Move over, Rivian (NASDAQ:RIVN). The share price of electric vehicle maker Sono Motors (NASDAQ:SEV) has more than doubled a day after its initial public offering (IPO).
Sono Motors is a little-known European company based in the Netherlands that makes solar-powered electric vehicles. It began trading yesterday, Nov. 17, under the ticker symbol SEV. Its share price more than doubled in its first day of trading.
Shares climbed a further 20% in today’s pre-market session, fueled by red-hot interest in all things related to electric vehicles. In contrast, the share price of rival electric vehicle company Rivian is up roughly 70% from its IPO price last week.
What Happened With SEV Stock
Dutch company Sono Motors sold 10 million shares at $15 apiece in its IPO. The shares quickly doubled to more than $31 per share and finished their first day of trading at $38.20. There was an over-allotment option, which is likely to be exercised, for an additional 1.5 million shares. According to the company, the IPO raised more than $172 million to fund its growth and expansion.
Sono Motors is a unique company in the electric vehicle space as it designs cars that use solar panels to generate renewable energy. The design and use of solar panels has attracted the interest of investors. And while the company has not yet produced a single vehicle, it says that it has 16,000 preorders on its books. Yesterday’s IPO proved popular with investors in both the U.S. and Europe.
Why It Matters
The success of Sono Motors’ IPO underscores how popular electric vehicle stocks are with investors right now. SEV stock’s doubling on its first day of trading follows other recent successful IPOs of electric vehicle companies Rivian and Lucid Motors (NASDAQ:LCID), and as shares of market leader Tesla (NASDAQ:TSLA) run higher.
The current run in EV stocks comes after the sector was largely dormant for much of this year. And while the rotation of dollars back into electric vehicle stocks is being lauded by many, some notable investors are raising concerns that a bubble may be forming.
Many analysts have raised concerns that the valuation of Rivian, which has yet to deliver a single electric vehicle, is now greater than that of established automakers such as General Motors (NYSE:GM) and Ford (NYSE:F). The 100%-plus gain in SEV stock in a single day may be further evidence that the electric vehicle market has gotten overheated and might be headed for a correction.
What’s Next for Sono Motors?
SEV stock looks likely to continue its ascent today. However, the share price could correct in coming days after the initial euphoria fades. RIVN stock fell 15% yesterday and is down another 5% today. A similar move might be in store for Sono Motors.
Investors looking for quick gains should plan to get in and out of SEV stock before a potential downturn.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.