Specialty electric vehicle (EV) producer Arcimoto (NASDAQ:FUV) is falling today on news of an offering. This penny stock has been struggling for a while now, shedding more than 50% of its value over the past six months. While shares ultimately began today by rising, FUV stock has since lost momentum as the market reacts to its important announcement.
This morning, Arcimoto announced a registered direct offering involving the sale of 1.46 million common stock shares and warrants for the purchase of around 2.94 million shares. The combined purchase price will be $1.70 per share. The offering is expected to raise roughly $2.5 million in gross proceeds.
This kind of announcement doesn’t have to be bad for a stock, but in the case of Arcimoto, the market isn’t reacting well.
What’s Happening With FUV Stock?
The day started off nicely enough for FUV stock, seeing shares slowly trend upward before they reversed course. As of this writing, FUV is down almost 8% for the day. Given its volatility, though, the stock could easily move in either direction from here.
Of course, with Arcimoto’s microcap penny stock status in mind, it’s hard to have much faith in FUV’s growth prospects. The market’s response today only brings even more uncertainty.
Arcimoto released more details about the offering in a statement:
“The closing of the offering is expected to occur on or about June 14, 2023, subject to the satisfaction of customary closing conditions. The Company intends to use $250,000 of the net proceeds from the offering to repay indebtedness (with the balance of such indebtedness to be satisfied by the issuance of 181,564 shares of restricted common stock), and to use the remainder of the proceeds for working capital and other general corporate purposes.”
Ultimately, the market will readjust, easing today’s volatility. But even when that happens, FUV stock isn’t necessarily a buy. As InvestorPlace contributor Josh Enomoto notes, the firm deals primarily in “fun utility vehicles,” or FUVs. While these alternative vehicles look entertaining, they won’t appeal to buyers in need of an actual car. Additionally, rising economic pressures also heighten concerns regarding the future of such a niche EV producer.
Arcimoto may be a better buy than fellow EV penny stock Mullen Automotive (NASDAQ:MULN), but not by much.
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On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
