Beware of These 4 Overvalued Electric Vehicle Stocks in August

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 – Get Rating), Lordstown Motors Corp. (RIDE – Get Rating), GreenPower Motor Company Inc. (GP – Get Rating), and Ayro Inc. (AYRO – Get Rating) are better avoided now.

Click here to checkout our Electric Vehicle Industry Report for 2021

Arrival Limited (ARVL – Get Rating)

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 – Get Rating)

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…

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