Update: Shares of Atlis Motor Vehicles dropped sharply Thursday for a second-straight day after reaching stratospheric heights when the stock debuted on the Nasdaq on Sept. 27. The shares closed down $41.20, or nearly 55%, to $33.95 on Thursday. Click here to follow the stock.
Original article: A day after Mesa-based Atlis Motor Vehicles debuted on the Nasdaq, its share price continued to swing wildly on its second day of trading Wednesday.
Shares opened at $27.50 on Sept. 27 and closed out the first day of trading at $82.12, a 198% gain. The price climbed up to $213 during after-market trading, when there are no trading halts, before opening Wednesday at $243.99.
Atlis Motor (Nasdaq: AMV) shares were halted continuously in Wednesday trading due to price volatility before closing at $75.15, a 69% drop from its sky-high open and an 8.4% drop from Tuesday’s close.
The price volatility can be explained, at least in part, by the relatively low amount of shares available for public investors to trade, called the float. With fewer shares being traded, each transaction has greater potential to move the share price.
Some individuals who bought stock in the company's previous crowdfunding campaigns have not yet transferred their shares into brokerage accounts, according to posts on social media, and thus cannot trade the shares they hold, contributing to the low float and high price volatility.
AMV bills itself as an electric vehicle ecosystem and plans to build electric pickup trucks, batteries and charging stations. The company has yet to generate revenue, according to a quarterly filing posted Sept. 27, and all its products are still in development.
AMV rang the Nasdaq opening bell in New York City on the morning of Sept. 28 to kick off trading.
“It's everyday hardworking people who made this moment possible. We are forever grateful for their support and look forward to continuing this journey together,” AMV founder and CEO Mark Hanchett said on Wednesday. “I want to give a sincere thank you to the team, the board, our investors, our followers, those that believed in us from day one. This is just the beginning.”
AMV did not respond to multiple interview requests from the Business Journal.
'That worries me'
AMV’s path to the public market was unique. The company converted a Regulation A+ crowdfunding campaign into a direct listing on the Nasdaq, meaning AMV did not raise new money by going public like a traditional initial public offering. AMV opted to make its listing without engaging an underwriter that typically goes out to sell newly issued shares ahead of an IPO.
Rod Turner, the founder of San Diego-based Manhattan Street Capital, has previously helped other companies turn Regulation A campaigns into public offerings, and said AMV is definitely charting a unique path.
Turner said AMV is the first company to do a direct listing (without underwriters) from a Regulation A campaign and he hopes more will follow.
“For companies who want to have an easier way to conduct their IPO, doing a direct listing via Reg A+ is a breath of fresh air, because it's a lot less expensive and a lot easier to conduct,” he said. “There haven't been any. This is the first Reg A+ direct listing IPO.”
While he was heartened by AMV’s direct listing and wished the company well, Turner said a financing mechanism that AMV may need to access could be cause for concern.
AMV announced a $300 million credit facility from GEM Global Yield in June 2021, which would allow GEM to purchase up to 4.2% of AMV shares.
“It means [AMV] will be able to scale up manufacturing and scale up marketing and so forth. But whenever you see a convertible note, usually that means it can convert into sales of stock, usually at a discount, which can be damaging to the value of the stock,” Turner said. “That worries me, any company that's doing a public offering with that overhang would make me nervous.”
AMV controls the timing and maximum amount of drawdowns in the facility and there is no minimum drawdown obligation, so management may opt to not access it at all.
Short on cash
AMV made its first quarterly filing with the Securities and Exchange Commission on Tuesday, revealing details on its current financial situation.
AMV, which employs about 70 people, reported having just over $683,000 in cash on hand at the end of June, down from $3.1 million at the start of the year.
The company also reported raising $8.88 million in the first half of 2022 via its Regulation A+ crowdfunding campaign, but ran a net loss of more than $36 million through the first half of the year. AMV's biggest expense this year, by far, was stock based compensation, which exceeded $24 million through the end of June.
AMV reported spending $3.6 million on advertising through June (primarily used to draw in investors to the crowdfunding drive) compared to just $1.9 million on research and development.
Atlis said it received a deposit for production of two XP platforms (basically the vehicle platform without a chassis) during the second quarter, which would be delivered “at a later date.” AMV said it expects to incur a loss on these two platforms and on all future production, until it can scale manufacturing and raise additional capital.
