With an accelerated shift toward battery-powered vehicles, the EV industry may provide investors a once-in-a-lifetime opportunity to create significant wealth over the long term. According to Fortune Business Insights, the global electric vehicle market will be worth $985.72 billion by 2027, growing at a CAGR of 17.4%.
However, this attractive growth projection has caused the sector to become overcrowded with EV start-ups seeking to capitalize on the industry’s tailwinds. Investors’ optimism over the industry’s solid growth prospects has helped the shares of many new players advance even without the companies having concrete product portfolios or business models in place.
While many experts believe that EV stocks have entered a bubble, understandably it’s a difficult call to pass on investing in EV stocks considering the large returns they have the potential to generate in the long term.
Fisker Inc. (FSR)
Based in California, FSR designs and manufactures electric vehicles and mobility solutions. It made its public debut through a reverse merger in October last year. The company went public through a sponsorship with Apollo Global Management affiliated Spartan Acquisition Energy Corporation on October 30.
FSR is expected to launch a Fisker Ocean vehicle in the fourth quarter of 2022, and three vehicles by 2025. On February 24, FSR entered a with Hon Hai Technology Group to pioneer a new market segment and jointly develop a breakthrough electric vehicle. This partnership is expected to revolutionize the automotive industry model by introducing ICT capabilities, while offering a combination of advanced technology, desirable design, innovation and value for money features.
Last December, FSR forged a partnership with auto supplier Magna International to supply the vehicle platform and build its Ocean SUV. It plans to launch its debut EV Ocean with autonomous driving features, integrated through the Fisker Intelligent Pilot.
FSR is also a pre-revenue company–it has neither engaged in any significant operations nor generated any operating revenues. Its loss from operations have increased 1033% year-over-year to $31,306 in the fourth quarter, ended December 31. Its net loss has increased 299% from its year-ago value to $12,037, and its loss per share grew 66.7% to $0.05 over the same period.
Analysts expect FSR to report a negative EPS of $0.11 in the current quarter, ending March 31. They further expect FSR’s EPS to decline 42.5% this year but increase 14% in the next year. However, the stock has gained 94.5% year-to-date based solelyon investor optimism.
Niu Technologies (NIU)
NIU, the world’s leading provider of smart urban mobility solutions, designs, manufactures, and sells smart electric scooters in the People’s Republic of China. Its NIU application synchronizes with the smart e-scooters and communicates with its cloud system, enabling users to receive real-time information. The company also provides scooter accessories, lifestyle accessories and performance upgrade components.
Last December, NIU entered a partnership agreement with Aurora Mobile Limited (JG) to improve its operational and service efficiency to deliver an optimal user experience to its customers. This partnership will allow NIU to gain more comprehensive insights into its users’ needs and allow joint exploration of growth opportunities in the smart mobility sector going forward.
In the fourth quarter of 2020, NIU sold 149,705 e-scooters, representing 40.9% year-over-year growth. The number of e-scooters it sold in the China market increased 35.0% year-over-year to 137,586. This China market growth was driven mainly by retail network expansion and new products, such as G0, MQi2 and MQiS, launched earlier past year. The growth in the international markets was mainly driven by a recovery in demand.
NIU revenues have increased 36.7% year-over-year to $131.74 million in the third quarter ended September 30. Its operating income has risen 14.2% from its year-ago value to $11.92 million, while its net income per ADS has improved 19.1% to $0.16 over the same period.
Analysts expect NIU’s EPS to increase 250% year-over-year to a $0.06 in the current quarter ending March 31, 2021. The consensus revenue estimate of $79.35 million for the current quarter indicates a 138.4% increase year-over-year. The stock has gained 33.3% year-to-date.
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FSR shares were trading at $25.28 per share on Monday morning, down $3.22 (-11.30%). Year-to-date, FSR has gained 72.56%, versus a 4.03% rise in the benchmark S&P 500 index during the same period.
About the Author: Rishab Dugar
Rishab is a financial journalist and investment analyst. His investment approach is to focus on quality stocks, trading at low prices, with business models that he readily understands. More...
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