GreenPower Motor Company Shifts Into High Gear

Key Points

• GreenPower Motor Company releases Q1 results, and shares rocket higher. 
• Reporting delays were offset by robust outperformance and a healthy outlook for sales growth. 
• Sell-side interest is almost non-existent in this market, leaving it nowhere to go but up. 

GreenPower Motor Company NASDAQ: GP has had its share of hurdles and headwinds but has overcome the challenges. The company’s FQ4 results, which were delayed for several months, have finally been released, proving the company is building momentum and not just specialty EVs. Among the takeaways from the report is that demand is growing across several product lines, including EV Star Cab + Chassis combinations.

That’s due to the partnership with Workhorse Group NASDAQ: WKHS, which may gain momentum in the 2nd half of 2023.

The deal with Workhorse Group has GreenPower supplying EV Star cab/chassis for the W750 lineup. That lineup went into production earlier this year, and Workhorse is beginning to ramp production. It recently announced its first commercial sales partner, Smyrna Truck, in Smyrna, GA, and the first sales should follow soon.

The W750 is a class-4 all-electric delivery vehicle that will compete with Mullen Automotive's NASDAQ: MULN vans. Mullen has shown a significant demand for class 1 through 4 all EV delivery vehicles, so this is a significant opportunity for Workhorse Group and GreenPower. 

GreenPower Motors Has Blow-Out Quarter 

The delay in filing Q4 results caused some anxiety among GreenPower Motors’ investors, but those fears have been put to rest. The company reported another record quarter with substantial outperformance and provided an outlook that suggest business could double soon. The company reported revenue of $15.33 million, a gain of 255% compared to last year.

The revenue beat consensus by 780 basis points due to strength in EV Star Cab + Chassis sales compounded by strength in other EV Star models and BEAST Type A EV School Busses. 

Margin also widened, with gross margin growing 87% compared to last year. SG&A also fell and came in at 36% of sales. This is the 4th consecutive quarter of double-digit SG&A decline; additional improvement is expected. The company didn’t offer profitability guidance but showed solid cash flow and the ability to invest in growth while it ramps production. 

The company’s working capital and inventory positions improved, including $31.9 million in finished goods. Given the time lag with the results, those goods are expected to sell or have already sold. Sales expectations include more than 100 active orders for EV Star vehicles and BEAST school buses compounded by written orders that will double the production outlook when activated.

The bottom line is that cash flow allows operations without using credit facilities, and operations are ramping. 

GreenPower Motor Has Nowhere To Go But Up

The sell-side interest in GreenPower Motors is almost non-existent, leaving almost nowhere for the stock price to go but up. The institutions sold at a pace of 4:1 over the last 12 months but only own about 1.25% of the shares, which is insufficient to provide significant downward pressure in the face of a bullish catalyst.

The analysts aren’t much better. Marketbeat.com is tracking 3 with ratings less than a year old, and the freshest was set in February 2023. The takeaway from that data is that analysts buy the stock and see about 70% of the upside, but the community is not fully engaged with the market.

If that should change, including renewed interest from institutions, the stock could see a sharp rally by the end of the year. 

The chart is favorable to reversal. The market hit bottom earlier in 2023 and is confirming the bottom now. Support was found at a higher level in early July, and now the Q4 results have shares up another double-digit amount.

Price action is back above the 150-day EMA, suggesting sell-side interest and long-term investors are returning to the market. If the market follows through on the signal, the stock could increase to $8, $12, and $16.