Rising concerns globally regarding climate change has steered governments’ attention to electric vehicles (EVs), many of which now provide policy support to EV companies. President Biden had allocated $174 billion from his planned infrastructure spending package for the U.S. EV industry to install 500,000 charging stations and to…
replace internal combustion cars by 2030. The global EV market is expected to grow at a CAGR of 29% over the next five years.
However, many companies in this space have garnered significant investor attention with promises that have not always been backed by reality. And with investors now rotating away from overvalued stocks in the sector to undervalued companies that are poised to grow with an economic recovery, the weak EV players are retreating. A global semiconductor chip shortage is another factor that could reduce the near-term growth potential of most EV companies.
Therefore, we think it’s wise to avoid fundamentally weak stocks QuantumScape Corporation (QS – Get Rating), Arrival Limited (ARVL – Get Rating), Lordstown Motors Corp. (RIDE – Get Rating) and Beam Global (BEEM – Get Rating). They have declined more than 45% year-to-date.
Click here to checkout our Electric Vehicle Industry Report for 2021
QuantumScape Corporation (QS – Get Rating)
QS serves the automotive industry by developing and commercializing solid-state lithium-metal batteries for electric vehicles and other applications. The company uses its original equipment manufacturer (OEM)-validated battery technology to design the batteries. The stock has lost 57.9% year-to-date and closed Friday’s trading session at $35.52.
On April 18, QS considered a legal action against Scorpion Capital because Scorpion had accused QS of fraud in its short seller report. The report has precipitated a 13% decline in QS’ shares since its release. On April 15, QS announced plans to build a highly automated factory for battery manufacturing in North San Jose. And last month, Volkswagen Group of America Investments, LCC (VW)successfully tested QS’ solid-state lithium-metal cells in its labs in Germany and will invest $100 million in QS.
QS’ non-GAAP operating loss was $22.42 million for the fourth quarter, ended December 31, 2020, which represents a 71.1% rise year-over-year. The company’s operating expenses increased nearly 100% year-over-year to $30.19 million. Its net loss was $694.74 million, representing an increase of 4762.4% year-over-year. QS’ net loss per share increased 3916.7% year-over-year to $2.41. Analysts expect the company’s EPS to remain negative for fiscal 2022, which represents a decline by 25% year-over-year.
QS’ POWR Ratings are consistent with this bleak outlook. The stock has an overall D rating, which equates to Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
The stock has a D grade for Stability, Sentiment, and Value. We have also graded QS for Growth, Quality, and Momentum. Click here to access all of QS’ ratings.
QS is ranked #59 of 66 stocks in the A-rated Auto Parts industry.
Arrival Limited (ARVL – Get Rating)
ARVL designs, researches and develops, assembles, and produces robotics and EVs. The company offers trucks, vans, buses and other commercial vehicles and operates in the U.K., U.S., Germany and Russia. The stock closed Friday’s trading session at $14.40.
CIIG Merger Corp. (CIICU), a U.S. publicly traded special purpose acquisition company, completed a business combination with ARVL on March 24.In an announcement, ARVL said it will be building its second U.S. Microfactory in Charlotte, North Carolina, to produce two different classes of EV vans. And in February, ARVL announced that it will…
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