What Do Proterra’s Earnings and Risk Factors Reveal?

California-headquartered Proterra (PTRA) went public in June 2021. The company makes electric commercial vehicles such as buses.

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Let’s take a look at Proterra’s latest financial performance, the LG Energy deal, and the company’s risk factors.

Proterra’s Q2 Financial Results

The company generated revenue of $59 million in the second quarter, representing a 39% year-over-year increase. It posted a loss per share of $4.24, compared to a loss per share of $5.59 a year ago. For the full year 2021, Proterra anticipates year-over-year revenue growth of 25% to $246 million. (See Proterra stock charts on TipRanks).

Proterra’s Battery Cell Supply Deal with LG Energy Solution

LG Energy Solution has agreed to supply Proterra with cylindrical battery cells through 2028. This comes after Proterra negotiated a new deal with the supplier and made an upfront commitment in the low nine-figure dollar amount. Some of those cells will come from LG Energy’s plant in the U.S.

Proterra’s Risk Factors

The new TipRanks Risk Factors tool shows 78 risk factors for Proterra. Since its full-year 2020 annual report, the company has amended its risk profile to introduce 71 new risk factors across several categories.

A newly added Financial and Corporate risk factor cautions investors that a large portion of Proterra’s outstanding shares is subject to restrictions preventing immediate resale, but those shares may be sold in the future. When that happens, Proterra’s stock price could decline sharply, even if the company’s business is doing well.

Further, the company reminds investors that it has a history of losses. It says it made a loss of $91.6 million in 2018, rising to a $101.6 million loss in 2019, and rising even further to a $127 million loss in 2020. In the first half of 2021, the loss was $241.2 million. Proterra cautions that there is no guarantee it will become profitable in the foreseeable future as its operating expenses are only expected to increase.

The company has introduced a new Production risk factor that cautions about potential supply chain problems. It says that its products contain multiple parts sourced from hundreds of suppliers. Proterra says that its operating results may be harmed if the suppliers fail to deliver the number of components it requires at acceptable prices.

Finance and Corporate is Proterra’s top risk category, representing 32% of the total risks. That is below the sector average at 34%. Proterra’s shares have declined about 20% since the beginning of 2021.

Analysts’ Take

Last month, Citigroup analyst Itay Michaeli initiated coverage of Proterra stock with a Hold rating and a price target of $16. Michaeli’s price target suggests 79.78% upside potential.

Michaeli observed that Proterra’s current valuation shows the stock trading at a premium to comparable stocks. However, the analyst expects Proterra to benefit from an early-mover advantage in the commercial electric vehicle market. “We view Proterra as being in the right place at the right time,” commented Michaeli.