For construction machinery and transportation equipment maker Xos (NASDAQ:XOS), its recent move to branch out into electric vehicles wasn’t exactly taken well by its investors. Xos stock was down modestly in Thursday afternoon’s trading, as expansion efforts didn’t sit well, particularly after the stock’s recently released earnings report.
Xos recently closed its acquisition of ElectraMeccanica, which moves it into the electric vehicle space since ElectraMeccanica focused on designing and building electric vehicles. With the deal complete, Xos looks forward to adding an extra $48 million to its balance sheet, as well as landing a new source of growth capital.
In an interesting development, buying ElectraMeccanica will also reduce the firm’s cash burn rate, according to Xos co-founder and CEO Dakota Semler. This, along with Xos’ positive gross margin stance, should ultimately get it to cash flow positive territory.
Eager to Become Cash Flow Positive
Based on the latest earnings report Xos put out—just last week, too—it’s small wonder it’s eager to become “cash flow positive.” While Xos put out a beat for earnings, it did so in perhaps the worst possible fashion: by posting a smaller per share loss than analysts expected. Xos turned in a loss of $2.33 per share, which is only good news against the fact that analysts thought it would lose $2.38 per share.
Meanwhile, revenue came in as a miss, as its $18.4 million for the fourth quarter faltered against the $18.5 million analysts looked for. The only real highlight was that the $18.4 million Xos turned in was up 114% against the fourth quarter of 2022.
Is XOS a Good Stock to Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on XOS stock based on two Buys and one Hold assigned in the past three months, as indicated by the graphic below. After a 33.28% loss in its share price over the past year, the average XOS price target of $17.75 per share implies 74.02% upside potential.
