Avantium Stock Analysis – AVTX Stock – Too Many Miracles Have To Happen

This Avantium Stock Analysis (AMS: AVTX) is part of my full analysis of every stock traded on the Amsterdam Stock Exchange. My goal is to find stocks to invest in that offer 10-bagger potential, so as would Buffett say; I start with the As.

Avantium Stock Analysis

Avantium Stock (AMS: AVTX) is more like venture capital investing than anything else. The company is not profitable and is still in the product development stage where it is taking advantage of the very positive environment for ‘green’ businesses to finance its business. Let’s look at the stock price, the investment thesis, the risk and reward and conclude with a remark on how and when a stock like Avantium might fit one’s portfolio.

Avantium Stock Price Overview

Avantium went public in 2017 at 11 EUR per share. The current AVTX stock price is around 5 EUR while the low was reached in 2019 with 1,82 EUR. AVTX’s stock price movement also indicated that there is potential for total loss as right after the IPO the stock dropped more than 80%. If you wish to dig deeper into the drop you might want to look at when insiders were allowed to sell after the IPO.

AVTX stock price chart
AVTX stock price chart

Avantium’s market capitalization is 155 million EUR which puts it into the small cap category.

Avantium Stock Investment Thesis – Business Overview

Investing in AVTX stock is making a bet on:

  • Their two innovative chemicals, FDCA and plant-MEG that result in 100% plant-based plastics,
  • The market adopting such plastics as mainstream and Avantium having an advantage in the sector thanks to their patents,
  • The FDCA flagship plant that should be completed by 2023 and then scaled globally as the company sells licences to their proprietary technologies,
  • Being able to produce things on scale and cheaper than the competition because, as they say in their presentation, they only hope to lower costs when significant global scale is achieved (this is where they lose me as an investor because it is really too much hope – plus, if it is profitable, nothing stops the competition to get into the business with similar products etc.)
Avantium Stock Analysis – Investment Highlights - Source: Avantium
Avantium Stock Analysis – Investment Highlights – Source: Avantium

Avantium might be interesting from an ESG perspective which is very trendy now but still, if you don’t want to be a hypocrite, you should best focus on buying local, less plastic etc. than to be happy because you are not using oil anymore but you are using sugars grown on fields that were forests once and where pesticides are used at scale.

Avantium Stock Analysis – Source: Avantium presentation
Avantium Stock Analysis – Source: Avantium presentation

Want to be ESG? Grow vegetables in your garden – no transport, no plastic packaging, no pesticides, no medicines as you exercise, eat healthier and live longer. Please don’t think that by investing in ESG stocks you are changing the world, for the most part ESG investing is just another story showing what ‘Wall Street’ does best, i.e. selling a new story to naïve investors.

Avantium Stock Analysis – Financials

Avantium’s plan is to reach scale profitability only in the long-term, likely very long term. Until that happens it will be mostly used for niche applications. This also means that the competition has plenty of time to enter the business and disrupt the disruptor if the business model proves profitable after all.

Avantium Stock Analysis – Source: Avantium presentation
Avantium Stock Analysis – Source: Avantium presentation

Of course, when the business model is fully proven and de-risked, the stock will jump and if there is more positive news or even profitability, then it might do even better. I would add Buffett’s line here: “I don’t invest in miracles”.

Avantium Stock Analysis – Source: Avantium presentation
Avantium Stock Analysis – Source: Avantium presentation

If it doesn’t work, if there are financing issues at any point in time down the road, someone might just buy the technology over for cheap and continue while cutting you out as an owner. So, this is really a game for venture capitalists that understand the rules of investing in such investment vehicles. I find it a disgrace that Avantium is a public company and that retail investors can invest.

From a financial perspective, there is only the legacy catalyst business making just around 10 million EUR in revenues, so nothing significant. I just hope this is not a scheme where the owners of a small catalysts chemical business decide to bank on a hot trend like plant based plastics to get some money out for them in the long-term.

Avantium Stock Analysis – Financials – Source: Morningstar
Avantium Stock Analysis – Financials – Source: Morningstar

There simply are no fundamentals there and they are using grants and loans to bet on their technology. So, all when it comes to Avantium is a pure bet.

Avantium Stock Analysis – Investment Conclusion

Anything can happen, but there is simply too much risk for me to invest into this as there is no margin of safety whatsoever.

Short article, thus I have time to pick some weeds from my garden and make myself a nice salad for lunch. Enjoy your lunch and I’ll look for better investments that will make us money with a margin of safety so that we have even more time to be in our gardens growing our own food.

My ESG investment – I am renting now, wait when you see my proper garden:-)

Here is my salad from my garden for today. I am renting so nothing fancy, but is already a contribution – think about it.

I focus on doing research and creating value, thus I publish things only during the last weekend of the month. To get the ONE SUMMARY EMAIL MONTHLY and pick the content that creates value for you, join my newsletter.

About the author: Sven Carlin Ph.D. is a dedicated investing educator and stock market researcher focused on finding investment opportunities with a value investing perspective. His research is summarized on the Sven Carlin Research Platform where he covers many stocks and shows his portfolios. The educational part is shared on YouTube and the Free Stock Market Investing Course.

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