7 electric vehicle stocks to sell before their stalemate
Like other speculative growth plays, most EV or EV stocks peaked at some point in 2021. Since then, most companies operating in this fast-growing sector have declined significantly in 2022. This said, while it may seem to some investors that this is an area to consider as it may have bottomed out, many names in this space still fall into the category of ‘EV stocks for sale’ .
Indeed, despite what many have called a bubble in the electric vehicle sector that appears to be bursting, dozens of publicly traded electric vehicle stocks continue to trade at extremely high valuations. Along with lofty valuations, these vehicle electrification players are also facing deteriorating fundamentals.
Growth is falling short of expectations, milestones are not being met, and the hope and hype that sent this sector to “the moon” during the pandemic era continues to dissipate.
So, investors shouldn’t get carried away with these overpriced electric vehicle stocks for sale. With the fundamentals weakening, there is more room for most of these stocks to fall. So, I think investors want to curb with these electric vehicle companies right now.
Charging station (CHPT)
There was a lot of buzz surrounding the EV charging solution provider Charging point (NYSE:CHPT) in preparation for its public markets debut via a special purpose acquisition company (or SPAC) merger in February 2021.
In fact, even before the closing of the SPAC merger, shares of CHPT’s “blank check” predecessor, Return energy, rose to levels nearly five times its original SPAC price ($10 per share). Since then, however, CHPT stock has all but fallen back to that initial SPAC price, changing hands today for around $11 per share.
Still, I wouldn’t assume that the $10 level is some sort of floor for ChargePoint. Although the company reported 93% revenue growth last quarter, it remains far from achieving profitability any time soon. Faced with burning half of its cash position over the next twelve months, CHPT stock could continue to decline as unprofitable growth stocks continue to fall out of favor.
Canou (NASDAQ:GOV) shares have been at an 83.5% discount so far in 2022, but this early-stage electric delivery vehicle maker has actually made major strides throughout this year. Namely, the company has received large orders for its vehicles from high-profile customers, including walmart (NYSE:WMT).
So why has GOEV stock taken such a big plunge since January? Blame it on shareholder dilution. As Louis Navellier explained in October, this cash-strapped startup needs capital to fill those orders. The company continued to raise this cash through the dilutive sale of new shares.
Based on its latest filings with the Securities and Exchange Commission (or SEC), it is clear that Canoo continues to rely on this source of funding. Future capital increases will limit the final value of GOEV shares per share (if they ever become profitable). So, for long-term investors, this is a story of dilution worth avoiding, as another sharp drop in prices could be in store.
Hyzon Motors (HYZN)
Rich valuation and poor fundamentals aren’t the only reason Hyzon Motors (NASDAQ:HYZN) is among the best electric vehicle stocks for sale. Another big concern is whether things are really going well with this company.
This year, HYZN stock was one of many stocks hit by scandal and controversy. Not only has Hyzon found itself the target of an SEC investigation, but the company itself has said that prior financial statements “cannot be relied upon.” Also, despite the release of new numbers, these more recently released numbers aren’t exactly exciting.
In the first quarter of 2022 (the last period in which HYZN provided quarterly figures), the company posted an operating loss of $26.8 million, on just $356,000 in revenue. With the situation likely to get significantly worse since then, going against the tide and buying HYZN stock today seems like a decision that will eventually end in tears.
Lucid Group (LCID)
One year ago, Lucid Group (NASDAQ:LCID) seemed poised to eventually grab a sizable share of the premium EV market. Flash forward to today, and the company’s outlook has diminished significantly. Initially, due to headwinds in production, Lucid announced significantly reduced production goals.
More recently, the company cut its targets due to weaker-than-expected quarterly results and a drop in reservations for its vehicles. As a result, as LCID stock plunged from the $40 level to the single-digit level following this year’s developments, further pullback may be ahead.
Over the next several quarters, if Lucid fails to meet/exceed expectations, it will be difficult for the company to maintain its now lower, but still elevated, valuation. The stock continues to trade at a high price-to-sales ratio (nearly 20x). While it might be worth revisiting if the company ends up dropping to penny price levels (less than $5 per share), for now I think passing the LCID is the best decision.
With more than 30% higher zoom in the past month, many investors may think Nio (NYSE:NIO) once again became one of the EV stocks to buy. However, I don’t think it’s time to dive in. This China-based electric vehicle maker remains one of the best electric vehicle stocks to sell as this latest rally could soon reverse the trend.
Of course, the big jump in Nio’s share price over the past month has been driven by promising news. The company reported a record number of vehicle deliveries in November. China also appears keen to ease its “Zero Covid” policy, which has hit both production and demand for Nio vehicles.
Even so, as a Looking for Alpha commentator recently argued that this sharp increase in November could be due to Chinese tax incentives for electric vehicles which expire this year. If this proves true and sales growth slumps again from 2023, stocks could return to prices below $10 per share.
After its late 2020 SPAC merger, EV battery tech startup quantum landscape (NYSE:QS) soared to prices well above $100 per share. Currently, investors can buy this same stock at around $7 per share.
That said, those who think this means QS stock is now in oversold territory should think otherwise. Shares of this company, which works to develop solid-state lithium batteries (or SSBs) for electric vehicles, could continue to slide as time is not on its side.
At least that is the view of Adam Jonas of Morgan Stanley. In November, the analyst downgraded the shares from “hold” to “sell” and lowered his price target from $12 to $4 per share. This downgrade appears to be primarily due to QuantumScape’s time to market being far too long. Years away from hitting its next market hurdle, rising interest rates and high operating losses are likely to put further pressure on the stock.
You’re here (NASDAQ:TSLA) is still not only the most valuable EV stock by market cap, but also the most valuable automaker by market cap (for now). However, TSLA has fallen more than 50% from its all-time high and could be at risk of falling further.
Globally, competition in the electric vehicle sector is intensifying. Incumbent automakers and “Tesla killers” in the United States are moving quickly to grab their share of the electric vehicle market. Tesla could also face big problems in China, where it is rumored to be slowing production.
Worse still, with CEO Elon Musk preoccupied with his latest personal acquisition (Twitter), these factors could have an even more negative impact than they would if Musk was fully focused on keeping this powerhouse at the top of the heap. Investors may want to follow the lead of the hedge fund community and put TSLA shares into EV shares to sell the bucket.
At the date of publication, Thomas Niel has not held (directly or 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 publishing guidelines.