The electric vehicle (EV) market's asset bubble concerns are intensifying in 2021 because several companies have yet to deliver on their promises despite receiving increased tax credits and having access to highly innovative software. Many companies that previously scheduled their EV product launches this year have been forced to push back their launch dates due to a worldwide semiconductor chip shortage. Also, several start-ups with diversified product pipelines are struggling to boost their revenues, given the intense competition in the global EV industry.
President Biden has announced a $174 billion plan for the EV industry that will subsidize domestic supply chains, install 500,000 charging stations nationwide by 2030, and increase tax incentives and point-of-sale rebates. The plan has spurred several start-up EV manufacturers to go public, making the EV space highly overcrowded amid a raw material shortage.
Thus, we believe it is better to avoid low-potential EV stocks Canoo Inc. (GOEV) and Lordstown Motors Corp. (RIDE) now, given their poor performances over the past quarters.
Click here to checkout our Electric Vehicle Industry Report for 2021
Canoo Inc. (GOEV)
Founded in 2017, GOEV is an automobile manufacturing company that designs and develops electric vehicles in the United States. The company offers B2B delivery vehicles, multi-purpose delivery vehicles, and lifestyle vehicles using skateboard architecture technology. It intends to serve small businesses, independent contractors, service technicians, retailers, corporations, logistics companies, fleet managers, and others. The stock has lost 34.9% year-to-date and closed Thursday’s trading session at $8.99.
For its alleged violations of the federal securities laws, a class action lawsuit has been filed against GOEV and its directors by several law firms on behalf of persons and entities who purchased or acquired GOEV common stock and/or warrants August 18, 2020 – March 29, 2021. GOEV debuted its fully electric pickup truck on March 10, 2021 during the Motor Press Guild’s Virtual Media Day (VMD), in partnership with Automobility LA, with deliveries scheduled for as early as 2023.
GOEV’s loss from operations was $127.66 million for the fourth quarter, ended December 31, 2020, which represents more than a 242% rise from the prior-year period. The company’s research and development expenses increased 214.9% year-over-year to $90 million. GOEV’s total liabilities have increased 41.9% year-over-year to $181.62 million. Its net loss for the fourth quarter was $12.30 million. Also, GOEV’s net loss per share came in at $0.08.
Analysts expect the company’s EPS to decline by 12.3% year-over-year and remain negative for the fiscal 2021.
GOEV’s POWR Ratings are consistent with this bleak outlook. The stock has an overall F rating, which equates to Strong 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 an F grade for Growth, and D for Value, Quality, and Stability. We have also graded GOEV for Growth and Momentum. Click here to access all GOEV’s ratings.
GOEV is ranked #44 of 51 stocks in the Auto & Vehicle Manufacturers industry.
Lordstown Motors Corp. (RIDE)
Headquartered in Lordstown, Ohio, RIDE is an automotive company that designs and manufactures EVs. The company’s electric pickup truck, the Lordstown Endurance, is targeted for sale in the commercial fleet markets. Its In-Wheel Drive System utilizes four hub motors with integrated software. RIDE’s Telematics system provides owners with a range of data for fleet management. The stock has lost 39.9% year-to-date and 40.2% over the past month to close Thursday’s trading session at $12.05.
On behalf of shareholders who purchased RIDE’s shares between August 3, 2020 – March 24, 2021, Block & Leviton LLP, a national securities litigation firm, has filed a class action lawsuit against RIDE and certain of its executives for securities fraud.
In March, RIDE entered an agreement with Holman Enterprises, a global automotive services organization. A co-marketing agreement and vehicle procurement agreement with Holman’s ARI segment and an upfit services agreement with Holman’s Auto Truck Group should help organizations integrate the Lordstown Endurance truck into their vocational fleet operations.
For the fourth quarter, ended December 31, 2021, RIDE’s loss from operations was $38.55 million, which represented a rise of 441.3% year-over-year. The company's total liabilities have increased 40.4% year-over-year to $35.09 as of December 31, 2021. Its net loss was $38.24 million for the fourth quarter, up 436.8% year-over-year. RIDE’s net loss per share was $0.23, which represents a rise of 130% from the prior-year period.
Analysts expect the company’s EPS to decline by 62.5% year-over-year and remain negative for the fiscal 2021.
It’s no surprise that RIDE has an overall F rating, which equates to Strong Sell in our proprietary rating system. The stock also has an F grade for Growth and Sentiment, and a D grade for Value, Quality, and Stability. In addition to the POWR Ratings grades we’ve just highlighted, one can see RIDE’s ratings for Momentum here.
RIDE is ranked #48 in the same industry.
Click here to checkout our Electric Vehicle Industry Report for 2021
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GOEV shares were trading at $8.42 per share on Monday afternoon, down $0.57 (-6.34%). Year-to-date, GOEV has declined -38.99%, versus a 9.00% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.
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