OK retards. Full disclosure is that someone who works for me has seen Romeo’s operations and engineering in person. They quite literally cannot push enough product out the door, fast enough. This was the basis for me looking into this play.
I’ll also warn you that I see this as a 1-3 year play.
If you don’t know, Romeo power essentially develops and manufactures battery packs for long haul trucks, and work van/truck kind of applications. They are moving into agricultural, marine and off road stuff as well.
The reason they are cheap as fuck right now
Most analysts are in the shitter about them, because their financials are trash. They are right, the books don’t look great. Cash flow sucks ass and debt is a little scary.
They also just bought their way out of the JV they had with Borg Warner (tier 1 auto supplier). But this frees them up to do what they want, rather than be somewhat controlled by an enormous corporation.
The big risk now is supply chain. They are a bit exposed on the actual battery cells. They only have 2 sources and would REALLY like to have 4. In fact, they misled investors a while back, saying that they did have 4. In my retarded opinion, the short term risk here is that they get fucked on battery supply and cant fulfill orders.
You may remember a while back when they merged with RMG and the stock mooned to $34 eventually. It fell off a fucking cliff in late 2020 and kept sliding, even to now. Recent sliding has been mostly because of supply chain concerns, the shit financials and management changes (even though I believe this to be a good thing).
Why it’s going to moon
Their orders are through the roof and they have signed deals going out through 2025. This is reported here in slide 10: https://s27.q4cdn.com/860719303/files/doc_financials/2021/q4/RMO-Q4’21-Earnings-PPT-FINAL.pdf
My eyes on the ground confirm this to be true. They are scrambling on 3 shifts trying to push as much out the door as they can. Their current problem is production. They can’t fill orders fast enough. Analysts are worried that they can’t meet their projections (which are aggressive).
But they are trending to meet the demand as evidenced by their migration to a much bigger facility, which will be complete in June. https://www.businesswire.com/news/home/20211004005858/en/Romeo-Power-Signs-Lease-for-215000-Square-Foot-State-of-the-Art-Facility-in-Southern-California
Now to the management changes I talked about. In August they brought on a new CEO. Susan Brennan. Susan spent over a decade at Ford running operations, then spent another long stretch as COO of Bloom Energy, right up until taking this job. Bloom Energy has been a huge success. This lady knows how to make shit work.
Additionally, they recently took a big step in another potentially lucrative deal. https://finance.yahoo.com/news/romeo-power-secures-initial-phase-133000084.html
Add this to headwinds coming back to renewables with the current global geoplotical climate and I think this is a lotto ticket worth buying.
Warning: I am retarded. I have little to no securities experience. I am a VP of Sales at an industrial company and all my real money is professionally managed. You definitely should not risk huge amounts of money based solely on my opinions.
I bought straight up shares this morning. I will buy more when it goes to $5, and dump a lot when it goes to $10. Im holding until July, after they complete the move to the new factory, and am ready to hold for up to 2 years. I don’t believe it will moon overnight.
Tldr; this company’s financials are a nightmare, but this shit is gonna moon if these guys can avoid supply chain problems and meet their demand.
Submitted March 07, 2022 at 10:42PM by reasonableliberty
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