Despite the potential of EVgo, Inc. (EVGO), Amyris, Inc. (AMRS), and COMPASS Pathways plc (CMPS) springing a surprise during the earnings season, their less-than-ideal fundamentals deem it wise to avoid placing any long-term bets on these heavily shorted stocks.

In 2021, easy money, unprecedented hype created by retail investors on social media forums, the excitement of trading, and a desire to short-squeeze came together to send some stocks into a frenzy.

This time around, even the slightest of positive developments could make speculators go overboard with optimism and trigger a rally among heavily shorted stocks. Hence, while sellers might have to bear the brunt, their weak fundamentals don’t deem it wise to keep holding on to such stocks either.

In the above context, let us look closely at the featured stocks.

EVgo, Inc. (EVGO)

EVGO develops, owns, and operates a public direct current (DC) fast charging network powered by renewable electricity purchased by using renewable energy certificates (RECs). These charging sites dispense electricity to EVs driven by individuals, commercial drivers, and fleet operators. The stock has a short float of 34.15%.

On January 5, EVGO announced its partnership with Amazon.com, Inc. (AMZN) to support an Alexa-enabled EV charging experience. This would enable EV drivers to ask Alexa for help locating and navigating to the nearest EV charging stations while initiating seamless payment for charging sessions at EVGO.

However, with AMZN’s devices unit, which houses voice assistant Alexa, under scrutiny and its first round of layoffs concentrated in its devices business, recruiting, and retail operations, the future of the collaboration is in question.

For the fiscal year ended December 31, 2022, EVGO’s revenue and adjusted gross profit increased by 145.7% and 155.3% year-over-year to $54.59 million and $13.25 million, respectively, as booming demand from business clients drove big jumps in sales and usage. Regardless, the company’s adjusted EBITDA loss widened 56.2% year-over-year to $80.25 million, while its net loss worsened 83.9% year-over-year to $106.24 million.

EVGO’s total assets stood at $729.72 million as of December 31, 2022, compared to $746.32 million as of December 31, 2021.

For the fiscal quarter that ended March 31, 2022, EVGO is expected to report a loss per share of $0.10 compared to an EPS of $0.23 during the previous-year quarter. For the fiscal year ending December 31, 2022, its loss per share is expected to come in at $0.41, while the company’s revenue guidance of $105-$150 million also fell short of street expectations.

Moreover, lack of certainty of use of its fast chargers, the potential of inviting competition from convenience stores (which would require very thin margins on their EV charging as they rely on the chargers merely as traffic drivers to make a profit on snacks and coffee), and Tesla, Inc. (TSLA) opening its supercharging network to non-Tesla vehicles could pile further pressure on EVGO’s top and bottom lines.

Although the stock has declined 20.3% over the past six months, its average 10-day volume of 4.25 million has been significantly above its average 3-month volume of 2.67 million. As a result, the stock has gained marginally over the past month to close the last trading session at $6.52.

EVGO’s POWR Ratings are consistent with its unenviable outlook. It has an overall rating of F, which translates to a Strong Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

EVGO also has F grades for Value, Stability, and Quality and a D for Sentiment.

EVGO is ranked #86 of 89 stocks in the Industrial – Equipment category. Click here to access additional ratings for EVGO’s Growth and Momentum.

Amyris, Inc. (AMRS)

AMRS is a synthetic biotechnology company involved in engineering, manufacturing, and marketing high-performance, natural, and sustainably sourced products by applying its Lab-to-Market biotechnology platform. The stock has a short float of 24.03%.

For the fiscal year that ended December 31, 2022, AMRS’ total reported revenue decreased by 21.1% year-over-year to $269.85 million. During the same period, the company’s adjusted EBITDA loss widened to $520.99 million from $107.09 million during the previous fiscal year.

As a result, the net loss attributable to AMRS’ common stockholders widened by 95.4% and 74.2% year-over-year to $528.51 million and $1.69, respectively. The company’s total assets stood at $824.93 million as of December 31, 2022, compared to $954.30 million as of December 31, 2021.

For the fiscal quarter that ended March 31, 2022, AMRS’ loss per share is expected to widen 29.4% year-over-year to $0.44. For the fiscal year ending December 31, 2022, its loss per share is expected to come in at $0.88. Moreover, the stock has missed consensus EPS estimates in each of the trailing four quarters.

Although the stock has declined 58.9% over the past six months, its average 10-day and 3-month volumes of 3.24 million and 4.95 million have caused it to gain 10.6% over the past month to close the last trading session at $1.30.

AMRS’ bleak outlook is reflected in its POWR Ratings. It has an overall rating of F, which translates to a Strong Sell, in our POWR Ratings system. It also has F grades for Sentiment and Quality and D for Value and Stability.

Unsurprisingly, AMRS is ranked #81 of 83 stocks in the Chemicals industry.

Click here for additional ratings for Growth and Momentum of AMRS.

COMPASS Pathways plc (CMPS)

CMPS is a UK-based company focused on mental healthcare. The company is involved in developing psilocybin therapy through late-stage clinical trials in Europe and North America for patients with treatment-resistant depression (TRD). The company’s 20.8% shares have been sold short.

Since CMPS is yet to report any revenue, its total operating expense and loss from operations for the fiscal year ended December 31, 2022, widened 32.7% year-over-year to $110.40 million. As a result, the company’s net loss for the fiscal widened by 27.5% and 20.7% year-over-year to $91.51 million and $2.16, respectively.

CMPS’ total assets stood at $197.29 million as of December 31, 2022, compared to $300.90 million as of December 31, 2021.

While CMPS is not expected to register any sales in the foreseeable future, its loss per share is expected to widen by 30% and 23% year-over-year to $0.65 and $2.66 for the fiscal quarter that ended March 31, 2023, and the fiscal year ending December 31, 2023.

Although the stock has declined 10% over the past six months, its average 10-day volume of 545.28 thousand has been significantly above its average 3-month volume of 309.77 thousand. As a result, the stock has gained 27% over the past month to close the last trading session at $10.49.

CMPS has an overall D rating, equating to a Sell in our proprietary rating system. It also has D grades for Growth and Quality.

CMPS is ranked #154 of 165 stocks D-rated Medical – Pharmaceuticals category. 

Click here to see the additional ratings of CMPS’ Stability, Sentiment, Value, and Momentum.

What To Do Next?

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EVGO shares were trading at $6.57 per share on Monday afternoon, up $0.05 (+0.77%). Year-to-date, EVGO has gained 46.98%, versus a 7.28% rise in the benchmark S&P 500 index during the same period.

About the Author: Santanu Roy

Having been fascinated by the traditional and evolving factors that affect investment decisions, Santanu decided to pursue a career as an investment analyst. Prior to his switch to investment research, he was a process associate at Cognizant. With a master's degree in business administration and a fundamental approach to analyzing businesses, he aims to help retail investors identify the best long-term investment opportunities. More...

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