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AYRO, Inc. - Electric Warrior Emerges

Jul. 06, 2020 10:22 AM ETAyro, Inc. (AYRO)FUV, NKLA, SOLO, TSLA, WKHS5 Comments
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  • AYRO recently completed a reverse merger into the former DropCar, positioning itself among the few pure-play electric vehicle (EV) makers on the public markets alongside FUV, NKLA, SOLO, TSLA, WKHS.
  • The Company has a miniscule share structure with roughly 15MM common outstanding after a small 2.2MM share registered direct offering a few weeks at @ $2.50.
  • The Company today completed an expansion of its manufacturing facility in Austin, TX allowing for capacity of 600 vehicles per month.
  • Based on an ASP range for its three models of $10K-$14K, and assuming additional expansion in 2021, AYRO should approach an annual revenue rate of $100MM quickly.
  • Using a 5x multiple on revenue potential of $100MM - below comparable multiples listed above - generates a 2021E target market cap of $500MM, or $25 per share.  We initiate coverage of this emerging EV trade opportunity with a STRONG BUY recommendation.  Risk factors include the need for further transparency on the Company's balance sheet including but not limited to pro form liabilities and convertible securities as well as an overhang of 4.5MM warrants struck @ $2.60.



AYRO Share Structure


AYRO 424B5 - Private Placement




Author Note

Intraday (07-06-2020) ARYO announced a $15MM registered direct offering @ $4.75.  We have updated the share structure for the deal.  The dilution is immaterial to our long-term valuation assumptions and the cash infusion further solidifies the Company's ability to execute against expected orders.  Based on best comparables SOLO/FUV, we believe the stock has fair value today of between $10-$15 per share.

Analyst's Disclosure: I am/we are long AYRO.

We intend to provide additional commentary in our ongoing coverage of AYRO.

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