It is evident that the electric vehicle (EV) industry has massive potential for long-term growth and sustainability, which makes these EV stocks a solid investment.
This year has been highly profitable for several global industries, and the EV industry is not exempt. However, while it is true that the industry is lucrative, not all EV stocks are.
In fact, there are more non-lucrative EV stocks than lucrative ones. This year, EV stocks experienced a massive price correction in the stock market, which segregated the profitable ones from the rest.
Of course, there will be opportunities to profit from oversold EV stocks, but it remains wise to steer clear of EV companies with poor fundamentals. This article highlights three EV stocks that are performing poorly in the market for various reasons and are unsuitable for long-term investments.
ChargePoint (CHPT)
ChargePoint (NYSE:CHPT) is an EV infrastructure company based in Campbell, California. It operates the world’s largest online network of EV charging stations and also produces technology to improve mobile vehicle electrification and integration.
The rapid growth and development of the EV industry have resulted in stiff competition among companies providing charging infrastructure. While no one has captured market share yet, the race is nearing its last stretch and ChargePoint is lagging behind.
The company’s stock is the most unattractive it’s been in years after experiencing a massive price correction in the past year.
It is worth noting that many EV companies are facing cash-burn issues, but revenue growth has not declined, and so many of them are doing just fine. However, ChargePoint is not one of them. According to its latest quarterly report, its revenue has declined by 18% to $107 million. Loss from operations has also increased.
At the moment, ChargePoint does not look likely to make a recovery, at least not in the short term. If you own the stock, now may be a good time to sell it.
Polestar (PSNY)
Polestar (NASDAQ:PSNY) is an automotive manufacturer of EVs based in Torslanda, outside Gothenburg, Sweden. The company is a subsidiary of Volvo Cars and Geely, two major players in the automotive industry. It produces EVs in several countries, such as China, South Korea and the U.S.
Despite the relative success of the EV industry this year, Polestar is one company that has not benefited from this success. Its stock is down by 81% in the last year and could drop even further by the look of things. Like many other EV companies, it suffers from severe cash burn.
Its latest quarterly report put things into perspective. According to the report, Polestar has experienced a 36% decrease in revenue and a marginal increase in operating level losses. There were some positives, though, such as its cash buffer, which stood at $784 million at the end of quarter one.
Furthermore, the company does not look likely to meet its cash flow guidance by 2025. With dwindling revenue generation and severe cash-burn issues, Polestar is not an EV stock you want to hold long-term.
Mullen (MULN)
Mullen (NYSE:MULN) is an automotive and EV manufacturer based in Brea, California. Its products have been called the next-generation of EVs, and it specializes in producing two types of EVs: passenger and commercial.
However, Mullen is among the worst-performing EV companies in the industry. Its stock has declined by 98% in the past year, and its ability to sustain its operations without external funding is in doubt, no thanks to a rapid decrease in cash reserves.
Furthermore, Mullen’s financial metrics are as poor as they can be, and its latest quarterly report is evidence of this. According to the report, Mullen’s equity fell from $272.8 million to $117.4 million in six months. It also spent $120.9 million cash in operations, way more than the $16.3 million it generated from EV sales.
With such poor figures, it’s unlikely that Mullen will achieve profitability anytime soon, making it a stock to sell for any investor who owns it.
On the date of publication, Joel Lim did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.