Is Microvast's Record Margins & Profit Growth Sustainable?

Microvast Holdings MVST demonstrated its operational prowess with a record gross margin of 34.7% in the second quarter of 2025, marking a jump of a whopping 220 basis points (bps) from the year-ago quarter. This growth highlights its operational strength, particularly due to its solid revenues, which increased 9.2% year over year to $91.3 million from the year-ago quarter’s $83.7 million.

This synchronized top-line and gross profit expansion displays a vivid shift in operational scaling rather than depending on growth volume.

The driving force behind the impressive gross margin expansion was clearly outlined by leadership in the second-quarter 2025 transcript as a relentless focus on operational execution, increased utilization and disciplined cost management. This paints a clear picture of the company’s structural and efficiency improvements ingrained by MVST’s supply-chain strength. Operational efficiency was validated with an adjusted gross margin of 36% in the recently reported quarter, up from 28.5% in 2024.

The margin improvement translates into a robust profitability position. The company achieved a positive adjusted EBITDA of $25.9 million in the June quarter, which is a significant feat achieved post an adjusted EBITDA loss of $78.4 million reported in the year-ago quarter. This massive turnaround is a validation of the effectiveness of MVST’s cost execution and scalability, leading to strong financial health.

The strategy behind Microvast’s long-term sustainability revolves around the expansion of capacity and prudent cost management. We expect the Huzhou Phase 3.2 expansion, which will add 2 gigawatt-hour of annual production capacity, to help the company meet customer demand. Banking on these positives, management anticipates 18-25% year-over-year revenue growth and a gross margin between 30% and 32%, signalling confidence in maintaining a robust margin profile, key to sustained profitability.

MVST’s Price Performance, Valuation & Estimates

Microvast has skyrocketed 1451.1% in the past year, significantly outperforming Yext YEXT, Vimeo VMEO, the industry as a whole and the Zacks S&P 500 composite. The industry and the Zacks S&P 500 composite rallied 78.1% and 17.2%, respectively. Yext and Vimeo have gained 25.3% and 53.3%, respectively.

1-Year Price Performance

In the year-to-date period, MVST has gained 87%, outperforming the industry’s 40.7% growth and the Zacks S&P 500 composite's 14.2% rise. Yext and Vimeo have rallied 36.4% and 21%, respectively, for the same period.

From a valuation standpoint, MVST trades at a forward price-to-earnings ratio of 14.63, below the industry’s 30.06. Microvast Holdings has a Value Score of D.

The Zacks Consensus Estimate for MVST’s earnings for 2026 and 2027 has increased 46.2% and 20.8%, respectively, over the past 60 days.

Microvast flaunts a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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