Three wheels, one passenger, and a heaping dose of ambition in the electric vehicle market. That’s the vision of Electrameccanica Vehicles (NASDAQ:SOLO) and for outside-the-box traders, there’s a solid case to be built in favor of a long-term position in SOLO stock.
Not everybody likes Electrameccanica as the company’s vehicles certainly don’t look like most of the cars you’ll see on the roads today. The first time you see a photo of a Solo car, you might be a little bit shocked.
But you also might be intrigued at the idea of an electric car with three wheels that only seats one person. Could this be one of the most efficient cars available today? And, is it possible that these little vehicles will be seen as normal someday?
You can say “yes” to these questions with a small position in SOLO stock, if you dare. This isn’t for everybody, but we’ve seen other electric-vehicle companies enrich investors and Electrameccanica could be the next game changer.
A Closer Look at SOLO Stock
This one’s a fast mover as SOLO stock often goes up or down 3%, 4% or even more in a single trading session. That’s because it’s a low-priced stock and because the electric vehicle is sensitive to ongoing news developments.
Interestingly, the 52-week high price of SOLO stock is exactly $6. That’s a great long-term target for the bulls to aim for. Ultra-bullish traders might be tempted to expect $6 per share this year, but they should be more realistic and work towards $4 first.
While you’re busy monitoring the price action in SOLO stock, don’t forget to keep tabs on Tesla (NASDAQ:TSLA) stock as well. I’ve been recommending this a lot lately because of what I call the Tesla effect.
Smaller electric-vehicle stocks have a tendency to follow Tesla stock, at least to a certain extent. This just goes to show how powerful Tesla is in this niche. SOLO’s massive price spike in early July might be attributable to the Tesla effect.
Raising Cash
But don’t get the impression that Electrameccanica is just a mini-Tesla. The company is working hard to make a name for itself and find its footing in a somewhat crowded electric-vehicle field.
In order to achieve this, Electrameccanica needs to maintain a solid cash position. Fortunately, the company’s second-quarter fiscal results indicate that Electrameccanica is raising enough capital to keep its business healthy.
As of June 30 Electrameccanica’s cash, cash equivalents and short-term deposits totaled 51.3 million CAD. That’s a huge improvement over the 11.1 million CAD recorded as of Dec. 31, 2019.
A reduction in spending contributed to this, no doubt. Thus, Electrameccanica’s second-quarter 2020 cash used in operations came to 5.7 million CAD. If that sounds like a lot, bear in mind that it’s substantially less than the 8.2 million CAD reported from the same quarter of the previous year.
New Facility, New Horizons
Whenever Tesla CEO provides hints about the location of another “giga-factory,” market commentators get whipped up into a frenzy. Yet, Electrameccanica is doing something very similar by teasing its state-of-the-art “U.S. based assembly facility and engineering technical center.”
SOLO stock holders should be excited to learn that Electrameccanica has narrowed the proposed location of the facility to Arizona, Florida and Tennessee. Wherever it ends up, the new assembly facility will represent a major expansion initiative for Electrameccanica.
The company’s CEO, Paul Rivera, considers this move as part of a “larger goal of a multi-use, urban SOLO ecosystem for personal, commercial, utility and fleet applications.”
I call it part of the tiny-car invasion of America. If it gains traction, then there will be little Solo cars in every state and they’ll be not just normal, but even fashionable.
The Bottom Line
Are Solo vehicles too weird for America? Electrameccanica is making a grand-scale gambit that they’re not. If you’re on board with this plan, consider SOLO stock as a vote in favor of ultra-efficient, future-facing transportation.
As of this writing, David Moadel did not hold a position in any of the aforementioned securities.
