Northvolt, a key player in Europe’s electric vehicle (EV) battery sector, is undergoing significant restructuring to navigate a challenging economic landscape.

The Stockholm-based company, known for supplying lithium-ion batteries to major automakers like Volkswagen and Volvo, is facing difficulties due to weakening demand in the EV market and cancelled contracts from key partners.

As a result, Northvolt has announced job cuts, and the closure of a production site, and is exploring options for its operations in Poland to ensure long-term sustainability.

Declining EV sales

As one of Europe’s most valuable privately-held tech companies, Northvolt has built a reputation for its advanced battery technology that powers electric vehicles across the continent.

However, the company now faces economic headwinds that have led to declining EV sales and growing uncertainties in the sector.

To address these challenges, Northvolt is making “difficult decisions” to restructure its operations and cut costs.

The restructuring involves layoffs and site closures, with the company working closely with unions and partners to minimize the impact on its workforce.

Job cuts and site shutdowns

While Northvolt has not disclosed specific details on the number of employees affected, the company confirmed that discussions are ongoing to determine the scope of job reductions.

The decision to downsize operations is part of a broader strategy to focus on core business areas and streamline production processes.

One of the major changes includes shutting down Northvolt Ett Upstream 1, its cathode active material production facility in Skellefteå, Sweden, which will be placed into “care and maintenance until further notice.”

Additionally, Northvolt has sold its Northvolt Fem programme in Kvarnsveden, Sweden, to an undisclosed buyer, further consolidating its production capabilities to better manage costs.

EV market slowdown adds pressure

The European EV market has experienced a decline in demand, exacerbating the challenges for Northvolt.

According to the European Alternative Fuels Observatory, EV registrations dropped by 3% year-over-year in May, with plug-in hybrid registrations falling by 10%.

These market shifts have placed added pressure on the company to meet its production targets and maintain key partnerships.

In June, Northvolt suffered a major setback when BMW cancelled a €2 billion contract for EV battery deliveries set to begin in 2024.

The contract was reportedly cancelled due to Northvolt’s inability to meet delivery timelines, adding further strain on the company’s financial outlook.

Northvolt valued at $12 billion

As part of its restructuring efforts, Northvolt is exploring strategic options for its facility in Gdańsk, Poland.

Northvolt Systems, which includes the battery systems production site Northvolt Dwa, may be partially or fully sold as the company enters discussions with potential investors and partners.

This move is aimed at securing funding to stabilize operations and ensure sustainable growth in a highly competitive market.

In the US, Northvolt is focusing on integrating its California-based subsidiary, Cuberg, into its Sweden-based Northvolt Labs.

Cuberg specializes in lithium metal battery technology, and the integration aligns with Northvolt’s strategy to centralize its advanced battery research and development.

Despite the current challenges, Northvolt remains a significant player in Europe’s tech ecosystem.

Valued at $12 billion, the company has strong backing from major investors such as BlackRock, Goldman Sachs, Volkswagen, and Singapore’s sovereign wealth fund GIC.

Industry experts speculate that Northvolt could be a strong candidate for an initial public offering (IPO) shortly, with a potential valuation exceeding $20 billion.

As Northvolt undergoes this transformation, the company is focused on consolidating its operations and securing new partnerships to position itself for long-term success in the evolving EV market.

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The Nikkei 225 and Topix indices are stuck in a correction as concerns about Japan’s economy continues and as traders wait for the next Bank of Japan (BoJ) interest rate decision. Nikkei was trading at ￥36,245, down by over 24% from its highest point this year.

Similarly, the Topix index fell to ￥2,590, down by over 12% from its highest level this year, and is 17% above its lowest level in August.

Japan economic weakness

The two top Japanese indices rose as investors reacted to Monday’s economic numbers from the country. In a report, the statistics agency said that the economy grew at a slower pace than expected in the second quarter. 

The GDP expanded by 0.7% in Q2 after falling by 0.6% in the previous quarter. This economic growth was lower than the median estimate of 0.8%. The growth translated to a year-on-year increase of 2.9%, also, lower than the median estimate of 3.1%.

The economic growth was driven by a 0.9% jump in private consumption and 0.8% increase in capital expenditure and offset by a 0.1% drop in exports. The private consumption figure was smaller than the expected 1% while the capital expenditure report was lower than the expected 0.9%.

These numbers mean that the country’s economy was not growing as the market and the Bank of Japan (BoJ) was expecting. 

Therefore, the implication is that the BoJ may decide to go slow when making its interest rate decision on September 20th. Japan stocks will likely do well when the BoJ halts rate hikes.

In its last decision, the bank decided to hike interest rates by 0.25%, catching most investors and analysts off-guard. The rate hike led to the unwinding of the Japanese yen carry trade, pushing the Nikkei 225, Topix, and other global stocks sharply lower.

Next Federal Reserve actions

The Topix and Nikkei 225 indices are also reacting to the next actions by the Federal Reserve, which is expected to start cutting interest rates later this month.

In a report on Friday, the Bureau of Labor Statistics (BLS) showed that the economy created 114k jobs while the unemployment rate fell to 4.2% and wage growth resumed.

The next key data to watch will be Wednesday’s US inflation report, which will provide more data on the state of the economy. 

These numbers mean that the Federal Reserve will start cutting interest rates on September 19. In it, the bank will likely cut by 0.25%, since the labor market has been relatively resilient.

The Fed actions have a big impact on the Nikkei 225 and Topix indices. In most periods, these indices do well when the Fed is cutting rates. What is unclear, however, is how they will react to a Fed that is cutting rates and a BoJ that is relatively hawkish.

Japan political situation

Meanwhile, the Nikkei 225 index is reacting to the ongoing campaign period as politicians seek to replace Fumio Kishida. 

Some of the top contenders are Sanae Takaichi, a protege of the late Shinzo Abe, Yoshiniko Noda, who served as the prime minister in 2011, and Shinjiro Koizumi, a former environment minister. Koizumi’s father served as Japan’s prime minister between 2001 and 2006.

The next Japanese prime minister has a lot of work to do as the country’s economy continues slowing. Notably, Japan has not been all that involved in some of the top emerging technologies like artificial intelligence and cloud computing. 

Japan is also facing risks from China, which has become a leading producer of vehicles. Just recently, China overtook Japan to become the biggest vehicle exporter. 

Also, China is gaining substantial traction in the Southeast Asian region that Japan has dominated for many years. As a result, in a recent FT interview, the head of Mitsubishi urged the government to intervene.

Credit Saison was the best-performing Nikkei 225 index company on Tuesday as it jumped by over 4%. It was followed by companies like Dainippon Screen Manufacturing, Tokyo Electron, Mitsui Mining and Smelting, and Ebara. All these companies jumped by over 3%. 

On the other hand, the top laggards in the index were companies like Daiichi Sankyo, Taiyo Yuden, Mercari, and Lasertec. Other notable ones were Trend Micro, and Nippon Telegraph & Telephone.

Nikkei 225 index analysis

The Nikkei 225 index surged to a multi-decade high of ￥42,437 earlier this year and then suffered a harsh reversal to ￥31,156 as the Japanese yen carry trade unwinding continued. It then bounced back to a high of ￥39,058 on September 2.

The Nikkei index remains below the 200-day and 50-day Exponential Moving Averages (EMA), and the two are about to form a bearish crossover. It has also moved below the key support level at ￥36,745, its lowest swing on April 19. Therefore, the index will likely continue falling as sellers target the key support at ￥35,000. 

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The Applied Digital (APLD) stock price has gone parabolic in the past few days, making it one of the best-performing companies in Wall Street. The stock surged to a high of $6.60, its highest point since July 17th and 120% above its lowest point this month. It has also soared by 177% from its lowest level this year. 

Nvidia invests in APLD

Applied Digital shares surged in a high-volume environment. Data by Yahoo Finance shows that the volume on Monday stood at over 52 million, up sharply from the average of 9.38 million. 

The stock was also among the top-trending names on social media platforms like X and StockTwits.

This rally happened after the company raised $160 million in funding, mostly from Nvidia, the most popular name in the semiconductor industry. It also received funds from Related Industries, a leading player in the real estate industry.

This investment is notable because of Nvidia’s role in the technology industry, where it manufactures the most advanced GPUs. In the past few years, the company has become the third-biggest firm in the world because of the ongoing AI trend. 

Nvidia has invested in several AI companies in the past. Most notably, it invested in SoundHound AI earlier this year, pushing its stock to a high of $10.26. Since then, however, the stock has dropped by over 55% to the current $4.50.

Applied Digital is growing

For starters, Applied Digital is a technology company that runs data centers. The company initially focused on Bitcoin mining, a high-risk and high-reward industry. It then changed its business strategy in 2022 and exited the mining business altogether.

Now, Applied Digital provides data center solutions to companies in the Bitcoin mining industry, who rent out space in its data centers. It now has seven big Bitcoin mining companies as clients who account for about 83% of its total revenue.

Applied Digital has also moved to the cloud computing industry. Launched in 2023, the division provides cloud services to companies, including AI and machine learning developers. It does that by providing GPU computing solutions to help them handle big workloads. It has over 6,200 GPUs mostly from Nvidia. 

This is a big industry that is expected to keep growing as demand for AI solutions continues rising. It also provides HPC Hosting solutions, where it is building AI data centers. 

Strong quarterly results

The most recent financial results showed that Applied Digital had mixed financial results. It made over $43.7 million in revenues, higher the $8.5 million it made in full-year 2022. 

Its net loss was over $64.8 million while its adjusted EBITDA came in at $4.8 million. The highlight for the quarter was its infrastructure upgrades as it continues to grow its business. It also resolved transformer issues at its Ellendale Data Center Hosting facility and restored it to full capacity.

For the year, Applied Digital made over $165.6 million, a big increase from the $55.5 million it made in 2023. As expected, the company had a big net loss of $149 million.

Analysts are optimistic about Applied Digital’s growth. The average estimate is that its revenue will come in at $53.8 million in the fiscal first quarter over $259 million in 2025 and $402 million in the following year. This shows that the company’s growth is set to accelerate. 

Analysts have a positive outlook for the company, with those at Needham, Roth MKM, B. Riley Securities, and HC Wainwright have a buy rating. The analysts have an average target of $9, much higher than the current level of $6.58.

Still, there are risks for investing in Applied Digital. First, the company depends on just a handful of customers in the Bitcoin mining industry. This means that the loss of just one of them could lead to substantial losses.

Second, Nvidia’s investment is not a guarantee that it will do well in the future. A good example of this is SoundHound, whose stock has not done well since Nvidia invested in it a few months ago.

Third, the AI industry may become cyclical as we saw with other industries like electric vehicles, cannabis, and 3D printing.

Applied Digital stock price analysis

The daily chart shows that the APLD stock price bottomed at $2.37 in May and has now soared by over 178% to its highest point since July. It has jumped above the 50-day and 200-day Exponential Moving Averages (EMA), pointing to more institutional and retail demand. 

The stock has also jumped above the upper side of the ascending channel and is nearing the crucial resistance point at $7.22, its highest point in June. Also, the Relative Strength Index (RSI) has pointed upwards and is nearing the overbought point.

Therefore, I suspect that the stock will rise to $7.22 and then resume the downward trend as the Nvidia news start to fade.

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The BSE Sensex and Nifty 50 indices pulled back slightly as some investors started to take profits. The blue-chip Nifty 50 index retreated to ₹25,000, down from the year-to-date high of ₹25,338. It has risen by over 233% from its lowest point in 2020.

The BSE Sensex was trading at ₹81,560, a few points below the year-to-date high of ₹82,764. Like the Nifty, it has risen by over 217% from its lowest level in 2020.

Indian rupee crash continues

The Nifty 50 and Sensex indices retreated as investors focused on the ongoing Indian rupee crash. The USD/INR exchange rate was sitting at 83.94, its highest level on record. It has risen by 1% this year and by almost 20% in the past five years.

Most analysts believe that the Reserve Bank of India (RBI) will not allow the rupee to weaken below the 84 mark against the US dollar. According to Reuters, the bank has been working behind the scenes to avoid it from falling below 84. 

If the rupee continues to depreciate further, the RBI will likely intervene by using some of the $655 billion of foreign reserves to intervene. 

The other option would be to start hiking interest rates, a move that would make Indian government bonds more attractive to investors. 

The Indian rupee has weakened for several reasons. First, while India’s economy is growing, thee volume of foreign venture capital inflows has been weaker than in the past. The most recent data showed that VC funding for Indian companies rose by 42% in the first seven months to over $6.3 billion.

In the past, however, the country was seeing more investments as foreigners allocated to companies like PayTM, Oyo Hotels, and ByJu’s. In 2021, these investments jumped to over $38 billion. They then slowed to $25 billion in 2022 and $15 billion in 2022.

At the same time, India’s Foreign Direct Investment (FDI) has been in a slow uptrend, rising from over $44.4 billion in 2018 to around $70 billion last year. These inflows have helped to support the Indian rupee.

To some extent, the Nifty 50 and BSE Sensex indices do well when the Indian rupee is weak because many companies focus on exports. This includes firms like Tata Motors, Reliance Industries, Tata Consultancy, Vedanta, and Hindalco Industries. 

Fed and RBI decisions

The Nifty 50 and BSE Sensex indices have also done well as investors as investors focus on the next actions of the Reserve Bank of India (RBI) and the Federal Reserve. 

The next Federal Reserve monetary policy meeting will happen on September 19, and will likely have a big impact on US and Indian equities. Economists expect the Fed to cut interest rates now that the labor market is softening and inflation has retreated. 

Data released on Friday showed that the unemployment rate remained above 4% in August as the economy added over 142k jobs in August. Fed rate cuts will likely fuel Indian stocks as American investors look for yield elsewhere.

The Reserve Bank of India, on the other hand, may decide to start cutting rates either later this year or in the first quarter of 2025 because of the stubbornly high food inflation rate in the country.

Top Nifty 50 index movers

The biggest mover in India was Premier Energies, which went public last week and has surged by over 50% since then. Premier Energies is a top company that focuses on solar energy in the country. It can manufacture 2 GW of solar modules each year. 

The other top movers in India were companies like Paramount Cosmetics, Marshall Machines, Sonal Mercantile, and Capital India Finance.

Reliance Industries rose by over 2% while Vodafone Idea rose by 3% even after Goldman Sachs warned that it may crash by over 80% in the coming years.

Adani Group shares were in focus after a Kenyan court halted the transfer of Kenya’s Jomo Kenyatta International Airport (JKIA) to the company in a 30-year lease. 

Nifty 50 index analysis

Nifty 50 index | Chart by TradingView

Looking at the daily chart, we see that the Nifty 50 index has been in a strong uptrend after bottoming at ₹16,820 in April last year. It has jumped by almost 50% since then as global stocks have rebounded.

The index has constantly remained above the 50-day and 200-day Exponential Moving Averages (EMA), meaning that bulls are in control.

It peaked ₹25,338 in August and then pulled back slightly to the psychological point at ₹25,000. At the same time, the Percentage Price Oscillator (PPO) has remained above the neutral point of zero.

Therefore, more Nifty 50 index upside will only be confirmed if it moves above the key resistance point at ₹25,338. If this happens, the next point to watch will be at ₹26,000. 

BSE Sensex index forecast

Sensex index chart by TradingView

The Nifty 50 and BSE Sensex indices have a close correlation with each other. The Sensex peaked at ₹82,765 earlier this year and then retreated to ₹81,600. It has remained above all moving averages and formed a small double-top chart pattern. 

Therefore, like the Nifty index, the Sensex will need to move above the key resistance level at ₹82,765 to confirm the uptrend. A move above that level will lead to more upside to the next resistance level at ₹83,000.

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Penny stocks could see some more volatility in the coming months as the Federal Reserve starts cutting interest rates later this month. Historically, many traders tend to rotate to these companies when the Fed is cutting rates. 

This article looks at Artificial Intelligence Technology Solutions (AITX), Intelligence Bio Solutions (INBS), and Tonix Pharmaceuticals (TNXP), which have become highly popular among day traders.

AITX stock price analysis

AITX is a technology company that builds robots through its RAD, RADR, RADM, and RADG subsidiaries. RAD makes stationary workflow automation solutions while RADM makes solutions for mobile workflow. RADR manufactures solutions for the security industry while RADG builds software for its companies.

AIT’s business has been doing well and the management anticipates that the trend will continue. In the most recent update, the company said that it was about to get to $10 million in annual recurring revenue (ARR) as it continues receiving more orders. 

Its orders in the second quarter came in at 172, meaning that it will generate an ARR of $210k monthly when fully deployed. Based on its operating model, AITX sells the devices and then it starts making money through a subscription model. 

AITX stock surged to a high of $0.0146 in 2023 as the artificial intelligence (AI) hype continued. It then suffered a harsh reversal and retreated by 87%, bottoming at $0.0018 in December last year. 

Earlier this year, AITX stock surged to a high of $0.01 on May 21 as the AI hype continued. Most recently, it has erased most of the gains it made earlier this year. This reversal happened after we warned that the CEO, Steve Reinharz salary was higher than its total revenue. The company is also making substantial losses.

It has dropped below the 50-day Exponential Moving Average (EMA), meaning that bears are in control. The Relative Strength Index (RSI) has continued falling and is now nearing the oversold level. The same is true with the Stochastic oscillator.

Therefore, the AITX stock price will likely continue falling as sellers target the key support at $0.0018, its lowest point in November last year. The main risk to the bearish view is that it has formed a falling wedge pattern, a popular bullish sign.

AITX chart by TradingView

Intelligent Bio Solutions | INBS

Intelligent Bio Solutions is another penny stock that has become highly popular among day traders. It has a market cap of over $5.8 million and had an average volume of over 90.5 million on Monday.

The company, which is building non-invasive, cost-effective workplace drug testing solutions, reported strong financial results on Monday. Its fourth-quarter revenue figures rose by 64% during the quarter and by 148% from the same period in 2023. Revenue rose to $0.73 million in the quarter and $3.11 million in the last financial year. 

INBS’s success came in from its growing installed base, which reached 1,000 readers in the United States. It then makes recurring revenue since these readers require a continuous supply of cartridges.

Despite the strong results, Intelligent Bio Solutions has been a highly embattled company whose stock has crashed from over $2,500 to just $1.80. It has even been forced to do several reverse splits to ensure its compliance with the NASDAQ listing requirements.

Most recently, the INBS share price peaked at $11.72 in February to the current $1.79. It has also formed a bottom at $1. Also, the stock is consolidating at the 50-day moving average. Therefore, the stock will likely remain in this range in the near term as the post-earnings jump fades.

INBS chart by TradingView

Tonix Pharmaceuticals | TNXP

The Tonix Pharmaceuticals stock has been in the spotlight in the past few weeks as the number of Monkey Pox cases has soared. The company, which has a market cap of over $3.14 million and had a daily volume of over 229 million on Monday. This happened as the company made progress on its Mpox vaccine. 

TNXP, like INBS, has been under pressure in the past few years. Its stock has dropped by almost 100% in the past few years. It has also plunged by 98% this year alone and by 99.9% in the last five years. 

This performance happened as the company continued reporting substantial losses and diluting its existing shareholders. Its annual loss in the last financial year stood at over $116 million, up from over $110 million a year earlier. Altogether, the firm’s total loss in the last five years was over $400 million.

Tonix has seen its total outstanding shares from just 392 in 2018 to over 5 million today. Its stock has remained below all moving averages while the RSI has continued falling. Therefore, the outlook for the stock is extremely bearish and could move to zero soon.

Tonix chart by TradingView

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