Elio Motors Inc (OTCMKTS:ELIO) Making Big Moves

Elio Motors Inc (OTCMKTS:ELIO), an American vehicle manufacturer, surprised the market in August 2017 by releasing that the company had applied to have its common stock listed on the NASDAQ and is trying to raise $100 million in an IPO:Source

"In connection with this offering we have applied to have our Common Stock listed on the NASDAQ Global Market (the “NASDAQ”) under the symbol “ELIO." Source

Seeking Alpha published an article about the company and explained the company's financial situation and its products. Other websites specializing in the auto sector such as thedrive.com and autonews.com also highlighted the news. Given the share price reaction to the announcement, we became interested in the company. Have a look at the most recent share price action before we provide our conclusions.SourceBusinessElio Motors, Inc. was founded in October 2009 with the objective of manufacturing an environmentally friendly, high quality, reliable, safe, and affordable vehicle for everyone. Additionally, creating American jobs is one of the goals highlighted in the company documents. The company noted that it expects to create approximately 3,000 direct manufacturing jobs (at the Shreveport facility and in the supply base). What type of vehicle did the company engineer? In our opinion, the best explanation was provided by the company in the following text:

"Between 80-90% of Americans who drive to work in an automobile in or around a metropolitan area commute to work alone.These solo drivers sit in cars big enough for four, six and even eight people. We seek to respond to this inefficiency by producing a vehicle that can cost-effectively supplement these households’ current cars. Leveraging existing automotive technologies through partnerships with whom we believe to be the world’s leading engineering firms and component suppliers, we have designed a revolutionary front engine, front-wheel drive, two-seat, gasoline-powered vehicle with two wheels in the front and one wheel in the rear – the Elio. This outside-the-box design makes the vehicle more aerodynamic while providing significantly higher gas mileage than standard vehicles." Source

SourceWe could find the vehicle specifications for the Elio. Those interested in the car industry will appreciate getting to know the following details:

• Layout: Front engine, front-wheel drive, 3-wheeled, open front wheels
• Engine: 0.9 liter, 3 cylinder, 55 horsepower
• Transmission:5 speed manual, or automatic manual transmission (AMT)
• 0-60 mph: 10.8 seconds
• Top Speed: 100 miles per hour +
• Fuel Economy: 84 miles per gallon EPA highway; 49 miles per gallon EPA city
• Fuel Capacity: 8 gallons (Unleaded gasoline)

We could read in the IPO documents that the "desired profit margin would require a sales price of $7,526." The company has not commenced to sell the car yet. Has the company reserved slots to the clients? Yes, as of March 31, 2017, the company received nonrefundable deposits of approximately $26.55 million. Recent DevelopmentsOn May 31, 2017, ELIO amended an agreement signed with RACER Trust. The company signed that it will create 1,500 jobs in September 1, 2019. The agreement seems to be serious, as there seems to be "a penalty of $5,000 for each full-time, permanent direct job that falls below the 1,500 target."On August 3, 2017, the company released that it is raising capital and intends to list its common stock on NASDAQ. The new information seemed to excite the market that pushed up the share price astonishingly. On the day of announcement, the share price went from below $5 to touch $7. But, the share price move did not end there. The upward trend continued until the share price crossed the $10 level. Following this violent share price move, we saw a technical decline back to the level of $5. Finally, the share price again saw an upward trend. Have a look at it:SourceIs the share price move over? It is difficult to say so. The company only announced that it is raising capital, but the amount of money obtained was not specified. The share price can move more once we obtain that information. We will need to be alert. On top of it, if shares get listed on NASDAQ, the stock will be off and running. ConclusionELIO is an interesting company mainly because of its innovative prototype. Like other companies, it started financing its operations and R&D with cash received from capital raising. The $26 million in nonrefundable customer deposits showed that potential customers are interested in the vehicle, but the company will need cash to deliver the cars, so this new capital raising is very relevant. To sum up, try to be alert on the amount of money that the company obtains from investors. It will determine if the Elio becomes a reality and we see it in showrooms on America's highways soon. We will be updating our subscribers as soon as we know more. For the latest updates on ELIO, sign up below!Image courtesy of Zsolt Fila via FlickrDisclosure: We have no position in ELIO and have not been compensated for this article.