We rate shares of LiveWire High-Risk for the following reasons:
• Highly competitive market with ICE incumbents including parent company H-D and new EV products.
• H-D is a majority shareholder and could make decisions to protect its ICE business and relationships.
• Unlike other industries, a strong regulatory push of electrification in motorcycles is not a prevailing undertone.
• Inherent risks (scale, reliability, etc.) at this early stage of product portfolio rollout.
• The company expects to incur losses and burn cash over the coming years.
• Electric motorcycles are a new product today and consumer appetite could inflect meaningfully higher/lower than projections resulting in a stronger/weaker performance in the stock.
• Macro, trade, geo-political and FX can all contribute to earnings risks and stock volatility.
• The stock could suffer significant downside (or cease to trade) if the company is unsuccessful.
• The stock could prove highly volatile given its limited trading history.
Positive or adverse developments in these risk factors could also cause the share price to remain above or fall below our target price.
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