Electric vehicles (EVs) have been gaining traction since last year, amid growing climate change concerns and cost efficiencies. The U.S. government is pushing to make half of the cars sold be EVs by 2030 as part of its plans to phase out fuel-powered vehicles over the next few decades and tighten pollution rules regarding automobile emissions.
Moreover, countries worldwide have been trying to ramp up semiconductors production, which is crucial for EVs. The United States has allotted $52 billion to curtail the global chip shortage.
The global EV market is expected to grow at a 29% CAGR from 2021 to 2026. Thus, Wall Street analysts expect under-the-radar EV stocks REE Automotive Ltd. (REE), Volta Inc. (VLTA), and Ideal Power Inc. (IPWR) to witness substantial gains in the upcoming months.
REE Automotive Ltd. (REE)
REE is an electronic vehicle company based in Herzliya, Israel, which develops REEcorner technology that integrates conventional vehicle parts into the arch of the wheel and REEboard, a flat modular electric platform. The company went public through a reverse merger with blank cheque company 10X Capital Venture Acquisition Corp and started trading publicly on July 23, 2021.
On August 19, REE received $17 million from the United Kingdom government for integrating its REEcorner™ technology in EVs, which is in line with the government’s target of a zero-emission transport network. This funding should facilitate commercial production of REE’s breakthrough REEcorner™ technology and ultra-modular electric vehicle platforms.
Almost simultaneously with its launch into the stock market on July 23, REE announced its U.S. headquarters in Austin, Texas. On account of this, Michael Charlton, REE’s COO, said, "REE’s Integration Centers will be designed to be fully modular and scalable to ensure the Company achieves projected production volumes. The state-of-the-art centers will utilize automation, including Automated Guided Vehicles (AGVs), for the optimal movement of assemblies, with the goal of increasing automation levels to Industry 4.0 Technology and beyond."
In the six months that ended June 30, REE’s gross loss improved to -$4,000 from -$128,000 in the same quarter last year. Its operating loss improved from -$38.5 million to $31.3 million. In addition, net cash provided by investing activities rose to $0.77 million, from -$0.31 million
The consensus revenue estimate of $16.15 million for the next year (fiscal 2022) indicates a 1,756.3% year-over-year increase.
Over the last five days, the stock has gained 8.6% to close yesterday’s trading session at $5.95.
Three Wall Street analysts that rated REE, have rated it a Buy. The 12-month median price target of $16.67 indicates a 180.17% potential upside. The price targets range from a low of $15.00 to a high of $20.00.
Click here to check out our Electric Vehicle Industry Report for 2021
Volta Inc. (VLTA)
VLTA operates a network of EV charging stations. The company takes a data-based approach to provide services to customers by placing its stations in their places of convenience. VLTA went public through a reverse merger with a SPAC Tortoise Acquisition Corp. II on August 27, 2021.
On September 7, VLTA partnered with Six Flags Entertainment Corporation (SIX) regarding the provision of electric charging stations to amusement park guests. This service of providing easily accessible and sustainable charging options in a bustling setup will likely enable VLTA to reach out to a larger customer base.
Earlier in the same month, VLTA opened a brand-new charging station in Lawrenceville, Georgia. This marks another vital step of VLTA branching out to bring more customers into its service purview of simple and easy vehicle charging.
The stock has gained 5.4% since it went public on August 27 to close yesterday’s trading session at $10.00. The 12-month median price target of $12.50 indicates a 25.00% potential upside.
Ideal Power Inc. (IPWR)
IPWR develops and sells patented bi-directional power switches, providing solutions for controlling energy for EVs. The company’s prime focus rests with its B-TRAN™ semiconductors, which is a development over conventional power semiconductors.
Last month, IPWR signed an agreement with a leading power conversion solution provider regarding testing its semiconductors focusing on Uninterrupted Power Supply (UPS). Dan Brdar, President and Chief Executive Officer of IPWR, stated, “We are excited to collaborate with this power conversion solution provider as they evaluate B-TRAN™ for UPS systems and for their innovative solutions in the two largest segments of the insulated gate bipolar transistor market, EVs and renewable energy.”
On July 27, IPWR announced that an EV charging company had shown interest in testing its B-TRAM™ semiconductors. This aligns with its strategy to collaborate with players in the EV field and broaden its horizon.
In the second fiscal quarter that ended June 30, IPWR’s grant revenue increased 1200.2% year-over-year to $85 thousand. Cash and cash equivalents at the end of the period for the six months ended June 30 came in at $25.72 million, indicating a 1,333.8% year-over-year rise. In addition, its net cash provided by financing activities improved 9,070.6% from the prior-year half to $24.51 million.
The Street revenue estimate of $0.2 million for the current quarter (ending September 2021) reflects a 35.1% year-over-year increase.
IPWR’s stock has gained 225.4% over the past year and 101.1% year-to-date. The 12-month median price target of $28.00 indicates a 70.42% potential upside.
REE shares were trading at $6.29 per share on Thursday afternoon, up $0.34 (+5.71%). Year-to-date, REE has declined -38.39%, versus a 20.87% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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