Thesis

I believe Hyliion (HYLN) is undervalued and poised for a 10x jump by Q3 2026. 

History

The company summary, from a certain stock brokerage app: “Hyliion Holdings Corp. manufactures hybrid and electric powertrains for trucks. It engages in the provision of hybrid technology to tractor trailers.”

This is incorrect, by about two years. Follow me.

Due to uncertainty in the market and the slow adoption of electric trucks, Thomas Healy and HYLN decided to pivot away from the drivetrain business model, and in 2023, fully shifted production to their KARNO power generator. 

The KARNO technology was purchased from GE Aerospace. It is a fuel-agnostic, “next-gen” power generator, with a myriad of current known applications (off-grid power generation, backup power for data centers, hospitals, commercial and municipal infrastructure, etc.), and a seemingly endless possibility of unknown applications as we surge forward into a world of energy-insecurity. 

Current Offering

You might have missed the “fuel-agnostic” part, and that’s what makes their technology unique:

Are you a manufacturer worried about the rising costs of fossil and alternative fuels, debating which is cheapest, while unable to fully capitally invest in upgrades to squeaky clean energy? The KARNO doesn't care how much it costs, or what it is, just feed it and it works.

Are you a commander overseas propping up a forward operating base in unknown territory? “Ah shit, they have diesel here instead of regular, we’re fucked.”

Are you a hospital that needs steady and consistent backup power in case of emergency? You want Nan to stay with us a little longer, right? You’re probably not in the will anyway after that one thanksgiving. 

Since pivoting, HYLN was able to secure government research contracts, specifically with the Navy. Their contracts are currently in the testing phase, and for completion will require full load testing of the units they have already delivered. (One of the test units in the shop back home has been purring like a kitten since March). They encountered manufacturing issues, they acquired more tooling than they would have liked in order to bring some of it in-house instead of outsourced, they have been spending more on R&D to maximize the amount of efficiency these things can handle, and despite these negative factors, they've resolved the issues and maintained their delivery windows for the rest of 2025 (a total of 10 units). 

For the engineers, it’s a Stirling engine platform, rather than electric or combustion. Stirling engines have a fascinating history and I encourage you to look into them more, but the benefits are again being fuel-agnostic, easily-portable at any size, and much quieter than other engine types. 

For the people-people, Thomas Healy (CEO) is a young leader worth keeping an eye on. It takes more than just balls to make the difficult decision to pivot, and it takes more than just brains to make it successful.

The LOI’s (letters of intent) are already coming in, mostly from unannounced sources due to legality and non-binding-ness, but of those publicly spoken about, you might recognize such names as “The Saudis”.

Publicly-Announced Contracts:

• Phase 2 SBIR (Small Business Innovation Research, $1.5m) with the Navy, to develop the software behind the hardware and allow for multi-unit scalability
• ONR Contract (Office of Naval Research, $15m), the big one and currently in the late-testing having already delivered units for an unmanned vessel and FOB
• I’m going to bury a lede here in the Contracts portion, but the Big Beautiful Bill just granted a flat 30% tax credit for businesses who invest in fuel-related infrastructure (carbon emissions be damned)
• The Air Force just deemed them “awardable” for a multi-fuel resilience initiative
• A grant from the Department of Energy to assist with methane emission reduction

Financials

This stock is trading in at the research phase, pre-commercialization price. This can be compared to multiple companies who have been successful through this process of R&D to production, specifically with branches of military in this case. I’m happy to provide examples if needed. 

They are using their cash and investments as expected, despite the slight increase due to the in-house tooling, and have plenty of runway to reach their targets of commercialization in 2026 and beyond. Happy to provide exact numbers as well, if requested. They have also been investing in the manufacturing infrastructure and tooling needed to reach production levels, and will continue to do so through the end of this year. 

The contracts and grants have provided a small amount of revenue to offset some of these costs, but you will see they are currently operating at a loss. 

Moving Forward

Commercialization in 2026 (which is on target as of the last revenue call) will involve ramping up production capability, resolving any additional manufacturing or efficiency issues that may arise in testing, and plowing through the verticals to find customers, some of which have already latched on like our enigmatic friends "The Saudis", though most are still currently unannounced. When you combine a 30% tax credit with the peace of mind of a fuel-agnostic generator, it’s an easier sell to your COO’s and CFO’s. 

Play

“I may have been early, but I’m not wrong.” 

“It’s the same thing Mike.”

I’ve been loading up on calls with some shares as well. Apr’26 $1.5 and $2. About 40 of each so far, so nothing huge, and with no volume, I may get fucked if I try to roll them. Open interest is starting to appear on the upside, but I'm a small fry with not very much money and an LLM.

It’s a bet. A very risky yet boring, quiet bet, that I encourage you to look into for yourself if you're interested in finding companies with cool tech that can profit in the future once produced.

I’m listening for any news of new contracts, and waiting somewhat impatiently for their next earnings call (11/13), where hopefully we’ll get an update on how the testing is progressing. The Navy already showed on YouTube the unmanned vessel on which they’re installing a KARNO. The American military industrial complex is still alive and well, but I believe in this company and product long term for a multitude of use cases beyond the forced ingestion of democracy and culture.