Sono Group (NASDAQ: SEV) had an interesting idea. If solar cells are going to be what produces the electricity to power an electric vehicle then why not put the solar cells on the electric vehicle? The car body is a piece of real estate after all, the insolation to that car body can at least make a contribution to the propulsive energy required. It's a cute idea. Also, one that hasn't in fact worked. Which is a pity but there we are, such things happen.
More importantly for the stock of Sono Group, the idea worked so little that the program was shut down in Feb: “the announcement that its Sion Passenger Car Program will be shuttered. The company announced on Friday that its Sion program will be shuttered and 300 employees will be laid off.” There were perhaps 45,000 preorders and reservations. But that's not enough to support the capital requirements of building out a plant to build 45,000 vehicles. As Tesla has shown, expanding real world manufacturing plant just swallows capital for years and years. Given the capital markets for smaller EV players currently that capital just wasn't available. Nor could deposits and prepayments cover the costs either.
No, nice idea no cigar territory here.
Sono Group stock price from NASDAQ
As a business Sono is now to concentrate upon its solar panel business. Which is one of those horribly competitive markets where margins are thin. So while that might work it's not going to return the business to a substantial premium valuation. There's also the issue of having to return deposits paid upon cars that are not going to be manufactured. Some would say that Sono faces possible bankruptcy.
So, why the 73% rise in the Sono stock price then? In the absence of any specific news it's necessary to make assumptions and try to piece it together. Given that there#s a 10% short position here we'd assume that it's just a bit of speculation. Perhaps a burst of buying could lead to those shorts being squeezed, thus triggering a price spiral? It's the sort of thing someone might try in a stock with only a $15 million market capitalisation.
That last number being, we think, the important thing. We are talking a microcap here. It just doesn't take much buying pressure to change the price dramatically. It's possible for such pressure to come from just a general change in opinion and also from a more concentrated attempt to change the price. We're not trying to cast specific aspersions here but such things have been known in penny stocks in the past.
The result, whichever the cause, remains the same for us. This in Sono Group is really just a random piece of speculation out there on the markets. It's not really possible to take advantage as there are near no shares available to borrow if we wanted to go short.
