which were also expected to change the world. Graphene stocks just haven’t performed leaving us wondering if graphene will ever live up to its expectations.
If you’re new to graphene, or you understandably already forgot about what it was, graphene is a nanomaterial with some incredible properties. Here’s a wonderful infographic from Compound Interest that will bring you up to speed quickly:
Now that you know what graphene is, you might be thinking about investing in it. Since graphene comes from graphite, why not invest in graphite miners? We dispelled that myth in an article titled “Graphite Miners are Not a Play on Graphene“. So what about investing in companies that produce graphene? We’ve written quite a bit about private graphene producers like XG Sciences, Perpetuus, and Angstron Materials. What we want to start by doing right now is looking at the performance of all publicly traded graphene companies that we’re aware of. Here is the list:
|Company||Ticker||IPO Date||Return to Date||Market Cap|
|Directa Plus||(LON:DCTA)||May-16||-30%||$42 million|
|Haydale Graphene Industries||(LON:HAYD)||Apr-14||+14%||$50 million|
|Applied Graphene Materials||(LON:AGM)||Nov-13||-56%||$60 million|
|Versarien PLC||(LON:VRS)||Jun-13||+56%||$37 million|
That sort of performance is not indicative of a hot market theme that investors can’t get enough of. Instead, it looks like a rather dismal theme that just hasn’t really panned out yet. The last company in the above table, Versarien, is one we haven’t talked about before. Let’s take a quick look at what each of these companies have been getting up to. We’re primarily interested in meaningful revenues which show us that graphene is being sold and used in end products.
Directa Plus (DCTA)
Looking at the Directa Plus results for 2016, we see that they delivered 3.1 tons of Graphene Plus (G+) materials compared to 1.3 tons in 2015. They have more than doubled their customer base to 16, with end products ranging from textiles to a graphene 3D printing filament. Still, revenues for 2016 came to just $963,600 which didn’t do much to cover the $5.35 million in losses. The end of the yearly report states that “the Board is disappointed to report that the Group now expects a significant reduction in anticipated revenues for 2017” which is attributed primarily to reduced sales of their graphene tires which were responsible for a “significant increase in 2016 revenues“.
Haydale Graphene Industries (HAYD)
Haydale managed to secure $1.52 million in revenues for 2016 which was offset by $4.68 million in losses. They have a promising relationship with Huntsman (NYSE:HUN) which is expected to produce revenues this year from “joint development of “graphene” enhanced resins“. Over 2016 they made a few complimentary acquisitions which included a “profitable, high-quality USA based silicon carbide producer” called ACM with an “existing $3.8 million of annual sales of silicon carbide nanomaterials“. They also announced a “graphene loaded polylactic acid (PLA) 3D printing filament“.
Overall, there seems to be a lot going on at Haydale (you can read the report here), and hopefully going forward they break out their graphene revenues separately so we can see how this area of their business is performing.
Applied Graphene Materials (AGM)
For 2016, AGM saw $391,000 in revenues against losses of $5.47 million. During the year they raised just over $11 million, it looks like they have money to survive on for a few more years if the losses continue. Highlights included the launch of a new range of performance Graphex® fishing rods and a new collaboration project with Sherwin-Williams Protective & Marine Coating. AGM supplied in excess of 264 pounds of graphene to customers in 2016 in the form of over 170 evaluation samples. At some point, all these samples being sent out need to turn into customers, ideally for non-sporting products.
Versarien isn’t a company we’ve talked about before so here’s a short introduction. Founded in 2010, the company began trading in June of 2013 and operates through three segments: Hard Wear Products, Graphene Products and Thermal Products. 2016 saw revenues of $5.73 million across all three groups and losses of $2.34 million. Graphene sales were just $20,850 during 2016 but four partnerships have been formed to expedite adoption of graphene into key markets: batteries, carbon fiber products and enhanced composites for 3D printing and the aerospace industry. In January of this year, Versarien plc acquired a majority stake in University of Cambridge spin-out Cambridge Graphene Ltd. which has commercialized graphene ink. Versarien also has a working relationship with Haydale.
3D Printing with Graphene
Since a few of these companies are manufacturing graphene 3D printing filaments, this reminded us about a company called Graphene 3D (CVE:GGG). When we wrote about this firm, we warned readers about potential conflicts of interest and also challenged the $40 million valuation which seemed to appear from thin air. We were met with comments like this one from Gary Anderson over at 3Dprintingstocks.com:
Hopefully, nobody actually followed that advice. Fast forward to today and we see Graphene 3D Labs is now worth a whole $5 million and we can touch that stock for just 10 cents a share. If you listen to the advice of stock promoters out there who try to cram garbage like this down people’s throats, then you deserve to lose -87% of your hard earned dollars which is exactly what investors in GGG have lost since we wrote an article aptly titled “Is Graphene 3D Labs a $40 Million Company?“. Do what institutional investors do and always stay far, far away from OTC stocks or anything behaves like an OTC stock.
Graphene Isn’t Selling
The common thread we see here is that graphene just isn’t selling yet at a volume and price point that can result in significant revenues. We’ve been sending out “samples” for years and still haven’t seen any meaningful revenues come from large orders. If you recall a few years ago, graphene producer XG sciences filed for an IPO and presented their financials which were equally dismal:
That big drop you see is the result of a one-time order for $600,000 worth of graphene. Why was that order just one-time and not recurring? It’s probably because there aren’t any economically viable applications for graphene that require large amounts of the nanomaterial in volume. Fishing rods and tennis rackets just aren’t cutting it.
In previous articles, we focused on the production capabilities of each graphene startup but that seems pointless because there just aren’t many products out there that utilize graphene aside from some sporting applications. Still, we continue to hear about new breakthroughs and potential applications. Even Goldman Sachs is trying to peddle graphene as an investment thesis:
Research and development continues with advancements keep being made regularly. A Cambridge startup called Novalia claims to have a high-speed, low-cost manufacturing process for printed electronics which uses graphene-based inks. Scientists are now able to “see” the flow of electric currents in graphene which may open up some applications in quantum computing. IBM claims that they can trigger the body’s immune response using graphene. Just yesterday, Rice University reported that they built a prototype that stores 3 times the energy of lithium-ion batteries. The Rice battery stores lithium in a unique anode, a seamless hybrid of graphene and carbon nanotubes. Maybe carbon nanotubes are making a comeback after all.
Are you paying too much in transaction fees to your broker? Check out a brokerage firm called Zacks Trade that's offering $1 trades for U.S. stocks and options until 2020. After that, you'll pay just $3 a trade or a penny a share, whichever is greater. It's one of the cheapest brokers out there and you can also trade stocks on foreign stock exchanges. Trade US stocks and options for as low as $1 per order until 2020.