Taiga Motors Slumps To All-Time Record Low Amid Production Pause And Job Cuts

Taiga Motors (TSX: TAIG) has witnessed a stark downturn in its fortunes, losing nearly half of its market value. This plunge came in the wake of the company’s decision to halt production temporarily, alongside financial results that signal a precarious future without a substantial cash infusion.

In a tumultuous trading session on Wednesday, shares of the Montreal-based manufacturer plummeted by 51 percent on the Toronto Stock Exchange, settling at 31 cents, its lowest on record. This slump brings the company’s market capitalization to approximately $10 million, marking a staggering decline from its heyday when it went public in April 2020, with shares trading above $14.

Investor sentiment soured following Taiga’s announcement late Tuesday, disclosing an indefinite pause in production and temporary layoffs affecting around 70 employees. The company attributed these measures to an adverse “economic context” compounded by an unusually mild winter, denting sales of its snowmobiles.

“In view of the current economic context combined with an unusually mild winter that negatively impacted the snowmobile business, Taiga is in the process of taking several steps to adjust its operations to better align seasonal production timing with dealer inventory levels. As such, the Company announced today that it is temporarily pausing its vehicle production and temporarily reducing its workforce accordingly by approximately 70 people,” the firm announced in its release.

With this recent move, Taiga has now reduced its workforce by a third since February, cutting 30 positions in addition to the recent layoffs.

The automaker also said that it “has decided that it does not currently intend to provide any forward-looking guidance, production or sales outlook” for 2024.

Under the leadership of founder and CEO Samuel Bruneau, Taiga has aimed to revolutionize the powersports industry with its range of all-electric vehicles, aligning with an environmental ethos in a sector historically dominated by combustion engines. Despite its ambitious vision, the company has grappled with challenges in scaling up production, including issues with suppliers failing to meet contractual obligations.

“Significant doubt on the ability to continue as a going concern”

Accompanying its latest earnings report, Taiga’s auditors underscored a significant uncertainty regarding the company’s ability to continue operations as a “going concern.”

The company manufactured a total of 417 vehicles during this period, comprising 243 Orca Performance watercraft and 174 Nomad snowmobiles. Out of these, Taiga successfully sold and delivered 242 vehicles, including 119 Orca PWC and 123 Nomad snowmobiles. As of December 31, 2023, Taiga boasts it has maintained a pre-order level of 2,442 vehicles.

Financially, the company recorded revenue of $6.1 million in Q4 2023, marking an increase from $1.4 million in the corresponding period of the previous year.

Taiga’s investment in research & development saw an escalation, with expenses reaching $3.1 million in the fourth quarter of 2023, up from $2.0 million in the fourth quarter of 2022. Similarly, general & administration expenses surged to $6.2 million compared to $4.9 million in the fourth quarter of 2022.

Despite increased expenses, Taiga managed to decrease its net loss for the period, which amounted to $22.2 million compared to $23.8 million in the fourth quarter of 2022.

Looking at the full-year financial highlights for 2023, Taiga reported revenue of $16.1 million, a leap from $3.2 million in 2022. However, the cost of sales for 2023 also jumped to $43.0 million from $29.2 million reported in 2022.

R&D expenses surged to $15.4 million in 2023 from $9.4 million in 2022 while G&A expenses escalated to $20.9 million from $19.8 million in 2022. Taiga then reported a higher net loss for 2023, which amounted to $72.5 million compared to $59.5 million in 2022.

Ending the previous year with $5.3 million in cash, Taiga recently secured an additional $5.25 million in credit from Export Development Canada. However, analysts, including Cameron Doerksen from National Bank of Canada, caution that substantial new funding is imperative to sustain even scaled-down operations in the upcoming quarters.

Moreover, inventory witnessed an increase, reaching $33.2 million as of December 31, 2023, compared to $20.8 million as of December 31, 2022.

The company refrained from holding a conference call with investors.

National Bank of Canada analyst Cameron Doerksen highlighted in a research report, “While we believe Taiga has developed competitive products in the electric snowmobile and PWC space, even if the company is able to source additional capital, there may be little equity value remaining for existing shareholders.”

Canaccord Genuity has issued a ‘Hold’ rating for Taiga, setting a target price of $0.50.

Information for this story was found via The Globe And Mail and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Leave a Reply