UPDATE: Since this article, Arcimoto has continued to struggle financially and saw its founder/CEO depart. I am no longer bullish on this company. For my latest portfolio details and thoughts on my holdings, you can see my actual portfolio in realtime on Savvy Trader.
If you know me, you know that I love my Tesla Model X. I’ve been driving it for more than 5 years and I’m absolutely convinced that Tesla is going to own the car industry as I’ve pointed out here and here and in this video.
So why has the Arcimoto Fun Utility Vehicle (FUV) become my daily driver for the past week?
The answer is that as an investor in public stocks, I don’t bet on the S&P 500. Instead, I do my own homework and make big bets on companies and technologies that I believe in. For me, that strategy has outperformed all the market indexes and the vast majority of the top mutual funds for the past 20 years!
Earlier this year, I learned about Arcimoto and their lineup of vehicles that are built on a unified electric platform. I was impressed! So much so that I started to buy the company’s stock. When I started buying, the stock was around $27 per share and as it often happens when I start buying a stock that turns out to be awesome, the stock proceeded to immediately crash. $22 a share. $18 a share. $15 a share. $12 a share. As I write this article, the stock closed at just $8.74 per share! That’s a 70% drop from when I started buying Arcimoto. Along the drops, like a stubborn [fool or genius, yet to be determined], I’ve added even more to my position. I’ve done all that despite never having seen the product or driven one.
I was convinced of Arcimoto’s potential, largely by this video:
Buying my own Arcimoto FUV
A few weeks ago Arcimoto got clearance to expand its ordering into Arizona. As a diligent investor, it seemed wrong not to order one and experience the product for myself. So I did. And last week, the Arcimoto FUV arrived:
I have to say, I was pleasantly surprised by the fit and finish of this vehicle. My expectation was that because Arcimoto doesn’t yet have mass-production going, the fit and finish of these vehicles might still be a work-in-progress. That was absolutely not the case! This vehicle is extremely well-made, feels solid and has a surprising number of options (colors/variations) that are delivered to perfection.
Unlike most of the EV companies out there, Arcimoto is actually building and delivering these products today! I configured my FUV in yellow-and-black with a cargo box in the back. The cargo box is the perfect amount of storage for everyday use. A couple of bags of groceries or backpacks fit nicely:
But is it Safe?
The vehicle is easy to learn, surprisingly quick, super fun to drive, and feels exceptionally safe. While I’ve always loved the idea of a motorcycle, I’ve never owned one because of the dismal safety record of motorcycles. The Arcimoto FUV is not like a motorcycle when it comes to safety. First, it has full-sized seats where each of the passengers sit fully upright and have two car-like shoulder seat belts. Second, the vehicle is surrounded by a strong and sturdy roll-cage to protect occupants from side impacts and rolls. Lastly, the vehicle has excellent traction on turns and feels sturdy even at high speeds. That’s thanks to the massive 19kWh battery system that runs across the middle of the entire vehicle giving it a low center of mass.
There’s also a lot of little niceties that I wasn’t expecting. Like the built-in speakers and a bluetooth system that quickly connects to your phone. Speaking of phones, the phone holder directly in the center of the controls is also a nice touch, as is the optional cup-holder. You also don’t need keys to start your Arcimoto. The vehicle can turn on with a 6-digit PIN making the keys that ship with the vehicle completely useless as I’ve never used my keys.
There’s also the plexiglass shield that goes from the front of the vehicle all the way to the back giving you plenty of protection from wind and weather and even making it possible to have a conversation with your passenger.
Overall, I was pleasantly surprised with the Arcimoto Fun Utility Vehicle. It definitely lived up to its name.
Back to the Stock
Earlier this year, Arcimoto bought a large manufacturing facility where they hope to ramp up to a capacity of up to 50,000 vehicles per year. That was the main reason I got excited about Arcimoto. When I examined their stock, which at that time was trading at just under a market cap of $1 Billion, I got the sense that if Arcimoto can pull off their mass manufacturing project, there is a lot of upside potential for the stock.
But, as it often happens for disruptive companies that have not yet fully proven themselves, there’s always huge market bets against them in the form of “short selling.” I have watched Arcimoto become one of the largest shorted stocks in the market. As of the time of this writing, short sellers have sold roughly 9 Million shares of Arcimoto, or about 24% of all shares outstanding. Don’t get me started on how or why short selling is even possible – the fact that roughly 24% of Arcimoto’s shares have 2 owners (likely without either owner’s knowledge of the other), is a mind-numbingly crazy bi-product of our financial systems. But that is where we are.
Fortunately, short sellers who are betting the company will fail, can also be wrong. And when they’re wrong, as was the case for Netflix and Tesla, where I have had firsthand experience, the stock can blow up far beyond even my expectations.
So what is Arcimoto’s potential? Here’s the basic math I’ve done:
- 50,000 vehicles per year (this is their goal to achieve in the next couple of years)
- x $15,000 average price
- = $750 Million a year in revenue
Today, the market caps of fast-growing disruptive tech companies can easily be 10, 20 or even 30x revenues. That could put Arcimoto on a path to eventually be worth anywhere from $7 Billion to $20 Billion. That’s roughly 20-60x its current market cap of $328 Million. Converted to per share pricing, that translates to a potential of $160 to $480 per share for a stock currently trading at $8.74 per share!
Of course, this is not investment advice, and along the way, many things can go wrong. It’s possible that Arcimoto will never perfect their manufacturing before their money runs out and currently, they’re bleeding a lot of cash. It’s also possible that there won’t be as much demand for their vehicles, as the market for an EV that’s a cross between a car and a motorcycle is unproven. It’s also possible that someone else will make a better and cheaper vehicle that competes in the same space.
But as an investor, I look for opportunities where the future can be bright and the present seems to undervalue the company’s future potential. When I find such a company, I go all in. That was my thesis on Tesla back in April of 2017 when I had predicted a stock price of (5:1 split adjusted) between $480 to $1,080 when it was trading at less than $50 per share. Today, Tesla is trading at around $1,000 per share – a roughly 20x increase!