Sono Motors IPO: How to Buy SEV Stock and Whether You Should

After Rivian's stellar listing, all eyes will be on Sono Motors, which is expected to list this week. Is the stock a buy?

Mohit Oberoi, CFA - Author

Nov. 15 2021, Published 9:17 a.m. ET

Sono Motors car
Source: Sono Motors Facebook

The EV bull market has gained wings over the last few weeks. Rivian’s bumper listing and the surge in listed EV names like Tesla and Xpeng Motors reflect the renewed optimism towards green energy companies. After Rivian's stellar listing, all eyes will be on Sono Motors. It's expected to list this week through a traditional IPO and trade under the ticker symbol “SEV.” Should you buy the IPO?

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Rivian’s IPO shows that EV euphoria is far from over. While EV names struggled in the second and third quarters, they have looked strong over the last month. Lucid Motors stock has also recouped some of its losses. The company went public earlier this year by merging with Churchill Capital IV.

When will Sono Motors go public?

Sono Motors is expected to go public on Nov. 16. It kept the IPO price range between $14 and $16. However, looking at the current momentum in EV stocks, it won’t be surprising if the company hikes the IPO price. Incidentally, even Rivian raised the IPO price range during the IPO process and eventually priced the shares above the upwardly revised range.

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Rivian stock surged despite the increased IPO price. The Amazon-backed company became the first pre-revenue company to command a market cap above $100 billion. The surge in Rivian is also playing out in Gores Guggenheim (GGPI) stock ahead of its merger with Polestar.

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Sono Motors stock forecast

Sono Motors is working on solar-powered electric cars. The concept isn't exactly novel and we have models from Toyota and Hyundai, which offer a blend of solar and EV. However, the range from solar in the models is for namesake at best.

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This is where Sono Motors intends to fill the gap with its Sion Model. The company claims that Sion’s solar system can add 69.5 miles on average per week. The range can be as high as 152 miles per week. The range is sufficient for short transits within the city.

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The car can also be charged using chargers and it can run almost 190 miles on a single charge. The company has kept the price at €28,500, which comes to around $32,650. While the price point is competitive, the model’s range is lower than what competing models from Tesla and other auto companies offer. Most new EV models come with a range of around 300 miles.

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Sion integrates solar panels with electric cars

But then, the USP of Sion is the integration of solar panels into the vehicle. The demand outlook for EV companies looks positive. Sion already has 16,000 reservations but the deliveries will only start in the first half of 2023.

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For producing cars, Sono Motors would go for third-party tie-ups, unlike Rivian which produces cars at its plant. Both of the business models have their positives and negatives.

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While producing the cars at self-owned facilities gives control over production, a third-party tie-up lowers the capital requirements. Third-party tie-ups would make sense, especially for startup EV companies with scarce capital and a lack of production expertise.

How to buy SEV stock

Sono Motors stock would be available on several brokerages when it becomes available. The IPO is also expected to be available on the Robinhood IPO Access Platform. Whether you should buy the stock or stay away depends on the final IPO prices. At the current IPO price, the company would be valued at around $1.1 billion at the upper end, which isn't too high looking at the valuations of other pre-revenue EV companies.


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