Should I buy Ilika shares to ride the battery tech wave?

Solid-state battery tech company Ilika saw its share price rocket in 2020. It’s now down from its highs, but is this stock a good long-term investment?

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Ilika (LSE:IKA) is a technology company developing solid-state battery technology to replace lithium-ion batteries. It sees its products helping a range of up-and-coming industries, including the industrial internet of things (IoT), medtech, electric vehicles (EV), and consumer electronics.

Lithium-ion batteries are in high demand for EVs and for advancing electrification around the world. But they’re not easily recycled due to the toxic liquid inside. Solid-state batteries should have a longer life span and be more easily recycled, hence their appeal.

They also have a higher power density, so they charge more rapidly, which is hugely appealing to consumers and businesses alike. The company sees a transition over the next decade in which solid-state batteries will gradually replace lithium-ion cell equivalents.

Ilika financials

Ilika is a small-cap stock with a £252m market cap. Its share price is down 36% from its 52-week high and up 275% from its 52-week low. Earnings per share are negative, but reassuringly, its debt levels are low.

Exciting uses

Ilika’s unique thin-film Stereax solution is helping it miniaturise its battery tech to fit medical products. This is for use in devices such as hearing aids. Even more futuristic are the nerve simulators that can replace the consumption of opioids. Plus, Stereax is used to power industrial wireless sensors in hostile environments.

Ilika has made a few notable connections in the past year. Such as teaming up with a Fiat subsidiary to help scale its Goliath battery programme.

As it stands, the company is producing a small volume of large-format solid-state technology from its pre-pilot production line. It intends to ramp this up by automating the facility over the next 18 months, at which point it will move into a battery industrialisation centre in Coventry. This facility has a framework agreement in place with the UK Battery Industrialisation Centre (UKBIC) to produce Goliath solid-state pouch cells.

Shareholder risks

It’s all undeniably interesting. But Ilika is a business-facing several risks that I think shareholders should keep in mind. It’s a competitive industry dependent on technological advancements and curbed by regulatory restrictions. It’s also reliant on partners commercialising its end-products.

Meanwhile, Ilika relies on a small number of significant customers and partners, and profitability is still a distant dream with a history of operating losses. Ilika previously raised funds via share placings, which may happen again. As a growth stock, it’s unlikely to consider paying dividends in the next few years either.

Will I buy shares in Ilika?

Ilika is very much an early-stage company with the potential to grow significantly if its vision for the future plays out. As it’s in the speculative stage, I’m not planning on adding Ilika shares to my Stocks and Shares ISA, but I’ll keep it on my watch list. It’s an exciting development area, and I think it could very well have considerable scope to grow.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Kirsteen has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Young mixed-race woman jumping for joy in a park with confetti falling around her
Investing Articles

6.9% dividend yield! 2 cheap stocks to consider for a £1,380 passive income

Looking for a market-beating passive income? These FTSE 100 and FTSE 250 dividend stocks could provide a healthy second income…

Read more »

Mature black couple enjoying shopping together in UK high street
Investing Articles

Potentially 34% undervalued, should I be watching the boohoo share price?

The boohoo share price has seen a rocky few years, but with signs that the economy is improving, could this…

Read more »

Investing Articles

Is the Amazon share price primed for a drop?

The Amazon share price has been on a tear for the last year, but can this trend continue? Gordon Best…

Read more »

Photo of a man going through financial problems
Investing Articles

Down 15% in a week! What’s gone wrong with the National Grid share price?

The National Grid share price isn't supposed to crash but now it has. Harvey Jones is wondering whether to take…

Read more »

Group of young friends toasting each other with beers in a pub
Investing Articles

Taylor Wimpey just paid me £158.78. I’m aiming to turn that into a £100k yearly second income

Harvey Jones says small, regular dividend payments can turn a few pounds into a mighty second income, if he gives…

Read more »

A pastel colored growing graph with rising rocket.
Value Shares

These FTSE 250 shares are tipped to rise 14% to 18% in the next year!

Looking for the best FTSE 250 momentum shares to buy? Here are two that City analysts expect to soar in…

Read more »

Young mixed-race woman jumping for joy in a park with confetti falling around her
Investing Articles

Lloyds’ share price is up 20% in 3 months! How high can it go?

Lloyds’ share price has ripped higher recently. Here, Edward Sheldon provides his view on the level it could potentially climb…

Read more »

Investing Articles

Why the Rolls-Royce share price could continue to outperform

The Rolls-Royce share price keeps moving forward, but this Fool thinks it's still behind where it ought to be after…

Read more »