Some brands have unspoken connotations on which the company universally agrees. That’s why you never see a supercharged guy driving a Prius with a dime in the passenger seat. A Prius is for the bachelor with a dozen girlfriends he is courting, none of whom would hit him with a ten foot pole. But a guy who drives a Harley and doesn’t call you back, now we’re getting somewhere. There’s a reason motorcycle clubs that wear the 1% patch only ride Harley Davidson motorcycles, with a few rare exceptions.
When we first looked at Harley Davidson‘s electric bike project, we were skeptical. Wouldn’t such a bike tarnish their macho image with grease and leather? It was four years ago when we wrote about 7 electric motorcycles you can buy from startups today. In a later article on a Kiwi electric utility vehicle, we felt that this e-bike gear just wasn’t going to fly with most of the world’s authentic riders.
If you are an experienced biker who has had a rough time on the streets and trails, you know this e-bike gear is cute and all, but only a complete tool would be seen riding one. If you want a real road cruiser that turns heads and gives you that visceral feeling of power and class, pay $ 35,000 and buy a brand new Big Dog K9.
This is what a Big Dog K9 looks like.
And this is what a LiveWire electric motorcycle looks like.
If you’re a store that sells both bikes, you’re going to attract two very different customers. Perhaps this is why today the LiveWire website has been cleaned of all Harley Davidson logos and is being transformed by Harley into its own business (can’t imagine why) which will soon be listed on the stock exchange. It all starts with a sspecial pgoal apurchase vscompany (After-sales service) called AEA-Bridges Impact (IMPX).
About LiveWire Stock
Harley Davidson (HOG) shares have skyrocketed + 14% yesterday on the news that they were going to run LiveWire using a SPAC. Maybe investors were applauding the company for overtaking a motorcycle launched in 2019 and failing to gain traction (more on that in a bit). Or maybe HD investors realize that Harley’s SPAC will train a bunch of Reddit morons to pump up a well-known brand’s stock while Harley laughs all the way to the bank (Harley will retain 74% brand ownership following PSPC). Whatever the reason, the LiveWire motorcycle no longer seems to have – at least on its website – any more associations with Harley Davidson.
The SPAC deck is possibly one of the worst we’ve seen in a while, with almost everything focused on a forward-looking view of the future. A number was strangely missing from the bridge. If you first launched LiveWire several years ago, how many units did you sell? This is probably the most important question anyone would ask here, which is why they probably don’t want to answer it.
We did a double take here. Are there any missing zeros? Apparently not. The company sold just 387 motorcycles in 2021, which generated $ 6 million in revenue. The calculation seems to add roughly (387 X $ 21,999 = $ 8,513,613). To put that number into perspective, HD sold 109,500 motorcycles in the first half of 2021 alone. If we annualize that number, here’s what the speed of sales looks like:
- LiveWire – one motorbike per day
- Harley Davidson – 600 motorcycles per day
LiveWire doesn’t make the sort of numbers we’ve come to expect from a product that has been available for several years now. Maybe it’s the $ 21,999 price tag, maybe it’s the association with Harley, or maybe it’s because bikers just don’t care about electric motorcycles.
An Electrek article yesterday explained how a company called SONDORS developed a $ 5,000 electric contraption that they say “sells more than the biggest electric motorcycle makers in the United States: Zero Motorcycles and Harley-Davidson’s. LiveWire “. Called the “metacycle”, a better name for it could have been the “betacycle”. Here’s their two-wheeled abomination alongside another electric vehicle they’ve developed that’s just as hideous.
The company has not released any concrete sales figures (nobody seems to want), but the three “should see annual sales figures for electric motorcycles in the lowest four digits.” Enough said.
Invest in a stock of electric motorcycles
Harley’s decision to do a SPAC merger is a pretty smart one. Attract people with the ubiquitous Harley Davidson brand and sell them on the electric vehicle thesis. While LiveWire comes with an impressive pedigree, the company is now on its own. Are electric motorcycles really going to attract enough bikers to enjoy the kind of massive growth we’re looking for in any given investment thesis? We think not.
The electric motorcycle thesis will likely grab the attention of investors who have so much money that ROI takes second place to the cause they want everyone to know what they believe in. ESG investors are likely to be drawn to LiveWire, but we’re having trouble seeing why. Riders already use so little gasoline that switching to an electric vehicle doesn’t make sense, relatively speaking. If a biker risks his life to ride a Harley Davidson averaging 48 miles per gallon, he won’t give up the rumble of that engine so that everyone who sees him thinks they care about the environment.
Will the LiveWire stock go “to the moon” when all the Reddit FUD FOMO YOLO guys take the story and run? This is very possible, in which case you will see the share price determined by speculators and not by investors. LiveWire is a stock that we’ll be avoiding with the whole electric motorcycle thesis until someone can produce a reasonably priced product that doesn’t look like a sin that real bikers want to buy.
If you’re considering getting on board as an investor anyway, be aware of how much this stock is valued at $ 10 a share. With $ 6 million in revenue in 2021 and a market cap of $ 2.31 billion, we get a simple valuation ratio of 385. To put that number into perspective, LiveWire shares should trade at $ 1.04. before you consider investing in the stock. We also do not invest in a company that has not made significant income (defined as $ 10 million per year or more).
Bikers have an unspoken connection which can come from the understanding that even the most careful biker always takes a huge risk of being on the road unprotected. This is why when runners around the world pass each other on a freeway in any direction, they are always exchanging a wave. That’s why we have motorcycle clubs in the first place. Electric motorcycles won’t be exempt from these cordial rider-to-biker exchanges, but they’ll never deliver the same kind of thrill you get when you hit the throttle and hear the exhaust rumble.
If the SPAC merger proceeds as planned, shares of LiveWire will trade under the symbol LVW.
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