ZAPZ got absolutely clobbered at the market open today, but has since started to make a comeback. I believe the market misinterpreted some information that had surfaced on the company. In this “sell now ask later” environment, it’s not surprising.
ZAPZ published a news release very early in the day stating it had sent a purchase order to Mercedes Benz for $1 billion worth of Smart Cars.
Reuters then carried a news report stating the Smart Division of MB was not even aware of the order.
Marketwatch then carried a one sentence news release stating MB’s Smart division would not be delivering any cars to ZAPZ.
ZAPZ then countered by publishing a press release stating that a number of distributors of the Smart Car had committed thousands of cars to ZAPZ- giving the market comfort that ZAP would be able to get supplies, and sending the stock back up from absurdly oversold levels.
ZAPZ made a low of $1.35 in early trading, and as I am writing this BLOG at 10:30 AM Pacific, the stock has rebounded to the $2 level.
Well- one thing for sure- you can’t say this stock is boring.
As I understand the real story, the relationship with MB and their Smart Car division is still up in the air. ZAPZ CEO Steven Schneider visited with the MB parent company, and started the ball rolling in an attempt to make an arrangement directly with MB to purchase the cars.
At this time, I’m pretty sure parent MB has not said yes or no, and subsidiary Smart didn’t really know what was going on at the parent level.
ZAPZ could be simply trying to stir the pot and force MB into a decision. The poor performance of the Smart Division has been well documented, and that division can ill afford to turn down a $1 billion order.
I’m planning to publish a full news letter once I speak with Steve Schneider and learn all the facts. In the meantime, I hope some of the ZAPZ lovers were able to pick up stock below $1.50. At this point, I would hang in there and wait for developments.
Your comments and questions are welcome. I’ll do my best to respond to questions with facts. Opinions are welcome on both sides of the fence.
It closed the gap at 1.54 made on 11/19/04. Probably will at least make it back to 2.5. A buy at 2 would generate 25% in this technical trade scenario. This looked like a shake-out of weak hands and one good news will attract buyers.
Editor: Probably a good technical observation. It’s quite amazing the way stocks find a way to close those gaps. If they can figure out a way to fill those orders, it’s worth a lot more than where it is trading now.
No kidding! I’m loaded to the gills and work for a living so unfortunately I could only grab some more shares at about 1.90…I agree that I think this was a misunderstanding…these guys have got to learn to shorten the titles of their news releases and also to get their ducks in a row before they release things…in any case, for a company of this size, many investors think this is all a hoax, which it isn’t. When people wake up to realize the potential upside on this speculation, we’ll see the stock move up…
Editor: I will be publishing an audio interview with Steve Schneider in the near future, and you will be able to hear for yourself exactly what is happening at the company, and where they can go from here.
Anyone who knows the automobile business knows that what Mr Schneider has tried to do is impossible. The sum translates to more than 66,000 smart cars. Remember that there can’t be many new pre 2003 model year smarts in Europe. The 2003 and later model year cars (700cc MK7) have NOT been certified for sale in the US I’m not sure how many cars were imported under the compliance certificate-not more than 300 max. The 2 major markets NY and California have not been cleared by CARB
Editor: The company is admitting they are unable to achieve these numbers without the help of a Tier 1 manufacturer to either produce the cars or complete the conversions. The actual number of cars they are ordering is 76,500. The company has the infrastucture in place to deliver about 15,000 cars annually by buying them through distributors, which translates to nearly $1/2 billion in sales. This is realistic. Cal and NY do not matter- they have the purchase orders without them. However, they have their own separate approval processes, and I believe they will not be hard to get passed. I am informed the EPA was by far more difficult that the DOT, but I don’t know the industry.
Mr Schneider calls “orders” the commitment a dealer makes to buy from Zap a certain number of cars over a period of time. How many orders will a dealer submit when he doesn’t have a buyer order for a car. Let the investor beware-Zap is a purely marketing driven company trying every way it can to stay alive a little longer. A public company can only quote mileage ratings issued by the EPA-ie 37 MPG City & Hwy . Zap violates it’s own ethics code.
Editor- well, that’s what makes for a market- a variety of opinions. Some will prove right, and some wrong. I hope everyone reads your viewpoint so they have both sides of the story.
Do you know why FMLY is not trading this morning
Editor: They got the “e” on their symbol, but they filed their quarterly numbers yesterday. It should be off tomorrow.
Let’s see now-Mini has 82 dealers in the USA-4 in the San Francisco Bay area and 8 in the Los Angeles area. Nevada has only 1–in LAS VEGAS– and guess what?- THE Reno AREA, the littlest BIG city in the world, with a total population of 180,500 has the great fortune to have 4 ZAP franchises “awarded” to the tune of $50,000 PER “FRANCHISE” P. T. Barnum is in play here.
Editor: Your comments are appreciated.
I warned you about ZAPZ almost two weeks ago. When you responded that I either had to accept Mr. Schneider’s word or that I would be accusing him of fraud I discontinued our dialogue.
Editor: So, why are we having a dialogue now?
We are having this exchange now since you were wrong to suggest that questioning was fraud. You of all people should know that thorough research is not the equivalent of fraud! You should apologize. I have since read with interest the details of the generous payments you are receiving from ZAPZ for promotong their stock which helps to explain your spirited defence of ZAPZ. Erik Nielsen
Editor: I am not defending anything. I am saying if you accuse the guy of lying, you are accusing the company of fraud. It’s that simple. Listen the today’s interview and make up your own mind. I am not defending the company. I have been saying all along that if they can fill the orders, the stock could be a huge win. If they can’t, it won’t. I don’t know what’s going to happen from here. Maybe MB will agree to finance and sell them the cars, and the stock will go nuts. Maybe they will sell two more cars, and the stock will go to $.25. Make up your own mind. Financially, this was a very small project for me, and the only real upside is options with a $2.95 exercise price. In the meantime, if you are going to accuse people of lying, don’t expect to be patted on the head and apologized to from someone who calls a spade a spade.
Since ZAP seems to be tanking, what is your opinion regarding the big 1 Billion Dollar PO. Also why was the PR so confusing for so many, or is it time to bail. Thanks in advance for your comments.
Editor: Now, this is a reasonable question. There are a bunch of vigilante loonies following this company. I believe the PR was so confusing because it was such big news to Smart, and the news services published some misleading stories. The real story can be heard in today’s interview with CEO Schneider.
Regarding whether it is time to bail- it depends on your risk tolerance and time frame. I believe it is reasonable to assume they will end up selling at least the 15,000 cars annually for a year or two. This should equate to about $20 million in gross profts down the road. That seems a reasonable bet.
However, the problem is the timing. Based on the interview, I don’t believe the company has a realistic shot at delivering huge numbers this year. Therefore, there probably won’t be many hard sales in the near future. Couple that with going into the summer, which is the worst time of the year for microcaps, and you are setting up for a declining market in the short term.
Therefore, if you are not willing to hold the stock for 6 months to 1 year, and you are going to be concerned about dips, you should probably sell. If you are longer term, it seems a pretty good speculation to me.
I have a problem with a CEO that says “you know” so many times in an interview. If you know, why bother with an interview? I would be very interested in knowing more of the nuts and bolts required for the conversion of the Smart car. I would have to guess that these cars would need to be fitted with safety glass, impact absorbing front and rear bumpers, driver and passenger front and side air bags (very expensive because it requires special: sensors, steering wheel, dash board and door panels), side door intrusion beams, etc. This process alone would take years of reasearch and developement, not to mention lots of cash and an inventory of replacement parts which would require warehouse space. I’m sure Mercedes has given this a lot of thought. I’ve seen these cars in Canada. They certainly are cute and draw a lot of attention, but the engines make a lot of noise and they look like a gust of wind would blow them over. The thought of a collision with a SUV is overwhelming…..
Editor: I didn’t occur to me to ask about how many nuts and bolts. Regardless of your thoughts on the issues, they have the orders. That seems to be indisputable. Let’s see if they can fill them. That’s the real issue.
I have only been tracking ZAPZ for a short time, but I have to say that I found Mr. Schneider’s “answers” to questions in the OTC Journal interview more than a little troubling. For a service which has presumably received promotional fees in some form for providing ZAP with coverage, it was to your credit that you did, by and large, ask the right questions. Unfortunately Schneider’s evasion of many key issues you raised did not beget the obvious follow-up questions…or even re-iteration of the questions he dodged. To my mind, the key to this whole business model, as you said, is “why doesn’t MB Americanize the smart cars themselves.” If there really is money to be made here, perhaps it is too small a sum to warrant their attention? If the likely market is larger, I am very dubious that MB will sit back and let some middle-man remanufacture and resell their vehicles at anything approaching profitable prices. And if MB decides that these ZAP guys are really onto something, how difficult would it be for them to make their next batch of Smarts pre-Americanized, bypassing ZAP altogether? I’m guessing many of y’all are day traders, so these concerns may be mostly irrelevant, but if anybody has a longer-term appraisal of these issues, I would be interested to hear your thoughts.
Editor: I agree with your assessment of the issues. They probably have a window in time to get a bunch of cars sold and get their foot in the door with a network of dealers nationwide who could potentially sell their electric vehicles. If the market is that large in the US, and MB has underestimated it, they will be here in a couple of years with cars. The main issue- can ZAP jump through this window. I believe they could get 15,000 cars out there, and gross $15 million in the process. That would give them a lot of fuel on the electric side. At any rate, I try to cover all sides of the issue. I am not paid for my opinion, I am paid for the size of the audience. If you look at our track record, you will see we have turned negative on many of them. They have to deliver.
While compulsive repetition of “you know” tends to make a speaker come across as either shifty, dishonest, or both, I was more disturbed by Schneider’s failure to provide substantive answers to the most critical questions asked. Most important of all, why doesn’t MB Americanize the cars itself? Kudos to OTCJ for asking, but it’s a shame there was no follow-up when he ducked the issue. If there is actuallly money to be made here (“$1 billion PO” notwithstanding), I would be shocked if MB would not avail itself of that market opportunity, and even more shocked if they would cheerfully cooperate with some middle-men in Santa Rosa tinkering their cars up to spec. If ZAP can do it, then surely MB has the resources and engineering know-how…and since they also make the cars to begin with, it seems ZAP’s position, even if they can start delivering re-worked existing Smarts is precarious at best. My strong suspicion is that in the next 6-18 months we will see MB roll out a new Smart model which is pre-Americanized and sells for less than the ZAP-mobiles which must pass throigh the hands of a couple additional intermediate sellers (with associated markup at each step) before they can ever get them out to consumers. I was also a bit baffled by the suggestion that ZAP might be able to sell its Americanization mods to MB, then have MB roll out the cars and presumably give ZAP a sizable cut (!?!?). As the previous poster pointed out, these modifications may be non-trivial, but it’s neither rocket science nor does it involve any kind of esoteric “secret sauce” intellectual property of which ZAP is the exclusive owner. This suggests to my mind that the only way ZAP will manage to survive by Smart sales is if MB has basically decided they are not at all interested in selling Smarts to the US market (or making/selling any more smarts period). If MB becomes a competitor, it’s over.
Editor: As time goes by, and I hear more and more commentary on this company, I become convinced that ZAPZ has a window of opportunity here. If they are able to jump through that window, they could set themselves up to be a major player in alternative fuel vehicles of all kinds through a distribution network. If they are unable to jump through the window, it’s definately over as far as the Smart Cart is concerned, but not over for the company. It would be intersting to learn if the Smart Car is only sold through MB dealers in Europe, or if they allow other dealers to participate as it is not the MB brand- just owned by MB as Chrysler is owned by MB. Bottom line in my view- they have to crank up and get cars rolling out before the end of the year in their 15,000 car infrastructure they currently have in place.
Ten brand new roll-on/roll-off vessels have been delivered, said Maritime Industry Authority (MARINA) administrator Vicente T. Suazo, Jr. It is my understanding Smart-Automobile, LLC has booked space with a custom broker and will be importing smart cars on ro-ro vessels for the east coast smarts and containers for the west coast. This is a move in the right direction. Webbie411
Editor: Thanks for the intelligence.