Please ensure Javascript is enabled for purposes of website accessibility

Why Electrameccanica Vehicles Stock Fell 23.8% in March

By Keith Noonan - Apr 2, 2021 at 1:27PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Despite a recent decline, the EV stock is still up 398% over the past year.

What happened

Shares of Electrameccanica Vehicles (SOLO 6.61%) dipped 23.8% in March, according to data from S&P Global Market Intelligence. The stock lost ground amid a steep pullback that rocked valuations for companies in the electric vehicle (EV) space. 

SOLO Chart

SOLO data by YCharts.

Many growth-dependent companies suffered substantial sell-offs in March as investors weighed rising Treasury bond yields, uncertain Federal Reserve monetary policy, and momentum for value and cyclical stocks. The EV space was particularly hard hit, and Electrameccanica was swept up the pullback. The Canada-based EV company also published its fourth-quarter results last month, and the release corresponded with a substantial decline for its share price. 

An Electrameccanica SOLO vehicle in a factory

Image source: Electrameccanica.

So what

Electrameccanica published a press release on March 16 announcing that it had selected Mesa, Arizona, as the site for its U.S. base of operations. The facility will feature a light vehicle assembly plant and an engineering center. The company says that the new facility will help it meet demand for its single-occupant SOLO electric vehicle.

The EV specialist followed up the Arizona facility announcement with its fourth-quarter results a week later, reporting that it had recorded $224,000 in revenue and a net loss of $41.1 million in the period. The company ended the fiscal year with cash and short-term equivalents totaling $129.5 million, up from $8.6 million in the prior-year period. 

Now what

Electrameccanica's stock has regained some ground early in April. The company's share price rose roughly 5% in the month's first trading day. 

SOLO Chart

SOLO data by YCharts.

While the stock saw a substantial slump last month, it looks like the company is making progress on moving forward with its manufacturing initiatives. Electrameccanica expects its new Arizona facility will create up to 500 new jobs and that it will be capable of producing 20,000 SOLO vehicles per year when at full operational capacity. The EV market has huge room for expansion over the long term, but investors have to keep in mind that the company is at an early growth stage -- and its outlook is speculative. 

Electrameccanica has a market capitalization of roughly $567 million and is valued at approximately 95 times this year's expected sales.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Electrameccanica Vehicles Corp. Stock Quote
Electrameccanica Vehicles Corp.
SOLO
$1.65 (6.61%) $0.10

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
328%
 
S&P 500 Returns
116%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/19/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.