We recently started a series called “Penny Stock of the Day”. These ideas are geared towards traders with an extremely high risk appetite.
Our Penny Stock of the Day is chosen by screening for stocks under $5 and then applying technical analysis on the shortlisted set of penny stocks showing unusual volume. When making these trades, please make sure to pay vigilant attention to pricing moves and have a strict stop loss in place to avoid significant losses.
Penny Stock of the Day: Arcimoto Inc. (NASDAQ: FUV)
Today’s penny stock pick is the electric vehicle company, Arcimoto Inc. (NASDAQ: FUV).
Arcimoto Inc. designs, develops, manufactures, sells, and rents three-wheeled electric vehicles in the United States. Its flagship product is the Fun Utility Vehicle (FUV) use for everyday consumer trips. The company also provides Rapid Responder designed to perform emergency, security, and law enforcement services; Deliverator, an electric last-mile delivery solution to get goods where they need to go; Cameo, an FUV equipped with a rear-facing rear seat and a modified roof built for on-road filming; and Arcimoto Roadster, an unparalleled pure-electric on-road thrill machine. In addition, it offers TRiO, a bolt on kit that converts a two wheeled motorcycle into a tilting three wheeled motorcycle.
Website: www.arcimoto.com
Latest 10-k report: https://sec.report/Document/0001213900-22-016925
Analyst Consensus: As per TipRanks Analytics, based on 2 Wall Street analyst offering 12-month price targets for FUV in the last 3 months, the stock has an average price target of $7.50, which is nearly 104% upside from current levels.
Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- Alliance Global Partners reiterated the ‘buy’ rating and set a price target of $11 for the stock.
Analysts | Source: TipRanks.com
- The news that FUV and JOCO, the world’s first Light Electric Vehicle sharing platform for delivery drivers, are teaming up on a pilot program to field test the Deliverator, Arcimoto’s ultra-efficient, three-wheel electric vehicle designed for local and last-mile delivery.
- Increasing interest from retail investors.
On analyzing the company’s stock charts, there seem to be multiple bullish indications…
Bullish Indications
#1 Falling Wedge Pattern: The daily chart shows that the stock has been forming a falling wedge pattern for the past several months. These are marked as purple color lines. It has typically taken support at the bottom of the wedge before bouncing back. The stock currently looks poised for a breakout from the falling wedge pattern. Once the stock breaks out of the falling wedge pattern, it could move higher.
FUV – Daily Chart
#2 Bullish RSI: The RSI is currently nearing 50 and moving higher, indicating possible bullishness.
#3 Bullish Stoch: The %K line of the stochastic is above the %D line, and has also moved higher from oversold levels, indicating possible bullishness.
#4 MACD above Signal Line: In the daily chart, the MACD (light blue color) is currently above the MACD signal line (orange color). This indicates a possible bullish setup.
#5 Above Support Area: The weekly chart shows that the stock is currently trading above a support area, which is marked as a pink color dotted line. This is a possible bullish indication.
FUV – Weekly Chart
#6 MACD above Signal Line: In the weekly chart, the MACD (light blue color) is currently above the MACD signal line (orange color). This indicates a possible bullish setup.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for FUV is above the price of $4.40.
Target Prices: Our first target is $6.00. If it closes above that level, the second target price is $7.00.
Stop Loss: To limit risk, place a stop loss at $3.50. Note that the stop loss is on a closing basis.
Our target potential upside is 36% to 59%.
For a risk of $0.90, our first target reward is $1.60, and the second target reward is $2.60. This is a nearly 1:2 and 1:3 risk-reward trade.
In other words, this trade offers 2x to 3x more potential upside than downside.
Potential Risks / Red Flags:
- The company has a history of net losses. In 2021, the company’s net loss attributable to common stockholders was approximately $47.56 million.
FUV – Results of Operations
- The company was formerly known as WTP Incorporated and changed its name to Arcimoto, Inc. in December 2011.
- According to the research report by Bonitas Research, LLC, FUV had failed to produce a safe, reliable, and properly working street-legal vehicle. Since December 2018, Arcimoto also filed 19 separate recall notices, the majority related to the vehicle’s power, steering, and braking.
- The Company is a nominal defendant in two shareholder derivative lawsuits filed in the United States District Court for the Eastern District of New York, Liu v. Frohnmayer et al. (Case No. 21-cv-03702 filed on June 30, 2021) and Carranza v. Frohnmayer et al. (Case No. 21-cv-03888 filed on July 9, 2021), and a shareholder derivative lawsuit filed in the United States District Court for the District of Oregon, Laguerre v. Frohnmayer et al. (Case No. 21-cv-00982 filed on June 30, 2021). Mark Frohnmayer, Douglas Campoli, Terry Becker, Nancy Calderon, Joshua Scherer, and Jesse Eisler are named as defendants in all three shareholder derivative suits.
- Hedge Funds Decreased Holdings by 14.4K Shares Last Quarter.
Hedge Funds | Source: TipRanks.com
- The Company, Mark Frohnmayer, and Douglas Campoli were sued in two putative class actions in the United States District Court for the Eastern District of New York, Barnette v. Arcimoto, Inc. et al. (Case No. 21-cv-02143 filed on April 19, 2021) and Gibson v. Arcimoto, Inc. et al. (Case No. 21-cv-02870 filed on May 20, 2021). The putative class actions purported to be on behalf of all those who purchased the Company’s common stock between February 14, 2018, and March 22, 2021. The allegations in the actions are based on the research report dated March 23, 2021, produced by Bonitas Research, LLC.
- Despite being a loss-making company, the executives are being paid significant compensation.
FUV – Summary Compensation Table
As you can see, today’s featured penny stock offers big upside potential… but it also comes with a number of risks and red flags. As always, when dealing with penny stocks, we advise caution before entering into such high-risk ventures. Remember to think before you trade… understand the risks… and if you decide to trade, stick to your stop-losses!
Happy Trading!
— Trades of the Day Research Team
READ BEFORE TRADING PENNY STOCKS: The allure of penny stocks lies in their potential to deliver massive gains in a short period of time. However, in exchange for that opportunity, most penny stocks carry tremendous risk. They can be extremely volatile and are susceptible to “pump and dump” schemes and fraud.
Unlike regular stocks, the financial condition of most penny stock companies can be extremely difficult to analyze, as the majority of such stocks are traded on over-the-counter (OTC) exchanges, which are typically less transparent and less regulated than the major exchanges. In fact, in the penny stock space, it’s often easier to spot warning signs and red flags than it is to identify a sound investment. Nevertheless, we do our best to identify short-term trade opportunities in this exciting space because we know some of our readers are looking for high-risk, high-reward ideas. We just urge you to make sure you fully understand the risks before making any of these trades.
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