The shares of Freehold, N.J.-based electric light- and medium-duty commercial vehicles manufacturer Cenntro Electric Group Limited (CENN) have plunged 91.8% in price over the past year and 71.8% year-to-date. Over the past three months, the stock has declined 85.7% to hit its 52-week low of $1.50 in yesterday’s trading session, closing at $1.51.

Last month, CENN announced that the company closed its fiscal year 2021 with $250 million in cash. But the company has yet to report audited fiscal 2021 financial results, which it plans to post in April 2022. In addition, CENN expects to scale production in the first quarter of 2022 through new facilities in Jacksonville, Fla., and Dusseldorf, Germany.

However, the company failed to impress investors, and its shares are continuing their downward trajectory.

Click here to checkout our Electric Vehicle Industry Report for 2022

Here is what could shape CENN’s performance in the near term:

Merger With Fundamentally Flawed Naked Brand Group

Naked Brand Group Limited (NAKD), an intimate apparel business, completed the acquisition of Cenntro Automotive Group Limited in December 2021, and the merged group began trading under the ticker CENN on January 14, 2022. NAKD is administering a rebranding, and all its digital assets are being updated. The initiative is scheduled to be completed during the first quarter of 2022. Currently, it is clear that CENN will focus on EVs with its existing management team. NAKD was a potential meme stock candidate last year; however, with the pivot to the commercial EV market, the combined stock has been extremely volatile over the past month.

Lock-Up Agreement Worrying Investors

In a 13D filing with the SEC last month, NBG outlined ownership stakes and unveiled a lock-up agreement with Cenntro Enterprise Limited (CEL), Trendway Capital Limited (TCL), and China Leader Group Limited, to lock up their holdings in CENN. The parties agreed not to transfer 92,463,001 shares beneficially owned or owned of record by them for 180 days following the closing. Share prices often decline following the expiration of a lock-up agreement, and thus, the stock could see continuing volatility in the near term. The stock declined in price significantly following the filing.

POWR Ratings Reflect This Bleak Prospects

CENN has an overall F rating, which translates to Strong Sell in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

The stock has an F grade for Stability, which is consistent with the anticipated volatility in the near term.

Among 69 stocks in the F-rated Auto & Vehicle Manufacturers industry, CENN is ranked #55.

Beyond what I have stated above, one can also view CENN’s grades for Value, Sentiment, Growth, Momentum, and Quality here.

View the top-rated stocks in the Auto & Vehicle Manufacturers industry here.

Bottom Line

CENN’s shares have been slumping over the past months. The stock is currently trading below its 50-day and 200-day moving average, indicating an overall downtrend. Furthermore, investors’ pessimism about the stock is evident. So, given the anticipated near-term volatility, we think it could be best to avoid the stock now.

How Does Cenntro Electric Group Limited (CENN) Stack Up Against its Peers?

While CENN has an overall POWR Rating of F, one might want to consider investing in the following Auto & Vehicle Manufacturers stocks with a B (Buy) rating: Isuzu Motors Limited (ISUZY), Daimler AG (DDAIF), and Honda Motor Company, Ltd. (HMC).

Click here to checkout our Electric Vehicle Industry Report for 2022

CENN shares rose $0.02 (+1.32%) in premarket trading Friday. Year-to-date, CENN has declined -71.83%, versus a -5.97% rise in the benchmark S&P 500 index during the same period.

About the Author: Subhasree Kar

Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics. More...

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