Enovix (ENVX) stock price plot thickens as a death cross forms

Enovix (NASDAQ:ENVX) stock price relentless sell-off gained steam this week as it plunged to the lowest level since April 2023. The shares have plunged by more than 58% from the highest point this year, giving it a market cap of over $1.8 billion.

Concerns remain

Enovix and other companies in the clean energy industry like Plug Power and Enphase Energy have been in a strong freefall in the past few months. For starters, Enovix is a company that designs and manufactures the next generation lithium-ion batteries.

The company’s products are used in several key industries like wearables, smartphones, laptops, and electric vehicles. It is also a cash incinerator that has constantly made substantial losses. Its annual loss in 2019 came in at over $16.2 million in 2019. This loss jumped to more than $231 million in the past four quarters.

Enovix stock price has crashed for several reasons. First, as I wrote in my Plug Power article, I noted that many loss-making companies are struggling as interest rates rise. The Fed has pushed rates from zero in 2022 to between 5.25% and 5.50%.

Enovix has also made some critical issues. For one, it recently acquired Routejade, a South Korean battery maker in a $16.2 million deal. This buyout provided the firm vertical integration of electrode coating and battery pack manufacturing.

The current trigger for the Enovix stock price was the decision by the company to realign its Fab1 battery plant in its Fremont. This means that the company will reduce its staff as it seeks to save over $22 million in annual savings. It also slashed its Q3 production at ~24k small cell units, lower than the guidance of 36k. 

The restructuring at the Fab1 was long overdue because it had underperformed for a long time. In a statement last year, the company’s chairman resigned, saying:

“We have poorly communicated on the status of Fab-1. I have heard from many investors that the delay and projected underperformance of Fab-1 must be the result of some catastrophic technology problem.”

Enovix stock price forecast

The daily chart shows that the Enovix share price has been in a strong bearish trend in the past few months. It has slipped below the key support at $13.06, the lowest level on August 25th. The MACD has slipped below the neutral point.

Most importantly, the ENVX share price has formed a death cross, which happens when the 200-day and 50-day moving averages. Therefore, the stock will likely continue falling as sellers target the key support at $8.97, the lowest level on April 28th. 

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