Whatever Opinion You Hold on Electrameccanica Vehicles, You May Be Right

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In previous articles about Electrameccanica Vehicles (NASDAQ:SOLO) I’ve expressed my skepticism about the company’s single-seat, three-wheel vehicle. Writing about stocks affords me the flattering ability to be my own echo chamber. After all, why I would offer an opinion I don’t believe in. Nevertheless, investors will do what they want. And they seem to want to buy SOLO stock.

The Solo vehicle from Electra Meccanica Vehicles (SOLO) drives through Vancouver
Source: Luis War / Shutterstock.com

That’s also an opinion that’s shared by at least a few of my InvestorPlace colleagues. For example, Faisal Humayan cited Electrameccanica research from the U.S. Census that cites 76% of people travel to work in a personal vehicle.  The thought is why waste space, and gas, in a vehicle that nobody else is traveling in? But my rebuttal is the fad of the tiny house. People liked them until they realized that sometimes having extra space is nice.

The simple truth is I can’t prove that my opinion will pan out. Neither can those that are bullish on SOLO stock. Ultimately the consumer will decide. When they do, we’ll all have a much clearer direction on the company’s long-term fortunes.

Microcars Have a Checkered Path

In the spirit of the holiday season, I promise not to press my skeptical point of view too far. However, I did find this tidbit interesting. In May, New York Times reporter, Susan Carpenter wrote about Electrameccanica’s launch of the Solo vehicle. Carpenter interviewed Karl Brauer, the executive publisher of Kelley Blue Book, who stated that far from being a novelty, the Solo is the latest generation of the microcar.

Brauer believes that Electrameccanica will get sales. But he doesn’t believe it will get enough of them to bring the car to the needed scale. This opinion about the company’s long-term viability was echoed by my InvestorPlace colleague Larry Sullivan who wrote, “Electrameccanica may find a niche for its vehicles and survive. But the outlook for SOLO stock as a long-term investment is quite uncertain.”

I remember the Smart car. I even knew a couple of people who owned one. It never took off. The Solo may be a cooler version (even though it’s technically a motorcycle not a car) but I’m just not sure.

Right Idea, Wrong Market

In my last article about the Solo vehicle, I expressed my feeling that the commercial market may drive the ultimate success of Electrameccanica. Getting back to my echo chamber comment, I was pleasantly surprised to see that Will Ashworth expressed a similar thought.

Both of us have concern about the Solo’s current ability to carry cargo (it can’t handle any significant volume) right now. But as a potential alternative to public transportation for the post-pandemic business traveler, I can see a path. After all, ride-hailing and online property rental weren’t a thing until they were.

Electrameccanica may very well find that it has a larger audience than it thinks. And it seems that Solo may be considering this as well. The company is looking to make a new version of the Solo with more storage capacity for food delivery and last-mile service that doesn’t require quantity.

SOLO Stock Is Priced…Better

Just about a month ago, Electrameccanica had a market capitalization of over $1 billion and shares of SOLO stock were trading for nearly $11 a share. But both the market cap and the share price have been cut nearly in half.

I can’t say that makes the stock a great buy, but it is good news for speculative investors. With the stock price at its current level and volume down to normal levels, it could be a good time to take a small position and see what happens when the company starts reporting actual sales. And for those who jumped in on SOLO stock in the summer, you’re sitting on a nice gain with no immediate need to sell.

On the date of publication Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Chris Markoch is a freelance financial copywriter who has been covering the market for over six years. He has been writing for Investor Place since 2019.

Chris Markoch is a freelance financial copywriter who has been covering the market for over five years. He has been writing for InvestorPlace since 2019.


Article printed from InvestorPlace Media, https://investorplace.com/2020/12/solo-stock-priced-well-for-bulls-bears/.

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