FUV - Arcimoto: Q2 Report Very Troubling

• Q2 results much worse than expected.
• Production guidance for the year has been withdrawn.
• Dilution continues to pile up at alarming rate.

After the bell on Monday, we received second quarter results from small electric vehicle maker Arcimoto ( FUV ). The maker of "fun utility vehicles" has seen its stock lose more than three quarters of its value in the past year as production growth has disappointed and financial results have been terrible. Unfortunately for investors, the latest report showed much of the same, continuing to show that this company just isn't ready for primetime.

For the period, total revenues more than doubled over last year's period. However, the just under $1.5 million figure reported badly missed street estimates for $2.3 million. While the company topped 100 consumer vehicles of production for the period, only 41 units were delivered to customers. A few dozen more were added to the rental fleet, but finished goods inventory jumped dramatically from 18 to 55 vehicles.

With such low production and delivery volumes, the company continues to lose large amounts of money. The gross loss for the period was over $4.6 million in Q2, more than triple the amount of revenue recognized, and up from a $2.5 million gross loss in the year ago period. With operating expenses also on the rise quite a bit, the loss from operations jumped from $9.35 million to almost $15.18 million. That means that the company's operations lost almost $10 for every dollar of revenue generated, which is not a sustainable business model. The GAAP loss per share of $0.44 reported for Q2 was much worse than analysts were expecting.

With significant quarterly net losses, this is a company that has tremendous ongoing cash burn. Free cash flow was a negative $31.7 million in the first half of this year, which actually worsened by about four million dollars over the first six months of 2021. As I discussed in an article earlier this year, the company has mostly been using equity sales to raise capital, which has resulted in massive dilution over time .

As you can see in the chart below, the outstanding share count is up more than 144% in just three years. In the past three months alone the number of shares outstanding rose by about 15.7% The company still has almost $74 million remaining on its current at-the-market equity sales program, according to its 10-Q filing , which at current prices if currently utilized would result in tens of millions more shares being sold into the market.

If all these numbers weren't bad enough, the worst part of the report was management's guidance. The company has withdrawn its production forecast for 2022, based on supply chain issues, and is no longer expecting to build 1,000 vehicles this year. It's one thing for a major vehicle player to miss guidance a bit due to supply chain problems, but we're talking about a company that's only building 6 units per day at the moment. Management still hopes, however, to get to a production rate of 12 units per day by the end of 2022, which they say represents an annual run rate of 2,400 units.

Arcimoto shares closed Monday at $3.05 per share, which is near the low end of their $2.65 to $15.53 range over the past year. Early in 2021, the stock broke out into the low $30s, but it has been all downhill since. It's hard to see much upside in the short term as results remain terrible and you figure equity sales will continue at a brisk pace due to sizable cash burn. In the end, this was another terrible report from the company, and I don't see how things can get much better for shareholders for at least a couple more quarters until overall production volumes and financial figures look a lot more impressive.

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