The Novonix Ltd (ASX: NVX) share price fell by 21% over the first quarter of FY22.
Today, the battery technology and materials company is trading down 2.5% to $1.76.
By comparison, over the first quarter the S&P/ASX All Ordinaries Index (ASX: XAO) dipped by 0.6%. So, Novonix did about 20 times worse than the broader market.
Drill down even further, and Novonix's home sector — the S&P/ASX 200 Information Technology Index (ASX: XJI) — actually gained 2.3%.
The quarter ended with an absolute shocker in September. Despite no news from the company, the Novonix share price dropped by 27%.
Yeah, Q1 FY23 was not a great period for Novonix. What on Earth is going on here?
Image source: Getty Images
Why has the Novonix share price been slaughtered?
Unfortunately, Q1 FY23 was just an extension of a big loss in value for the Novonix share price that took place in Q4 FY22.
Over the past six months, the Novonix share price has dropped by more than 70%. Most of that occurred in Q4 FY22, but let's focus on what happened in Q1 FY23.
Arguably, the worst bit of news for Novonix shareholders was the company's annual report, released in August. It detailed a $71.4 million loss for FY22 and a $40.35 million net operating cash outflow.
Now, it's not uncommon for growth companies to spend big in their expansion phase.
As my Fool colleague Zach reported, a big part of the FY22 outflow was the purchase of an approximate 5% stake in United States battery tech company KORE Power. That cost Novonix $35.1 million in cash and scrip in January.
It's worth noting that Novonix did report revenue growth in FY22. Revenue came in at $8.4 million, up from $5 million in FY21. But it's yet to turn a profit.
The company added to its costs when it gave rather large pay rises to key management personnel.
As Zach noted, the company increased its remuneration by 224% in FY22 to $21.45 million. That's up from $6.6 million in FY21.
Here's the clincher, though.
On 20 September, Novonix's auditor, PriceWaterhouseCoopers (PWC), said there was "a material uncertainty exists that may cast significant doubt on the Group's ability to continue as a going concern". Yikes.
The auditors said Novonix "remains dependent upon raising additional funding to finance its ongoing expansionary activities".
Shareholders can ask questions this month
October heralded a new 52-week low share price of $1.655 for Novonix. This was recorded during intraday trading on 3 October. This is a pretty good indicator that shareholders are feeling nervous.
Continuing pressure for Novonix comes in the form of rising interest rates. Obviously, that makes debt more expensive, and as a growth company, Novonix needs to borrow to fund its expansion activities.
The company increased its borrowings to $1.474 million in FY22, up from $277,060 in FY21. Borrowing costs in FY22 increased to $2.086 million, up from just $229,394 in FY21.
Shareholders will have the opportunity to ask questions at the upcoming annual general meeting.
The meeting will be held on 26 October in Brisbane.
