Arcimoto (FUV) Shares Continue to Advance Toward Their Potential
Good day everyone,
Today we are continuing coverage of Arcimoto, Inc. (NASDAQ: FUV), a manufacturer of electric three wheeled hybrid type vehicles. They are producing three models, a recreational vehicle (FUV), a model for making deliveries (Deliverator) and an emergency response vehicle (Rapid Responder). All can be licensed for use on public roads.
Current price $5.40 per share
FUV shares have done well since we reported on them the 22nd of June, gaining 50% as of this report. Congratulations to our members who have realized gains. We love this story, sector and company.
We wanted to highlight a few of the positives we see in FUV shares that could drive the price to higher levels.
Revenues: The company started generating revenues late last year and the revenues have been on a solid ramp-up. With that said, production at their manufacturing facility has been shut down or restricted since March due to coronavirus. Restrictions due to the pandemic are beyond the company’s control. More importantly, FUV has a plan in place to build their production ramp to 200 vehicles per week by next year. Their EV models sell for $20K+ so we can see a pro-forma revenue goal of $200M annually.
Balance Sheet: The company recently eliminated all debt from their balance sheet except for a $1.6M capital equipment lease. When a company eliminates debt, and in the FUV case, $5.6 million of debt and liabilities has been extinguished from the Company’s balance sheet, they also eliminate the costs of carrying that debt. We always like the balance sheets with zero long term debt.
Share structure: FUV only has 24.49M shares outstanding and 13.94M shares in the public float. The company just announced a capital raise proposal to sell 1.7 million shares to institutional investors. If the sale comes to fruition it will increase the outstanding shares by 7% to 26.2M shares. This is great news for the company as it needs to finance the ramp-up in production. The impact on the outstanding share count is negligible and there will not be an interest expense to negatively impact the bottom line. We feel that the common stock sale (at $5.00 per share) may be preferential to adding costly long-term debt.
HyreCar collaboration: The deal with HyreCar gives FUV a solid potential for increased vehicle sales and a possible secondary revenue stream. HyreCar is a company that connects vehicle owners with folks that want a short-term rental, through their website. FUV vehicles could be rented for short term delivery service or for ride sharing. While motorcycle sales constitute 3% of vehicle sales, they only account for .06% of miles driven which means they sit idle a lot of the time. Consumers may be more inclined to purchase an EV from Arcimoto if they knew it could also generate a revenue stream for them.
Insider ownership: This is one of the characteristics we look hard at in any company, sometimes more importantly than their financial metrics. The rate of insider ownership at FUV is 43.63% and that is a large position. Investors tend to look toward management favorably when shareholder value is a key goal of the company. When the insiders at a company hold such a large position as 43.63% their dedication to shareholder value is tacit.
The move toward electric vehicles will continue at a rapid pace. The global Electric Vehicle Market Size was estimated at $162.34 Billion in 2019 and is expected to reach $802.81 Billion by 2027, at a CAGR of 22.6 percent. We know that 3% of all registered vehicles are motorcycles but we don’t know how much that 3% could grow if the motorcycles were electric and had a body. Regardless, 3% of $802.81 B is still $24 billion.
FUV is at the forefront of this change in transportation. FUV is ready to exploit the market and reap the benefits. We believe the current market cap of $133M may experience significant growth.
We will have more on this one soon,
The Traders News Group
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