The honeymoon period is over for Ola Electric, the fast-growing Indian electric motorcycle company, as its stock continues its downtrend. Ola Electric’s share price has erased most of the gains made after its initial public offering in 2024. It has crashed by over 52% after peaking at ₹157 following its IPO. So, what next for the Ola Electric stock price?
Investor and customer issues persist
Ola Electric’s stock price continued its strong downtrend amid consumer and regulatory issues it has gone through in the past few months.
Indian regulators warned the company against posting on social media without informing investors first. This happened after the firm’s founder, Bhavish Aggarwal, posted about his store expansion plan without informing investors through regulatory filings first.
Ola Electric has also faced substantial challenges as more customers continue complaining about its products. A recent report showed that it had an over 80,000 complaint rate, as many users have taken to social media to complain about the products.
Therefore, there are significant risks that the company’s business will come under intense pressure as competition from firms like Honda, TVS, and Activa. These are some of the best-known brands and their electric products have a better reputation. As such, there are signs that the company will continue losing market share, which stands at 33%, to other established brands.
Instead of focusing on launching new models, prioritize addressing the concerns of users who are already facing issues with OLA S1.
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Read more: Ola Electric’s $734 million IPO: 2024’s largest in India—Should you invest?
Ola Electric’s finances are doing well
Despite its many challenges, there are signs that Ola Electric’s business is doing well as demand for electric bikes and scooters grows. The growth has been helped by demand and its stores, which it hopes to get to 2,000 by March.
Ola Electric’s recent results showed that its top-line and bottom-line numbers steadily improved. Its revenue jumped by 35% YoY to over ₹1,240 crore as deliveries jumped by 73.6% to 98,619, up from 56,813 in the same period a year earlier. The management hopes that the quarterly deliveries will keep growing, and cross the crucial 100k mark.
Ola Electric’s gross profit margins improved by 12 basis points to 20.3%, while the EBITDA margin rose by 0.18% to minus 17.9%. Its EBITDA loss improved to ₹223 crore from the previous ₹321 crore.
The company also hopes that its innovation and vertical integration will help to boost its market share in the longer term. It also believes that global expansion may help it to grow its sales over time.
Indian motorcycle companies have a long history of growing their businesses globally, and many have a strong market share there.
Still, Ola Electric’s share price may remain under pressure as it works to boost its market share amid high competition from Indian and Chinese brands. These actions may reduce its margins as it is forced to cut prices.
Ola Electric share price analysis
OLA stock chart | Source: TradingView
The four-hour chart shows that the Ola Electric stock price has been in a strong downtrend and is now at the lowest swing since November 27. This decline is in line with our first Ola stock forecast.
It recently crashed below the key support level at ₹91.67, its lowest level on December 9 and the 25-period moving average. The Percentage Price Oscillator (PPO) has moved below the zero line, while the Relative Strength Index (RSI) dropped below 50.
Therefore, the stock will likely continue falling as sellers target the next point at ₹67.03, its lowest level in November. A crash below that level will point to more losses, potentially to ₹50.
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