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Folks who sell AYRO stock now will regret bailing on this short-haul EV market disruptor
By David Moadel, InvestorPlace Contributor Dec 17, 2020, 8:10 am EST
Texas-based purpose-built electric vehicle company Ayro (NASDAQ:AYRO) holds a place in a very specific sub-sector of the market. Whether you’re bullish or bearish on AYRO stock will largely depend on how much faith you’re willing to place in the future of electric vehicles that don’t look fancy but have practical uses.
Sure, it’s tempting to place your bets on more well-known, “normal” electric car companies like Tesla (NASDAQ:TSLA) and Nio (NYSE:NIO). Hitching your wagon to these more famous names will probably feel safer than buying shares of AYRO.
The AYRO stock skeptics will also assuredly point out that the share price is in a general state of decline. That’s not good news if you already own the stock, but it presents an interesting opportunity for dip buyers.
This, then, leaves prospective investors with a billion-dollar question: Does the market have room for an ambitious yet highly unusual company and its ultra-efficient, supremely sustainable specific-use vehicles?
A Closer Look at AYRO Stock
On Dec. 2, I dared traders to let AYRO stock pull back and then grab shares with both hands. The share price was fairly close to $7 at that time.
And indeed, AYRO stock did pull back after that article was published. During the Dec. 14 trading session, AYRO’s share price hovered between $5.60 and $5.70.
More important than trying to catch the exact bottom of the price move in AYRO is to establish your long-term outlook on the company. If you like Ayro and believe that its vehicles will continue to sell, then that’s a company you can invest in with confidence.
Major Capital Infusion
More specifically, Ayro received an aggregate of $10 million in gross proceeds with the closing of a registered direct offering. The proceeds were sourced from Carnegie Hudson Resources, which is an investment arm of Wanxiang America, along with several existing institutional investors.
Ayro CEO Rod Keller expressed that he is “thrilled” with the strategic investment by Carnegie Hudson Resources. Moreover, Keller pointed out that this will provide better access to Wanxiang’s global supply chain.
What do Keller and Ayro intend to do with the $10 million?
“With this support, we plan to continue to build strong fundamentals, expand production capacity beyond our current 600 cars per month, drive stronger market penetration, and position AYRO to meet ever growing demand with a variety of EV products across our value chain,” Keller said.
That’s a very reasonable use of the incoming capital, no doubt. Yet, AYRO stock investors should also want to know more about the vehicles that Ayro’s supplying.
To put it simplistically, Ayro aims to address the urban, last-mile and food delivery markets. All of Ayro’s vehicles are zero-emission, so they offer an eco-friendly alternative. These vehicles are designed for use with college campuses, hotels and resorts, government entities and more.
Big-ticket clients are already taking notice. For instance, Club Car, a subsidiary of Ingersoll Rand (NYSE:IR), signed a five-year licensing deal with Ayro for light-duty trucks in North America.
The Bottom Line on Ayro Stock
As you can see, Ayro’s vehicles are simultaneously specific and diversified. Ayro is already in the process of powering vehicles of different shapes, sizes and purposes.
So, does a lower price point for AYRO stock bolster the bear thesis? Not necessarily. We have to remember that innovation takes time to be accepted and mainstreamed.
AYRO stock is best viewed as a long-term investment. The bears might control the price action for a little while longer. That’s fine as the company, and its unique zero-emission vehicles, are here to stay.