KULR Technology (KULR -2.92%), a provider of energy storage solutions, saw its stock rally about 1,610% over the past two months. It had been languishing as a penny stock since early 2023, but it abruptly skyrocketed and transformed into a hypergrowth stock after it secured new contracts, regained compliance with the NYSE American's listing standards, and made a big Bitcoin purchase to launch its own Bitcoin treasury.
But should you buy, sell, or hold KULR's stock after that breathtaking rally? Let's review its business model, growth rates, valuations, and potential catalysts to decide.
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What does KULR Technology do?
KULR develops energy storage solutions for the aerospace and defense industries. Its integrated products dissipate the heat of lithium-ion batteries with thermal interface materials, lightweight heat exchangers, and other safeguards against runaway heating.
Its solutions can be customized across a wide range of power and electronic configurations, which makes them ideal for tiny spaces with size and weight limitations.
KULR was founded in 2013, and it initially developed fiber-based thermal management technologies for NASA and other aerospace applications. Those heat-dissipating technologies became the foundation of its current business, and it went public as an over-the-counter (OTC) stock in 2018 before being uplisted to the New York Stock Exchange in 2021.
How fast has KULR been growing?
KULR's revenue rose 285% to $2.4 million in 2021, 66% to $4 million in 2022, and 146% to $9.8 million in 2023. That expansion was driven by its growing list of partners and customers, which includes SpaceX, Tesla, Meta Platforms, Boeing, and General Motors.
Over the past three months, KULR expanded its existing U.S. Army battery contract, signed a new high-temperature battery-testing contract with the U.S. Navy, won a defense contract for a major missile program, and announced a plan to launch its KULR ONE Space (K1S) battery to a satellite via SpaceX's rideshare program in 2026.
Analysts expect KULR's revenue to only grow 4% to $10.2 million in 2024, but they expect that figure to grow at a two-year compound annual growth rate (CAGR) of 123% to $50.8 million in 2026 as it recognizes more revenue from its contracts. They also expect it to narrow its net losses and squeeze out a net profit of $2.9 million in 2026.
As KULR scales up its business, it plans to spend 90% of its surplus cash on Bitcoin purchases to build up a Bitcoin treasury. It recently made its first purchase of 217.18 Bitcoins for $21 million at an average price of $96,556.53.
That strategy seems similar to MicroStrategy's Bitcoin buying frenzy over the past four years, but MicroStrategy holds a lot more Bitcoin ($11.9 billion) as of Nov. 10 with a much lower average purchase price of $42,692.
Can KULR justify its meme stock valuations?
The bulls claim that KULR has carved out a defensible niche and can continue to scale up its energy solutions business as it accumulates more Bitcoin. The bears will point out that with an enterprise value of $1.15 billion, KULR is overvalued at 115 times this year's sales and 23 times its projected sales for 2026.
They'll also point out KULR has increased its number of shares by 164% over the past five years, yet its insiders sold more than 50% as many shares as they sold over the past 12 months. They also didn't buy a single share over the past three months.
So for now, KULR looks more like a meme stock than a sustainable growth stock. It's generating a lot of buzz with its thermal technology, expanding customer base, and Bitcoin purchases, but it simply isn't bringing in enough revenue to support its sky-high valuations. Therefore, it's smarter to sell KULR's stock than to buy a new position or hold it in anticipation of bigger gains.