Volcon (NASDAQ: VLCN) stock price has seen elevated volatility this week after the company published a statement on its Volcon Stag project. The stock initially surged to $2.38, 195% above its lowest level this year. It then retreated by 45% and ended the day at $1.33.

The world has seen substantial investments in electrification as governments have embraced the net zero stance. This trend has been highly successful in the electric vehicle industry as the number of cars sold has surged recently. Tesla, the biggest player in the sector is valued at over $642 billion.

Other industries have been trying to electrify. For example, we have some companies building electric scooters, bikes, and even electric tractors. 

Volcon ePowersports, is one of the companies attempting to disrupt the industry. Precisely, the company is building electric products for the outdoor market. Its four products are Grunt Evo, Stag, Brat, and Youth.

This week, John Kim, the new CEO, announced that the company had started to manufacture its electric stag, which is a rugged vehicle for outdoor enthusiasts. The stag goes for about $52,000 and is being sold to individuals and the government.

In a statement, the CEO said that the company had delivered its first Stag to the US Army Corps of Engineers as part of a large order. The agency will use the product for military and humanitarian purposes. 

Still, there are some serious concerns about Volcan, which explains why its stock has plunged by more than 98% from its all-time high.

The first major challenge is that its balance sheet is stretched substantially. It ended last quarter with $2.4 million in cash and short-term investments down from over $20 million in the same period in 2022.

At the same time, its cash outflows have continued rising. One way to look at this is to consider its net losses. The company lost $11.3 million in the September quarter, a big increase from the $7.9 million it lost in the same period in 2022. All in all, the company’s net loss in the past five quarters stood at over $57 million in the last five quarters.

VLCN chart by TradingView

The daily chart shows that the VLCN stock price has moved in the horizontal direction in the past few months. It has remained below the important resistance point at $10 since November last year. As a result, the stock has continued to consolidate at the 50-day and 25-day moving averages.

The Average True Range (ATR), a popular measure of volatility has also tumbled. Therefore, the outlook for the highly-shorted stock is bearish. There is a high possibility that it will crash below $1 soon.

However, as I always warn about these stocks, shorting them is a bit risky because a short-squeeze is possible as we saw this week.

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