Sure manufacturers have unstated connotations that society universally agrees upon. It’s why you by no means see a jacked-up dude driving a Prius with a dime piece within the passenger seat. A Prius is for the only man with a dozen feminine mates he spends time courting, none of whom would contact him with a ten-foot pole. However a man who drives a Harley and doesn’t name you again, now we’re getting someplace. There’s a cause bike golf equipment who put on the 1% patch solely drive Harley Davidson bikes with some uncommon exceptions.
Once we first checked out Harley Davidson’s plan for an electrical bike, we had been skeptical. Wouldn’t such a motorbike tarnish their grease and leather-based macho picture? That was 4 years in the past once we wrote about 7 Electrical Bikes You Can Purchase From Startups Right now. In a later piece on a Kiwi electrical utility car, we opined that this electrical bike stuff simply wasn’t going to fly with a lot of the world’s genuine riders.
For those who occur to be an skilled bike rider who has carried out arduous time on the streets and trails, you understand that this electrical bike stuff is cute and all, however solely a complete software can be seen using one. If you would like an actual highway cruiser that turns heads and offers you that visceral feeling of energy and sophistication, pony up $35,000 and purchase a brand-new Huge Canine K9.
Nanalyze
That is what a Huge Canine K9 seems to be like.
And that is what a LiveWire electrical bike seems to be like.
For those who’re a store that’s promoting each bikes, you’re going to be attracting two distinctly completely different clienteles. Maybe that’s why right this moment, LiveWire’s web site has been scrubbed of all Harley Davidson logos and is being spun out by Harley into its personal firm (can’t think about why) which can quickly develop into publicly traded. All of it begins with a special purpose acquisition company (SPAC) referred to as AEA-Bridges Affect (IMPX).
About LiveWire Inventory
Shares of Harley Davidson Inc (HOG) soared +14% yesterday on the information that they’d be spinning out their electrical bike division – LiveWire – utilizing a SPAC. Maybe traders had been applauding the corporate for transferring previous a motorbike that was launched in 2019 and failed to achieve traction (extra on this in a bit). Or possibly HD traders notice that Harley’s SPAC will lead to a bunch of Reddit morons pumping up the shares of a widely known model whereas Harley laughs all the way in which to the financial institution (Harley will retain 74% possession of the model following the SPAC). Regardless of the cause, the LiveWire bike now not seems to have – a minimum of on its web site – any extra associations with Harley Davidson.
The SPAC deck might be one of many worst ones we’ve seen shortly with practically every little thing centered on a forward-looking view of the longer term. One quantity was suspiciously absent from the deck. For those who first debuted the LiveWire a number of years in the past, what number of models have you ever bought? That’s in all probability the only most essential query somebody would ask and right here’s why they in all probability don’t wish to reply it.
We did a double take right here. Are there some zeroes lacking? Apparently not. The corporate solely bought 387 bikes in 2021 which introduced in $6 million in revenues. The maths appears to roughly add up (387 X $21,999 = $8,513,613). To place that quantity in perspective, HD bought 109,500 bikes within the first half of 2021 alone. If we annualize that quantity, right here’s what gross sales velocity seems to be like:
- LiveWire – one bike a day
- Harley Davidson – 600 bikes a day
LiveWire will not be doing the kind of numbers we’d anticipate to see from a product that’s been out there for a number of years now. Perhaps it’s the $21,999 price ticket, possibly it’s the affiliation with Harley, or possibly it’s as a result of bike riders simply don’t care about electrical bikes.
An article by Electrek yesterday talked about how an organization referred to as SONDORS has developed a $5,000 electrical contraption that they declare is “outselling the most important electrical bike producers within the US: Zero Bikes and Harley-Davidson’s LiveWire.” Referred to as the “metacycle,” a greater identify for it may need been the “betacycle.” Right here’s their two-wheeled abomination alongside one other electrical car they developed that’s equally as hideous.
The corporate hasn’t launched any arduous gross sales numbers (no person appears to wish to), however all three “are estimated to see annual gross sales figures for electrical bikes within the low 4 figures.” Sufficient mentioned.
Investing in an Electrical Motorbike Inventory
Harley’s choice to do a SPAC merger is sort of intelligent. Appeal to folks with the ubiquitously identified Harley Davidson model and promote them on the electrical car thesis. Whereas LiveWire comes with a powerful pedigree, the corporate is by itself now. Are electrical bikes actually going to draw sufficient riders to benefit from the kind of large development we’re on the lookout for in any given funding thesis? We don’t imagine so.
The electrical bike thesis will probably draw consideration from these traders who’ve a lot cash that ROI takes a second seat to no matter trigger they need everybody to know they imagine in. ESG traders will probably be interested in LiveWire, however we’re having a tough time seeing why. Motorbike riders are already consuming so little petrol that transferring to an electrical car makes little sense, comparatively talking. If a rider is risking their life to drive a Harley Davidson which averages 48 miles-per-gallon, they’re not going to forgo the rumble of that motor simply so everybody who sees them thinks they care in regards to the setting..
Will LiveWire inventory go “to the moon” when all of the Reddit FUD FOMO YOLO varieties take the story and run? It very nicely would possibly, wherein case you’ll see the inventory worth pushed by speculators, not traders. LiveWire is a inventory we’ll be avoiding together with the complete electrical bike thesis till somebody can produce a fairly priced product that doesn’t appear like sin and that actual riders wish to purchase.
For those who’re pondering of climbing on board as an investor anyway, pay attention to how richly valued this inventory is at $10 a share. At $6 million in 2021 revenues and a $2.31 billion market cap, we get a easy valuation ratio of 385. To place that quantity in perspective, LiveWire shares would wish to commerce at $1.04 earlier than we’d take into account investing within the inventory. We additionally don’t spend money on any firm that hasn’t achieved significant revenues (outlined as $10 million every year or extra).
Conclusion
Motorbike riders have an unstated bond which can stem from the understanding that even probably the most cautious bike rider remains to be taking an enormous threat to be on the highway so unprotected. It’s why when riders around the globe cross one another on a freeway in any route, they’ll at all times trade a wave. It’s why we have now bike golf equipment within the first place. Electrical bikes gained’t be exempt from these cordial exchanges between riders, however they’ll by no means supply up the identical kind of thrill you’ll get if you crank that throttle and listen to the exhaust rumble.
If the SPAC merger goes by as deliberate, shares of LiveWire will commerce below the ticker LVW.
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