The word “quirky” is perhaps the best descriptor of the vehicles offered by Canadian automaker Electrameccanica Vehicles (NASDAQ:SOLO). And to be honest, not everyone likes the company’s cars. And not everyone is convinced that they should own SOLO stock.
Electrameccanica’s electric vehicles come with three wheels and a unique vision of what the future of the automotive industry will look like. It’s a visionary company, and SOLO stock isn’t suited for extremely safety-conscious investors.
The price action of SOLO stock could also be described as “quirky” as the stock flipped and flopped around wildly in 2020. However, it appears that the volatility has subsided lately and it’s possible that SOLO is finally finding its groove.
I won’t recommend that investors take a huge position in SOLO stock. Still, with company making inroads in North America recently, a small position might be worth considering.
A Closer Look at SOLO Stock
It’s fair to say that SOLO stock offers a lesson in buying during a time of maximum pessimism. In March, April and May, the stock traded near the $1 level. As it turns out, that was a terrific window of opportunity.
SOLO stock popped to $5 in July as the electric vehicle market heated up. Then there was a pullback to $2.50 during the fall. Again, nimble traders had a chance to capitalize on maximum pessimism.
In November, SOLO stock rocketed up to a dazzling 52-week high of $13.60. That point could be called maximum optimism, and it was the right time to take profits.
After a retracement of the share price, SOLO stock calmed down and went sideways for a while. Now it’s near $9 per share, and that’s after a dazzling 22% jump on Jan. 12.
Thus, at least we can say that SOLO stock is, so far in 2021, not overly volatile. That’s not necessarily a bad thing, unless you’re seeking excitement. Personally, I’ll gladly take steady price growth over excitement.
Small Cars, Small Price Tag
As I mentioned earlier, Electrameccanica Vehicles is a Canadian company. To be more specific, it’s headquartered in Vancouver, British Columbia.
SOLO stock has been on many investors’ radars for a short time. You might be surprised to learn, though, that ElectraMeccanica subsidiary InterMeccanica has actually been building specialty cars for 60 years.
But let’s be honest. Investors are most interested in the company’s three-wheeled electric vehicles. What distinguishes ElectraMeccanica’s vehicles, besides their unusual design, is that they’re not just environmentally friendly, but they’re also affordable and fun.
Granted, they’re one-seater cars. Therefore, I’m not expecting these vehicles to become the most popular cars on the planet.
However, for folks who want to buy a low-emission/no-emission vehicle at a reasonable price, the SOLO EV starts with a manufacturer’s suggested retail price (MSRP) of just $18,500.
Expanding the Footprint
Beyond the affordability, ElectraMeccanica’s vehicles offer wide applicability. For instance, the single-seat vehicles could easily be used for local commuting, or for delivery (a hot market in the Covid-19 era).
With a business model as promising as this, you’d think that ElectraMeccanica would seek to expand beyond its Canadian headquarters. And indeed, that’s what the company’s doing.
In a news release, ElectraMeccanica announced that since October, the automaker has opened six new retail locations in the United States. These locations are in California and Arizona.
With that, ElectraMeccanica has successfully extended its existing footprint from four to 10 locations. Moreover, the company teased that it has further announcements planned for 2021.
Furthermore, ElectraMeccanica is preparing to establish a U.S.-based assembly facility and engineering technical center. The two finalist locations under consideration are in Tennessee and Arizona.
The Bottom Line
With these developments in mind, it’s evident that ElectraMeccanica Vehicles has a major U.S. market invasion in the works.
And with the SOLO stock price showing some stability, a small, long position could be justifiable even for risk-averse investors.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
