Electric vehicles (EVs) are revolutionizing the automobile industry as governments worldwide emphasize clean energy. According to the latest forecast by the investment bank UBS, 20% of all new cars sold globally are expected to be electric by 2025, a metric that is expected to jump to 40% by 2030. The bank also projects that by 2040, almost every new car sold will be electric.
However, a current semiconductor shortage is far from being solved and is the primary factor dragging automobile production and sales down. Analysts believe the semiconductor shortage could even last until 2023. This is expected to have a greater impact on start-ups with limited market share than on well-established EV manufacturers.
Thus, we think lesser-known and overvalued EV stocks Arrival Limited (ARVL), Lordstown Motors Corp. (RIDE), GreenPower Motor Company Inc. (GP), and Ayro Inc. (AYRO) are better avoided now.
Click here to checkout our Electric Vehicle Industry Report for 2021
Arrival Limited (ARVL)
Arrival focuses primarily on designing, assembling, and distributing commercial electric vehicle vans and buses worldwide. The company is based in Luxembourg.
On July 15, ARVL announced that LeasePlan would be the preferred operational leasing partner for ARVL electric vans, based on an initial order of 3,000 vans. However, the agreement is not yet finalized and, thus, it might take a while for ARVL to benefit from the partnership.
In terms of trailing-12-months Price/Book, ARVL is currently trading at 3.73x, which is 12.3% higher than the 3.32x industry average.
ARVL’s operating loss increased 6,488.8% year-over-year to €1.06 billion ($1.26 billion) in the fiscal first quarter ended March 31. Its loss for the period grew 4,374.6% from the year-ago value to €968.70 million ($1.147 billion).
Analysts expect ARVL’s EPS to remain negative at least until the next year.
Shares of ARVL slumped 15.5% over the past month. The stock lost 7% intraday to close yesterday’s trading session at $11.94.
ARVL’s POWR Ratings are consistent with this bleak outlook. The stock has an overall F rating, which translates to a Strong Sell. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.
The stock also has an F grade for Growth, Value, and Quality, and a grade D for Sentiment. Among the 57 stocks in the Auto & Vehicle Manufacturers industry, ARVL is ranked #51.
To see additional ARVL ratings for Stability and Momentum, click here.
Lordstown Motors Corp. (RIDE)
RIDE operates as an original equipment manufacturer of light-duty fleet vehicles. The Lordstown, Ohio-based company develops, manufactures, and sells Endurance, an electric full-size pickup truck targeted to fleet customers. RIDE completed its business combination with DiamondPeak Holdings Corp., a special purpose acquisition company, and began trading on Nasdaq under the ticker “RIDE” on October 26, 2020.
Scott+Scott Attorneys at Law LLP and Kehoe Law Firm, P.C. are investigating whether certain directors and officers of DiamondPeak Holdings Corp., which merged with RIDE last year, breached their fiduciary duties to DiamondPeak and its shareholders.
On June 28, Lifshitz Law Firm, P.C. announced the filing of a class action against RIDE alleging that the company misled investors by misrepresenting and materially false public statements.
RIDE’s 10.23 forward EV/Sales multiple is 562.7% higher than the 1.54 industry average. In terms of forward Price/Sales, RIDE is currently trading at 22.31x, which is 1,665.7% higher than the 1.26x industry average.
RIDE’s loss from operations increased 785.8% year-over-year to $106.21 million in the fiscal first quarter, ended March 31. Its net loss increased 955.3% from its year-ago value to $125.21 million. The company’s loss per share increased 350% year-over-year to $0.72.
The Street expects RIDE’s EPS to decline 96.2% year-over-year to negative $2.04 in the current year. The company’s EPS is expected to remain negative at least until the following year. Shares of RIDE have slumped 78.2% over the past six months and 70.4% year-to-date.
RIDE’s poor prospects are also apparent in its POWR Ratings. The stock has an overall F rating, which equates to a Strong Sell. RIDE also has an F for Growth, Value, Stability, and Sentiment. It is ranked #54 in the same industry.
To see POWR Ratings for Momentum and Quality, click here.
GreenPower Motor Company Inc. (GP)
GP in Vancouver, Canada designs, manufactures, and distributes electric vehicles for commercial markets in the United States and Canada. The company offers a range of high-floor and low-floor electric medium- and heavy-duty vehicles.
GP has been affected by the vagaries of the COVID-19 pandemic, resulting in its declining financials, and could continue to incur losses in the near term. GP’s gross profit declined 11.7% year-over-year to $3.58 million in the year ended March 31. Its loss from operations stood at $7.79 million, up 58.3% from the last year. Its loss for the year increased 52.3% from its year-ago value to $7.84 million. The company’s loss per common share has increased 26.5% year-over-year to $0.43.
GP share price has slumped 42.7% over the past six months to close yesterday’s trading session at $17.13. The stock lost 40.2% year-to-date.
GP has an overall F rating, which equates to Strong Sell in our proprietary POWR Ratings system. In addition, GP has an F grade for Value and Quality, and a D for Stability and Sentiment. It is ranked #53 in the same industry.
Click here to view additional GP ratings for Growth and Momentum.
Ayro, Inc. (AYRO)
AYRO designs and manufactures light-duty, emissions-free electric vehicles for urban and community transport, local delivery, closed campus mobility, recreational, and government use.
In terms of forward EV/Sales, AYRO is currently trading at 2.35x, which is 51.9% higher than the 1.54x industry average. Its 5.74 forward Price/Sales multiple is 354.6% higher than the 1.26 industry average.
AYRO’s loss from operations increased 234% year-over-year to $5.64 million in its fiscal first quarter, ended March 31. Its net loss increased 213.8% from its year-ago value to $5.63 million.
Analysts expect the company’s EPS to be a negative $0.81 in the current year, indicating a 12.5 % decline from the last year.
AYRO has lost 28.3% year-to-date. The stock price has slumped 38.1% over the past six months.
AYRO’s POWR Ratings reflect its poor prospects. The stock has an overall F rating, which equates to a Strong Sell in our proprietary rating system. In addition, AYRO has an F grade for Value, Stability, Quality, and Sentiment. It is ranked #52 in the same industry.
Beyond what we’ve stated above, we have also rated AYRO for Momentum and Growth. Click here to view all AYRO ratings.
Click here to checkout our Electric Vehicle Industry Report for 2021
ARVL shares were trading at $11.90 per share on Wednesday afternoon, down $0.04 (-0.34%). Year-to-date, ARVL has declined -57.68%, versus a 18.37% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.
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