Analysts expect 2022 to be another big year for the electric vehicle (EV) industry with the rapid rollout of charging infrastructure and government measures to reduce carbon emissions. Furthermore, automakers are investing increasingly in EV manufacturing to meet the rising demand for EVs due to their high performance and affordable recurring expenses. Global electric vehicle sales are expected to surpass 10.5 million this year.
Furthermore, automakers have yet to surprise their customers with 58 new electric car options, which are expected to be launched this year with innovative designs and features. The global electric vehicle market is expected to reach $812.89 billion by 2028, registering a 19.8% CAGR.
However, not all electric vehicle companies are expected to benefit from the industry tailwinds. Despite declining in price recently, the shares of Lucid Group, Inc. (LCID), Fisker Inc. (FSR), and Nikola Corporation (NKLA) are trading at price levels that are not consistent with their bleak growth prospects. So, we think it could be wise to avoid these overvalued stocks now.
Click here to checkout our Electric Vehicle Industry Report for 2022
Lucid Group, Inc. (LCID)
LCID in Newark, Calif., is a manufacturer of electric vehicles (EVs). The company designs, engineers, and builds electric vehicles, EV powertrains, and battery systems. Its Lucid application provides an in-car experience; LCID also offers Air Dream Edition, Air Grand Touring, Air Touring, and Air Pure.
Last month, The Schall Law Firm, a national shareholder rights litigation firm, commenced investigating claims on behalf of investors of LCID regarding alleged violations of the securities laws. The investigation focuses on whether LCID issued false and misleading statements and failed to disclose information pertinent to investors. If the law firm declares any negative findings, it could negatively impact investor sentiment.
For the third quarter, ended Sept. 30, 2021, LCID's revenue decreased 30.5% year-over-year to $232,000. The company's negative gross profit increased 1,022.9% from the year-ago value to $3.09 million. And its total operating expenses rose 205.2% from the prior-year quarter to $493.96 million. Also, the company's loss from operations increased 206.6% year-over-year to $497.05 million.
LCID's EPS is estimated to decrease at the rate of 38.7% per annum over the next five years.
In terms of forward Price/Book, LCID is currently trading at 13.04x, which is 334% higher than the 3x industry average. In addition, in terms of forward Price/Sales, LCID is currently trading at 820.11x, which is significantly higher than the 1.08x industry average. The stock has declined 8.4% over the past five trading days.
It is no surprise that LCID has an overall F rating, which equates to a Strong Sell in our POWR Ratings system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting. Also, the stock has an F grade for Value, Quality, and Stability.
Click here to see the additional POWR Ratings for LCID (Momentum, Sentiment, and Growth). LCID is ranked #63 of 69 stocks in the F-rated Auto & Vehicle Manufacturers industry.
Fisker Inc. (FSR)
Founded in 2016, FSR in Manhattan Beach, Calif., designs, develops, manufactures, and sells electric vehicles. White space; the value; and the conservative premium are the FSR’s segments. The company offers Fisker Flexible Platform Agnostic Design (FF-PAD) to design and develop a vehicle from an EV platform.
FSR's revenue came in at $15,000 in the third quarter, ended Sept. 30, 2021. However, the company's total operating costs and expenses increased 1,004.1% year-over-year to $109.56 million. Its loss from operations grew 1,004.2% from its year-ago value to $109.57 million. Also, the company's net loss rose 176.9% from the prior-year quarter to $109.84 million.
FSR's EPS is expected to decrease 305% in its fiscal 2021. The stock has declined 29.5% in price over the past month and 26.7% over the past six months.
FSR’s 4.35x forward Price/Book is 44.8% higher than the 3x industry average. The stock has declined 9.8% in price over the past five trading days.
FSR's POWR Ratings are consistent with this bleak outlook. The stock has an overall F rating, which equates to a Strong Sell in our proprietary rating system.
Also, the stock has an F grade for Stability and a D grade for Value and Quality. We have also graded FSR for Growth, Momentum, and Sentiment. Click here to access all FSR's ratings. FSR is ranked #59 in the Auto & Vehicle Manufacturers industry.
Nikola Corporation (NKLA)
NKLA is a technology innovator that provides zero-emissions transportation and infrastructure solutions. The Phoenix, Ariz., company operates in two business units, Truck and Energy. NKLA's products include Nikola One, Nikola Two, Nikola Tre, and Nikola Badger.
During the third quarter, ended Sept. 30, 2021, NKLA's total operating expenses increased 131.8% year-over-year to $271.83 million. The company's loss from operations grew 131.8% from its year-ago value to $271.83 million. Its net loss rose 235.7% from the prior-year quarter to $267.57 million. Also, the company's loss per share increased 119.4% year-over-year to $0.68.
NKLA's EPS is estimated to decrease 40.3% in its fiscal 2021 and 16.1% next year. The stock has declined 50.8% in price over the past six months.
In terms of forward EV/Sales, NKLA is currently trading at 965.92x, which is significantly higher than the 1.94x industry average. In addition, its 1,185.64x forward Price/Sales compares with the 1.56x industry average. The stock has declined 6.9% in price over the past five trading days.
NKLA's poor prospects are also apparent in its POWR Ratings. The stock has an overall F rating, which equates to a Strong Sell in our proprietary rating system. Also, the stock has an F grade for Value and Stability.
In addition to the POWR Rating grades I have just highlighted, one can see NKLA's ratings for Sentiment, Growth, Quality, and Momentum here. NKLA is ranked #62 in the Auto & Vehicle Manufacturers industry.
Click here to checkout our Electric Vehicle Industry Report for 2022
LCID shares rose $1.20 (+3.38%) in premarket trading Wednesday. Year-to-date, LCID has declined -6.81%, versus a -8.52% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research.
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