Exro Technologies Inc (TSX: EXRO) is a Canadian based company commercializing patented technology designed to advance existing rotating electric machines. It is engaged in the production of electronics for electric motors and generators.

Key Highlights

• Secured a purchase order: Exro Vehicle Systems, a company of Exro Technologies Inc., has received a purchase order for more than CAD 1.0 million in engineering design and consulting services from a renowned Tier-1 automotive supplier. Exro will provide design and installation services for a custom electric powertrain system with a custom battery pack solution within the parameters of the purchase agreement.

• Multifold jump in operating expenses: The company's selling, general, and administrative expenses climbed by CAD 2.4 million to CAD 5.3 million in FY 2021, while research and development expenses increased by CAD 5.1 million to CAD 7.4 million. The primary drivers of the total cost increases are increased expenses made as the Company moves from the proof-of-concept stage to the commercialization phase and prepares for future Coil Driver manufacturing. While R&D costs were increased owing to testing and validation of various initiatives to accomplish the Company's commercialization ambitions.

• Resignation from the management: Alan Gaines resigned as a director of the Company on March 23, 2022, to focus on his other business activities.
  

Stock recommendation

The company maintained its operational pace into Q4 2021, where it completed a number of significant milestones, capping off a difficult year for early-stage technology businesses like Exro. However, it reported multifold increases in operating expenses, resulting in a comprehensive loss of CAD 24.6 million in FY 2021, compared to a loss of CAD 10.9 million in pcp.

As a result of the stock's thin financials, stretched valuations, and the recent announcement of its director retiring from his position to focus on his other business, we recommend a "Avoid" rating on EXRO at the last closing price of CAD 1.45 on April 20, 2022. Additionally, the markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

One-Year Technical Price Chart (as on April 20, 2022). Source: REFINITIV, Analysis by Kalkine Group

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