Microvast Shares Defy Strong Fundamentals with Steep Decline

Investors are grappling with a perplexing situation surrounding Microvast Holdings. Despite the company announcing record-breaking quarterly revenue and a significant strategic partnership in Europe, its stock has experienced a severe downturn in recent weeks. This divergence between robust operational results and weak market performance raises a critical question: does this sell-off present a concealed buying opportunity?

The battery manufacturer's latest quarterly report showcased formidable operational strength. Revenue surged to a record $123.3 million, representing a substantial 21.6% year-over-year increase. The company also demonstrated impressive profitability, achieving a gross margin of 37.6%. Furthermore, its adjusted EBITDA landed firmly in positive territory at $21.9 million. Contrary to expectations, these strong results triggered a wave of investor selling, culminating in a single-week share price drop exceeding 20%.

Strategic European Alliance Forged

A key development underpinning Microvast's long-term strategy is its newly formed collaboration with Škoda Group. This partnership is focused on designing and producing advanced battery systems for public transportation networks across Europe. The companies aim to deploy the first vehicles equipped with this co-developed technology by the end of 2026. This move not only grants Microvast direct access to the European market but also establishes local production capabilities—a crucial competitive edge when bidding for public sector contracts.

Should investors sell immediately? Or is it worth buying Microvast Holdings?

Capacity Expansion Underway to Meet Demand

Supporting its growth ambitions, Microvast is actively advancing its manufacturing expansion. The Huzhou Phase 3.2 facility is scheduled for completion within the current year. From the first quarter of 2026 onward, this new plant is projected to contribute up to an additional two gigawatt-hours of production capacity. This expansion is considered vital for the company to keep pace with rising global demand for its battery solutions and to solidify its international growth roadmap.

The central dilemma for investors remains the glaring disconnect between the company's solid fundamentals and its struggling stock price. While the Škoda partnership and capacity expansion paint a promising long-term picture, the equity must first navigate the prevailing negative market sentiment and overcome the current downward pressure.