You may have witnessed the sizable moves in electric-vehicle names like Tesla (NASDAQ:TSLA) and NIO (NYSE:NIO) and wondered which up-and-comer would break through next. Ayro (NASDAQ:AYRO) could be the one, though admittedly it’s an unusual choice and there is some risk in owning AYRO stock.
In case you’re not completely familiar with what Ayro does, InvestorPlace contributor Luke Lango describes the company as a producer of “purpose-built, low-speed electric vehicles, or LSEVs,” and more specifically “three-wheel electric cars, electric golf carts, e-scooters, campus security EVs, so on and so forth.”
So, you’re not going to see any slick muscle cars like what Tesla has to offer. Plus, Ayro’s vehicles aren’t “normal”-looking street vehicles like the ones that Nio produces.
If there’s any company that’s comparable to Ayro, it would probably be Electrameccanica Vehicles (NASDAQ:SOLO). That’s a company which also offers odd-looking three-wheeled cars. I provided a much more detailed description of that company’s cars here, in case you’d like to learn more about Electrameccanica Vehicles.
The point is that there’s nothing “normal” about Ayro. And, AYRO stock is really meant for forward-looking, open-minded investors. If that describes you, then a strong case can be built in favor of taking a moderate position in this stock.
A Closer Look at AYRO Stock
Since the beginning of June, AYRO stock has gyrated between $2 and $7. This is not unusual for low-prices stocks, which have the potential to make sharp moves frequently.
That’s why I don’t recommend mortgaging your house to buy shares of AYRO stock. It’s just too volatile and speculative to bet a lot of money on. Rather, it’s best to take a small position in the stock and hold it for the long term.
By the end of July, AYRO shares were trading at $4.30. In relation to the price action during the past couple of months, that’s somewhere in the middle of the range. Value seekers might choose to wait until AYRO gets closer to $3 or even $2.50, if it gets there.
Or, you can simply start accumulating the shares now in anticipation of much higher prices. That, however, would require widespread adoption of Ayro’s vehicles. Could that actually happen?
Going Niche Is the Key
I believe that Ayro’s ultra-specific angle in the electric-vehicle market could lead to widespread acceptance of the company’s vehicles. Ayro isn’t trying to compete with Tesla’s muscle cars, or Nio’s normal-looking cars, or even Solo’s street-ready three-wheelers.
Instead, Ayro’s taking a decidedly niche approach to its electric-vehicle offerings. After all, why try to compete against a juggernaut like Tesla? Ayro is smart to focus like a laser on a select group of clients that don’t necessarily need what Tesla has to offer.
As InvestorPlace Josh Enomoto elaborates, Ayro specializes in service vehicles for a targeted clientele: “Thus, the company’s key clients come from academic institutions, government entities, hotels and resorts, and the food, beverage and retail industries.”
A Big Order Comes In
How is Ayro’s niche approach working out so far? Not too badly at all, as the company just received a sizable order for “on-the-go” hospitality vehicles.
In partnership with Gallery Carts, which provides carts, kiosks and portables, Ayro is in the process of fulfilling “$584,000 in orders for [Ayro’s] inaugural purpose-built EV hospitality truck solution.”
Ayro and Gallery Carts are making good progress in the fulfillment of these orders. So far, roughly one-fifth of the ordered vehicles have been shipped. The rest of the orders are expected to be fulfilled by Ayro and Gallery Carts during the third and fourth quarters of this year.
As we’ve seen with NIO stock, an increase in vehicle deliveries can really pump up a company’s share price. With more orders like the one that Ayro and Gallery Carts are fulfilling now, AYRO stock could potentially increase by several multiples.
The Bottom Line
Again, please only take a small-sized position in AYRO stock as it is a speculative investments. Still, it could provide outstanding returns if the company’s ultra-niche approach to selling electric vehicles leads to widespread adoption.
As of this writing, David Moadel did not hold a position in any of the aforementioned securities.