The company, which is gearing up to become America’s only producer of synthetic graphite, a key component in electric vehicle batteries, has not been able to explain the collapse.

But analysts are predicting it could be a significant year for the company with the possibility of a “break-even” not far off. The average price of artificial graphite anode material was also expected to remain high because of tight supply out of China.

Despite the sudden collapse in December, the Novonix share price was still up 640 per cent last year. It jumped another 9 per cent this morning, breaking through the $10 level.

Analyst Marcus Padley said the stock Novonix “started taking off’’ in June last year when it was noticed by the US Government after showing it was a credible non-Chinese supplier of synthetic graphite anode material and a possible groundbreaker in cathode technology. 

“China’s volatility on the trade front (is) helping drive US interest as well as a desire to end its reliance on Chinese production of critical metals. Excitement also flowed from its work on single-crystal cathode materials that are essential in producing longer life batteries,’’ Padley said.

“Novonix has ambitions to grow anode materials volumes to 150,000 tonnes a year by 2030 and estimates North American graphite anode demand will hit 871,000 tonnes in 2030.”

He said it was a difficult stock to value and shareholders were wary “given the unexplained 34 per cent drop at the start of December’’.

“Announcements, not cash flows, are driving the share price,’’ he said.

Morgans is the only major broker covering Novonix and its Hold recommendation in November implied a $7.32 price target, a long way below its current $9.19.

“The near-term picture doesn’t offer that much of a compelling reason to get involved,’’ Padley said.

“Safe to say it is volatile, an unexplained 34 per cent fall should be a bit of a red flag. The move has taken some of the froth off the top which is putting it back in the focus of bargain hunters. ‘’

He said it was still unclear if it was a bargain at current levels given the eye-watering valuation at 723-times revenue. 

“Its inclusion into the ASX 200 (is) drawing focus as well. A profit isn’t expected to be achieved for a few years so it will be incredibly announcement driven.’’

He said deals with electric vehicle and tech companies to shore up supply chains was likely to drive performance.

“Favourable legislative outcomes from the US are another possible tailwind.’’

He expected a period of share price consolidation around the $9 level, but progress on its production capacity and a deal or two would make it look more appealing.