Don’t Fall Victim to These 2 EV Stocks

Don’t Fall Victim to These 2 EV Stocks

Posted On November 4, 2022 12:41 pm

With increasing climate change concerns, rising costs of fossil fuels due to geo-political turbulence and ever-depleting supplies, and growing inclination toward lower operational and maintenance costs, the global automotive industry is fast transitioning toward e-mobility.

Including electric vehicles, charging networks, infrastructure, and energy storage, the global electric mobility ecosystem is projected to grow at 23.7% CAGR between 2022 and 2029. The following chart illustrates the key milestones in the impressive growth trajectory of electric vehicles.

EV Sales Milestones
Source: wri.org

While high input and borrowing costs amid record-high inflation and an increasing interest rate environment impeding the EV industry’s growth, EVs are expected to keep replacing Internal combustion engine vehicles at an increasing rate each year.

However, since the EV industry is expected to bear the brunt of the macroeconomic headwinds in the near term, investors are advised to exercise caution and not to bottom fish NIO Inc. (NIO) and Blink Charging Co. (BLNK), as some technical indicators point to further downside in these stocks.

NIO Inc. (NIO)

China-based NIO designs, develops, manufactures, and sells high-end smart electric vehicles. With a market capitalization of $16.01 billion, the company also offers energy and service packages; design and technology development activities; manufacture of e-powertrains, battery packs, and components; and sales and after-sales management activities. Over the last three years, NIO’s revenue has grown at a 70.6% CAGR.

During the second quarter of the fiscal year 2022 ended June 30, 2022, NIO’s adjusted loss from operations widened 360.1% year-over-year to $351.60 million due to Covid-related challenges and cost volatilities. The company’s adjusted net loss came in at $338.50 million, widening 575.1% year-over-year, while its adjusted net loss per ordinary share worsened by 538.1% from the prior-year period to $0.20.

NIO is expected to report a loss of $0.71 per share for the fiscal year ending December 2022. The company is also expected to incur a net loss during the next fiscal year. Additionally, the company has missed its consensus EPS estimates in each of the trailing four quarters.

NIO is currently trading at a premium compared to its peers, indicating a downside risk of holding the stock. In terms of forward EV/Sales, NIO is trading at 1.64x, 52.2% higher than the industry average of 1.08x. Also, it is trading at a forward Price/Sales multiple of 1.99, compared to the industry average of 0.83.

The stock is currently trading below its 50-day and 200-day moving averages of $16.35 and $19.34, respectively, indicating a downtrend. It has lost…

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