Why Aspen Aerogels Stock Is Surging Higher Today

Aspen Aerogels (NYSE: ASPN) easily beat quarterly expectations and said revenue more than doubled from a year ago. Investors are buying in, sending shares of the advanced materials company up 38% as of 10:30 a.m. ET.

Revenue is surging

Aspen makes materials designed to improve the efficiency of lithium batteries, among other uses. The company lost $0.02 per share in the first quarter of 2024, it reported yesterday, on revenue of $94.5 million, significantly better results than the $0.11-per-share loss on revenue of $75 million that Wall Street had expected.

Revenue was up 107% year over year, led by thermal barrier sales up 459% and accounting for about two-thirds of total sales. And Aspen is getting closer to profitability after losing $0.24 per share in the first quarter of 2023.

"We remain deeply engaged with a growing list of automotive OEMs and battery cell manufacturers and have strong conviction that we are providing a unique solution to a very challenging problem," CEO Don Young said in a statement. "We remain focused on scaling the five OEM awards that we have in hand alongside maximizing our Energy Industrial business."

Is Aspen Aerogels a buy after its strong quarterly results?

Shares of Aspen Aerogels are now up nearly 250% over the past year. But the company is still relatively small, with a market capitalization of just $1.7 billion, and the potential market opportunity as the world transitions to electric vehicles is massive.

Post-earnings the company boosted its full-year revenue guidance by 9% to $380 million, and said it now expects to be slightly profitable on a per-share basis. Young said that Aspen's existing manufacturing footprint and supply arrangements give the company the capacity to do about $650 million worth of business, which at scale he says can generate a 3% gross margin.

With such high expectations now built into the stock price, there are risks that any misstep could cause the shares to tumble. But if things go according to script for Aspen, this stock can continue to accelerate from here.

Should you invest $1,000 in Aspen Aerogels right now?

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Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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