Executive Summary
NINGI Research is short Sono Group N.V. (Ticker: SEV) because we think that the company did not disclose material information regarding target groups, does not have a viable product up to now, customers cancelations are accelerating, any further funding is unlikely and there is a severe misalignment of interests between management and shareholders.
Already several hundreds of million Euros have been invested and to this day only a handful prototypes have seen the daylight.
In our opinion,
- the company has failed to disclose the target group structures for its car prior to its IPO and thus failed to identify risks in the marketing of the product
- the company is thereby developing a niche product based on wrong target group surveys
- the Sono Group (SEV) has been promoting its product to customers and investors for years with unrealistic comparisons, promises, and statements
- the cancelations of the reservation holder have been increasing for several months because there are now adequate substitutes for the main product.
- Sono Group (SEV) pays for reservation holders to drive the car of a direct competitor so that these customers do not cancel their down payment
- priorities are set wrongly by hiring marketing employees and instead of tackling operational problems
- financing is very unlikely in the near term future
- management is driven by a false idealism and this leads to a classic principal-agent problem.