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What happened

Novonix (NASDAQ: NVX) stock is making huge gains in Friday’s daily trading session. The battery-technology specialist’s share price was up 31.7% as of 11:15 a.m. ET, according to data from S&P Global Market Intelligence.

Novonix published a press release after the market closed yesterday announcing that its production of high-performance synthetic graphite for use in lithium-ion batteries had met performance targets. The Australia-based company also announced that it was now expecting much better production capacity at its Tennessee facility.

So what

With its recent production and testing results, Novonix’s furnace technology looks better positioned to support scalable and cost-effective production of synthetic graphite. The company is now aiming to reengineer its Tennessee facility to support the production of up to 20,000 tons of synthetic graphite per year — up from its previous target of 10,000 tons per year. With production seemingly on track to scale rapidly, Novonix could be moving closer to profitable creation of the material.

Now what

Novonix is still in the early stages of ramping up its business and exploring new battery-technology solutions. The company has recorded just $4.25 million in revenue across the first half of this year and is valued at roughly 39 times this year’s expected sales.

NVX PS Ratio (Forward) data by YCharts

Even with today’s stock pop, the company’s share price is still down roughly 40% year to date and about 89% from the peak it reached shortly after its public debut in 2021. While the stock could deliver explosive growth if the company ramps up production and scores wins with key suppliers, the business outlook here remains highly speculative. Investors should approach the stock with the understanding that it’s a high-risk, high-reward play and one that probably shouldn’t be weighted too heavily even in a growth-oriented portfolio.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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