Gogoro, the new electric scooter leader, is a long-term buy

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gogoro (NASDAQ:GGR) went public on April 5 on the US stock exchange, following its merger with special acquisition company Poema Global. The Taiwan-based electric scooter hopes to raise $335 million after the operation. GGR stock hit a high of $17.59 on April 5 before falling below $7 on April 22. But the innovative company is expected to experience strong growth over the next two years, which could generate solid earnings.

According to Meticulous research, the market value of electric scooters is expected to grow at a rapid pace over the next few years, reaching a value of $644.5 billion by 2028 and growing at a compound annual growth rate of 29.4%. Strong growth in electric scooters is expected to support GGR’s business prospects in the coming years. However, analysts expect GGR’s revenue to grow 51% in 2022 to $499 million and 72% to $859 million in 2023, showing strong strength in GGR’s equity story.

While these figures will please GGR shareholders, any slowdown in growth will be penalized by market players. Additionally, with this rapid revenue growth, GGR is expected to break even in 2023, earning an expected profit of $2.47 million.

The newly listed company does not have a consistent track record and the risks of disappointing analyst estimates are high at this stage. In addition, current equity market conditions are unfavorable to non-profit stocks, and the downward momentum seen since its listing should come as no surprise to investors.

Despite this, Gogoro is a market leader in electric scooters, offering an innovative and diverse solution to its customers. Gogoro’s battery exchange program that eliminates the need for riders to charge their scooter with a wall outlet could be a game-changer if it hits the mass market.

The decline observed since the IPO is an opportunity for long-term investors. Furthermore, GGR stock is cheap in terms of valuation multiples, trading at a price to earnings of 4.16 times and 4.95 times company value to sales. That being said, further weakness in GGR stock should be seen as a buying opportunity to add to its exposure.

At the date of publication, Cristian Docan did not hold (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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