3 Electric Car Stocks That Will Be Sold Off As Inventories Rise Spoils Trouble
Although experts continue to tell us that electric vehicles are the future, changing sentiment in this area now requires a discussion about shorting electric vehicle stocks. Fundamentally, concerns regarding electric vehicle inventory are weighing heavily on the industry. Worse still, the headwinds affect players big, small and somewhere in the middle.
like Axios As we noted earlier this year, unsold electric-powered cars are piling up on dealer lots. In July, the supply of electric vehicles available nationwide swelled to nearly 350%, or more than 92,000 units nominally. What makes it especially annoying is that companies have been cutting prices to stay ahead of the game.
However, such actions also challenge profitability. With the consumer economy still fragile due to pressures such as stubbornly high inflation, it is time to at least consider selling EV stocks.
Of course, I know this is a controversial topic so I invite you to continue the discussion. I Available on XI do my best to respond to readers’ inquiries.
Tesla (TSLA)
Source: Arina B. Habisch / Shutterstock.com
Despite the risk of turning this piece into a clown show, I must express my reluctance to do so Tesla (Nasdaq:TSLA). While CEO Elon Musk may be a genius, his intelligence does not exempt his company from economic pressures. While TSLA may be up roughly 92% over the course of the year, Tesla’s efforts to dominate the electric vehicle sector with deep price cuts may come back to haunt it.
In just a one-month period, shares fell nearly 16%. What is particularly troubling here is not just the red print itself. According to TipRanks, hedge fund sentiment towards TSLA has become “extremely negative.” Specifically, between the end of Q2 and the end of Q3, hedge funds clearly dumped the electric vehicle leader.
So, when I say Tesla is an electric car stock to sell, it’s not just my opinion; The smart money decided to eliminate exposure as well.
While analysts remain generally bullish on TSLA, Bernstein’s Tony Sacconaghi rates TSLA shares a “sell.” The expert also expects the downside target to be $150, which indicates a risk of approximately 28%.
Rivian Automotive (RIVN)
Source: Tada Pictures / Shutterstock.com
when Rivian Cars (Nasdaq:Raven) For the first time, I had high hopes for the company, at least in terms of the core product. Instead of using a weird chassis, Rivian kept its electric-powered trucks and SUVs clean. In my opinion, they have beautifully combined the classic design language with attractive modern fixtures. Unfortunately, the market has not responded well to RIVN.
On a year-to-date basis, the stock’s performance isn’t that bad, down less than 8%. However, in the subsequent one-year period, RIVN lost approximately 54% of the stock’s value. Since its public market debut, shares have lost nearly 88%, according to weekly average pricing data from Google Finance.
Interestingly, TipRanks currently rates hedge fund sentiment towards RIVN as “Positive.” This is because from the first quarter to the second quarter of this year, hedge funds increased their exposure to Rivian. However, since the end of 2021, these major investors have been quick to dump the stock. So, I think RIVN is one of the EV stocks to sell.
Mullen Automotive (MULN)
Source: Ringo Chiu / Shutterstock.com
A crowd favorite, I think under the right circumstances, Mullen Automotive (Nasdaq:Mullen) can go up. Based on data from Fintel, MULN currently has a short interest of 15.92% of its float. As one of the most shorted securities on the market, contrarian activity – a short squeeze – could lead to a significant rebound.
But here’s my problem with that novel. We’ve seen MULN rise, sometimes by coincidence on the day you released a skeptical article. However, it constantly declines to lower and lower levels, leading novice investors to catastrophic losses. Just keep in mind that since the January open, MULN has lost more than 99% of the stock’s value.
If that’s not a sign that Mullen is one EV stock to sell, I don’t know what is. Moreover, the company is plagued by more than just EV inventory concerns.
As investment data aggregator Gorovox points out, MULN suffers from six red flags. Aside from rising inventory, Mullen continues to issue new debt. Also, a negative Altman Z score indicates profound distress. Better to speculate about something else.
On the date of publication, Josh Enomoto 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 author and are subject to InvestorPlace.com Publication guidelines.
