Wallbox's Deep Discount Offers Significant Upside For Value Investors

Company Overview - Wallbox is a Barcelona-based EV charging provider involved in designing, producing, and distributing EV charging solutions across 117 countries, with a total addressable market (TAM) of $102 billion [2] - The company went public in October 2021 through a merger with Kensington Capital Acquisition Corp. II, initially trading at $8.60 and reaching an all-time high of $18.50, but has since dropped to $1.37, losing over 85% of its value [3][4] Financial Performance - In Q2, Wallbox generated €48.8 million in sales, a 48% year-over-year increase and a 13.2% sequential increase, with North American revenue growth exceeding 65% in AC and DC sales [10][11] - The company improved its gross margins to 39.1%, marking a 936 basis point increase from the previous year, and achieved its first month of positive adjusted EBITDA in June [11] - Despite these improvements, Wallbox reported a net loss of $123.7 million last year, an 84% increase from the previous year's loss of $67.2 million, and has a cash balance of $118 million against total debt of $271.9 million, indicating a cash runway of just 10.3 months [11][12] Market Dynamics - The global EV market saw a 35% increase in sales to 14.2 million units last year, but this growth was slower than the previous year's 55% surge, attributed to economic headwinds and subsidy cuts in Europe [8] - In the U.S., EV deliveries grew by 48% last year, supported by the Inflation Reduction Act, but the anticipated boost in adoption did not materialize as expected [8] - The first half of 2024 saw global EV sales reach 7 million units, a 20% year-over-year increase, with China leading sales at 4.1 million units [8] Future Outlook - Analysts predict a potential recovery for the EV market in 2025, driven by anticipated interest rate cuts and stricter regulations, which could stimulate demand for EVs [9] - Wallbox's fair value model suggests a substantial upside potential, with a base case indicating a 14% upside from current prices, while the bear case suggests a 37% downside [19] - The company is positioned to benefit from its innovative product portfolio, including bidirectional chargers, which could enhance its competitive edge in a rapidly evolving market [5][21]