Novonix (ASX:NVX) Recharges Investor Hype, Is This Stock a Buy?

Hot Charge or Overcharged? Novonix Soars 34% as Bulls Reconnect

Novonix (ASX:NVX) has experienced a sharp sell off in recent months, falling from around A$1.00 in October to approximately A$0.57 today. Like many critical minerals names, sentiment has been weak, but the key trigger for Novonix was the loss of its major supply agreement with Stellantis. That contract was expected to deliver around 86,000 tonnes of battery material, so its removal was a meaningful blow to the near term growth outlook and understandably weighed heavily on investor confidence.

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But Is the Battery Boom Just Getting Started?

That said, the tone appears to be shifting. The stock is delivering a 34% return this week. While confidence has clearly been shaken over the past few months, the broader investment case remains intact for those who believe in the long term tailwinds behind energy storage and electrification.

From our perspective, Novonix is now firmly focused on proving commercial scale, deepening partnerships in the US, and preserving its cost advantage as domestic demand for synthetic graphite continues to build.

We think it’s important to note that this is still theory and NVX still needs to detail a clear pathway to commercial scale.

The foundation of a long-term growth story lies in powerful macro tailwinds reshaping the global graphite market. China currently accounts for roughly 95% of global graphite supply, and recurring export restrictions have amplified concerns about supply chain security.

The company is positioning itself to capitalise on growing demand for high-performance synthetic graphite, which remains the preferred choice for reliability and energy density in advanced battery applications. However, it is worth noting that Novonix’s production facilities still require time before reaching large-scale commercial output. In its latest presentation, management reiterated its ambition to expand production capacity tenfold by 2035, underscoring its confidence in the long-term potential of its US-based anode materials business.

NVX supply agreement update

Novonix still holds long term supply agreements with Panasonic Energy and POSCO, which together represent around 42,000 tonnes of capacity once qualification is complete.

Management also highlighted that the company is currently in commercial discussions with approximately 15 potential OEM and battery cell manufacturing customers, all at varying stages of the qualification process.

For us, this is an important signal that underlying customer interest is building, and that these discussions could translate into meaningful revenue opportunities once formal supply agreements are secured.

We see the conversion of these qualification milestones into binding supply contracts as one of the most important catalysts for a potential re rating of the stock.

Successfully doing so would materially de risk both operations and partnerships, particularly in the context of the earlier loss of a major customer.

That event clearly exposed commercial execution risk. Looking ahead, what investors will want to see are new customer wins with tighter alignment on product specifications and clearer qualification pathways. Clean execution on future offtake agreements will be critical in rebuilding confidence and demonstrating that Novonix can translate technical capability into sustainable commercial outcomes.

It is a capital-intensive business model

However, it is important to recognise that Novonix’s synthetic graphite process is highly capital-intensive. Scaling production to meet demand expectations requires substantial external funding. This has already been reflected in the company’s recent financing moves, including a US$100 million convertible debt facility and a conditional commitment for a US$754 million loan from the US Department of Energy. While these funding channels provide critical support for growth, they also highlight the company’s reliance on external capital to achieve commercial scale and long-term profitability.

The investor’s takeaway for NVX

Looking ahead, the company’s outlook is centred on ramping production at its Riverside facility, with management targeting full capacity of 20,000 tonnes per annum by late 2026. Beyond this, the focus is on securing additional Tier 1 OEM supply agreements on top of existing relationships with Panasonic and POSCO, while also working toward positive operating cash flow by 2027.

For investors asking whether this is a buy today, we think this is a more nuanced call. The timelines to commercialisation are long, and with scale this large, a lot can change between now and 2027 when these partnerships are expected to materially contribute.

From our perspective, this makes the stock more suitable as a speculative opportunity for risk tolerant investors who are comfortable underwriting execution risk and long dated outcomes.

For more conservative investors, it is likely better viewed as a hold until there is clearer evidence of scalability, consistent customer conversion, and improving unit economics.