ZAPP (ZAPP) $15.25 Speculative – Avoid.
This is an electric bike maker from Thailand, with a tiny market cap of $37Mn. The company’s debut product, the i300, is a high-performance electric “perfect city bike” with widespread acclaim, including winning the prestigious Red Dot Product Design Award, the German Design Award, the Australian Good Design Award, and other E-Mobility awards.
The value proposition – Price around only $10,000 lightweight motor, rechargeable and removable battery pack.
Weaknesses and challenges
Pre revenue, development stage company with a limited operating history as a public company, Product development in new category in this cyclical and volatile sector is notoriously costly, and their planned entrance to the U.S. market will require considerable capital, effort, and time.
In addition, the sobering fact is that the i300 has been in development for almost six years (admittedly the COVID-19 crisis was a legitimate factor in this delay) and can only be ordered online at the company website at Zapp i300 Urban Electric Scooter/Motorbike | Zapp EV.
Two competitors at an advanced stage:
Livewire (LWR) – Market cap of $1.7Bn
LVWR has a strong strategic relationship with Harley-Davidson (HOG) which spun off its electric motorcycle division on 9/20/22 as a separate, publicly traded company in a SPAC deal. LVWR has retail partners in more than a dozen states in the U.S, and sales of only $38Mn, 18% lower than 2022, but is expected to grow 30-40% in the next 3 years.
Niu Technologies (NIU), with over 400 retail stores in the U.S. through retail partners is another strong competitor with a market cap of $165Mn and revenues of $479Mn with 20% growth prospects.
ZAPP’s lack of experience to produce at scale and shareholder dilution are two other weaknesses.
I suspect that the 15% rise was due to short covering, this was quite heavily shorted. I want to take a close look at the Niu.