Creative Learning Corporation (OTCQB: CLCN) is capitalizing on the EV craze with a pivot away from the education and child-learning sector towards a vehicle subscription model with a share exchange agreement to acquire DriveItAway, Inc. The decision has brought new attention to the company which has seen volume 43 times greater than average these last few days. Despite heavy buying, the stock slumped 35% with profit taking as news got out about one of the newest EV penny stocks.
CLCN Stock News
The initial share exchange was announced in December and will make DriveItAway Inc. (DIA) a wholly-owned subsidiary of CLCN. After this, the EV company will then become the operating business and be headed by DriveItAway’s management team to focus solely on automotive mobility technologies and programs. As a result, CLCN’s five wholly-owned subsidiaries will be sold to an entity affiliated with the current CEO where it will continue pursuing its business strategy as a private enterprise.
Meanwhile, DIA’s main asset will be its unique approach to car ownership since it allows customers with cash or credit challenges to buy any vehicle from any car dealer. This is done through a “risk free” subscription ownership pathway that allows customers to build their credit and equity with each payment.
DIA’s CEO – John F. Possumato – is confident that its national ownership program for employers will help relieve labor shortage issues while its “drive to own” pilot program will allow consumers who traditionally lack access to EV vehicles to take part in the EV revolution through its vehicle purchase program.
While this model does present some risks, the company highlights that its strategy addresses a very real need across the country as ride-sharing and public transportation are not always a viable option for workers who need a car to reach the job – but first need a job to afford the car. These potential first time car owners are an untapped market that DIA hopes to target by providing immediate vehicle access through a new twist on the rent-to-own model.
Using its “Subscribe to Own” app, DIA works with automobile dealers to sell more vehicles using its proprietary mobile technology, driver app, and training as well as insurance and maintenance coverages so that dealerships are profitably capitalizing on emerging online sales opportunities. At the same time, its app provides users with a rental contract that charges for usage while users earn a down payment coupon of up to 85% with each payment. This coupon can be applied towards a down payment for an auto loan if the user chooses to purchase the vehicle but the car can be returned at any point.
DIA is clearly the brainchild of its founder John F. Possumato who is hoping to offer dealerships new market opportunities with its subscription-to-purchase model. Possumato has a great deal of experience in the industry himself as an automotive industry entrepreneur and dealership owner. With over 30 years of car industry leadership experience, Possumato brings impressive credentials to his company as a graduate of the University of Pennsylvania Law School and the Wharton School of Business. In the past he was counsel to the Board of Directors of the Automotive Fleet and Leasing Association as well and may use his unique industry connections to bring DIA to the industry’s forefront.
Now that the share exchange has been consumated, investors will be watching whether DIA’s business model will prove profitable. Despite the stock’s 98% surge to $.25, CLCN may not have the momentum to retest this high without positive news from CLCN’s new management. What is notable CLCN is its low market cap of $2.3 million and low float of only 5 million. In light of this, CLCN could be one to watch for more news from the company in case of a similar run up.
Media Sentiment
It appeares that @stockballa was right on the money about CLCN’s runup
@BMoeKnows is still bullish on CLCN’s potential for another run as one of the few EV penny stocks with a float this low.
Technical Analysis
CLCN’s run on March 3rd formed a resistance at .26 with a secondary resistance at .18. Currently trading at $.17 CLCN shows a support at .13. The RSI is currently resting at 45 and the MACD is bearish. Accumulation continues to taper but has not dropped as steeply as the stock’s price action.
If CLCN continues to drop towards its primary support, then bullish investors can watch for an entry point as the RSI approaches oversold. As old shareholders leave their positions, more selling could take place and investors should watch for a point of consolidation.
CLCN Stock Forecast
Given the legislative push towards EV ownership across America, CLCN’s business model could find a receptive audience amongst employers and car dealers. However, this business has yet to prove the success of its rent to own model and this presents a potential risk to investors. Yet, the founder’s extensive experience in the sector is a bullish sign and could help push the company forward. As one of the newest EV penny stocks, CLCN will be one to watch as it moves ahead with it plans for greater EV ownership.
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