With over 500 electric vehicles models on the market, competition has intensified, and several EV companies will face financial difficulties. This analysis focuses on the fundamental outlook and advises against holding these high-risk EV stocks in a long-term portfolio.
While there may be speculative opportunities for short-term rallies, the overall trend for these stocks is expected to be downward.
Let’s explore the EV stocks to sell based on fundamental negative catalysts.
Mullen Automotive (MULN)
Mullen Automotive (NASDAQ:MULN) has experienced a significant decline, going from over $300 per share to around 50 cents per share. However, the downward trend may not be over yet.
According to Thomas Yeung of InvestorPlace, Mullen is facing challenges obtaining additional capital. Having $116.1 million in cash is insufficient for scaling up production and launching its planned Mullen Five-passenger EV.
Considering the experiences of Lucid and Rivian, profitability in Mullen’s electric van and truck business is doubtful in the initial stages.
MULN’s prospects are increasingly bleak, making it highly unlikely to recover and resulting in a total loss for shareholders. Previous warnings about the company’s shares, including bearish viewpoints, should not be ignored.
The opportunity for a significant comeback is now gone, as Mullen Automotive lacks access to capital. This makes the stock unsuitable for both risk-averse and risk-hungry investors. It is advisable for all investors to steer clear of MULN.
Electrameccanica (NASDAQ:SOLO), a Canadian EV startup, is making progress in production with 170 units of its SOLO three-wheeled EV manufactured in Q1.
The affordable base price of under $20,000 and its suitability for urban users and delivery services contribute to its appeal. Although revenue in Q1 increased by 400% compared to the previous year, the company still faces a net loss of nearly $18 million and holds a working capital of just $215 million.
ElectraMeccanica has experienced a significant decline in its stock price, falling over 60% in the past year. The company aims to open a new production facility in Arizona by the end of this year. The success of SOLO in its target markets will be crucial for investors.
Until its market reception becomes more evident, the stock may continue to be volatile, influenced by broader events in the EV sector. Recent fluctuations have demonstrated this pattern.
The company’s financial situation is concerning, with a reported cash burn of over $20 million per quarter. Their decision to relocate EV production from China to the U.S. is expected to worsen their financial position.
Workforce reductions aimed at cutting costs may provide temporary relief, but they mask underlying systemic issues.
Canoo (NASDAQ:GOEV) is among the top underperforming EV stocks to sell.
Once a hopeful player in the EV industry, the company has faced a series of financial missteps that have caused its value to plummet. In the past year, its stock price has dropped by over 83%, with a significant 50% decline in the last six months alone.
Canoo is facing a severe cash crunch, with its reserves plummeting to a critical $6.7 million in the first quarter, an 82% decline from the previous year.
The company is at risk of bankruptcy, compounded by the departure of key executives and the potential de-listing from NASDAQ. Given these challenges, it is advisable to steer clear of investing in this struggling business.
Canoo’s small electric vehicles face significant challenges in a market dominated by tri-wheeled options. Despite its niche-focused strategy, the company struggles to achieve commercial success.
A recent recall of over 428 SOLO EVs due to propulsion issues adds to its woes. With a cash burn rate of approximately $20 million per quarter and plans to shift production to the U.S., Canoo’s financial situation may worsen in the future.
On the date of publication, Chris MacDonald 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.