Electric vehicles (EVs) are expected to dominate the automotive market in the long run as governments worldwide implement several policy measures to support the industry’s growth, primarily to address climate change concerns. According to a SpendEdge report, the EV market is expected to grow at a 20.4% CAGR between 2021 -2025. Nevertheless, the manufacture of EVs has slowed down significantly over the past several months due to the global chip shortage and supply chain issues.
There is speculation that the current semiconductor chip shortage could last for another two years, making the EV industry’s near-term growth prospects look bleak. Indeed, investors’ pessimism in the EV space is evidenced by the Global X Autonomous & Electric Vehicles ETFs’ (DRIV) 2.2% returns over the past month versus the tech-heavy Nasdaq’s 5.5% gains.
Given this backdrop, we believe it is wise to avoid EV stocks Ideanomics, Inc. (IDEX), Nuvve Holding Corp. (NVVE), and Ayro, Inc. (AYRO). Their sky-high valuations are not justified by their weak financials and growth prospects. So, the prices of these stocks could continue declining in the coming months.
Ideanomics, Inc. (IDEX)
IDEX focuses on driving the adoption of commercial electric vehicles (EVs), associated energy consumption, and developing financial services and fintech products. Its Ideanomics Mobility division facilitates the adoption of EVs by commercial fleet operators. The company also offers solutions for procurement, financing, charging, and energy management needs.
Shareholders Foundation, Inc. announced in December 2020 that a lawsuit was filed against IDEX last year over alleged securities laws violations. It is alleged that IDEX made false and/or misleading statements and/or failed to disclose that Ideanomics’ MEG Center in Qingdao was not “a one million square foot EV expo center.”
IDEX’s loss from operations increased 37.4% year-over-year to $12.96 million for its fiscal first quarter, ended March 31, 2021. Its total liabilities increased 330% sequentially to $140.36 million, while its loss before taxes increased 8.2% year-over-year to $13.65 million. The company’s net loss came in at $0.74 million compared to $12.62 million in the prior year period.
In terms of forward P/S, IDEX’s 10.14x is 148.2% higher than the 4.08x industry average. The 8.64x stock’s forward EV/Sales is 102.1% higher than the 4.28x industry average.
The company’s revenue is expected to increase 12.2% year-over-year to $145 million in its fiscal year 2022. However, analysts expect IDEX’s EPS to decrease 40% in l 2022 and remain negative in 2021 and 2022. The stock has gained only 1% over the past month to close yesterday’s trading session at $2.91.
IDEX’s poor prospects are apparent in its POWR Ratings also. The stock has an overall D rating, which equates to Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has an F grade for Stability and Value, and a D grade for Quality. Click here to see the additional POWR ratings for IDEX (Growth, Momentum, and Sentiment). It is ranked #104 of 129 stocks in the D-rated Software – Application industry.
Nuvve Holding Corp. (NVVE)
NVVE develops vehicle-to-grid (V2G) software technology. Its Grid Integrated Vehicle platform—GIVe—transforms EVs into grid assets when charging and uses EVs to store and resell energy to an electric grid. It serves public organizations, businesses, and homes.
The San Diego, Calif., company announced a collaboration with Romeo Power on June 2 to integrate communication protocols between its V2G platform and Romeo Power’s battery management system. However, this venture is still in its early stages and it’s uncertain if the battery system will generate significant market demand.
NVVE’s revenue decreased 15.5% year-over-year to $0.80 million for its fiscal first quarter, ended March 31, 2021. Its operating loss for the quarter came in at $5.07 million, which represents a 985.8% year-over-year increase. Its net loss increased 977.1% year-over-year to $5.36 million. The company’s loss per share increased 766.7% year-over-year to $0.52.
In terms of forward EV/S, NVVE’s 13.37x is 585.4% higher than the 1.95x industry average.
Analysts expect NVVE’s revenue to increase 210.5% year-over-year to $47.20 million in its fiscal year 2022. However, the company’s EPS is expected to remain negative in 2021 and 2022. The stock has lost 37.9% since hitting its 52-week high of $22.74 on November 25, 2020, to close yesterday’s trading session at $13.82.
NVVE’s POWR Ratings are consistent with this bleak outlook. The stock has an overall F rating, which equates to Strong Sell in our proprietary rating system. The stock also has an F grade for Value, Stability, and Quality, and a D grade for Growth.
Ayro, Inc. (AYRO)
AYRO designs and manufactures light-duty, emissions-free EVs for urban and community transport, local delivery, closed campus mobility, recreational, and government use. Its offerings include the AYRO 311 and Club Car 411.
On February 11, the company priced a $41.80 million registered direct offering. AYRO intends to use the offering’s net proceeds for working capital and general corporate purposes. However, this financing is expected to cause share dilution.
AYRO’s loss from operations increased 234% year-over-year to $5.64 million for its fiscal first quarter, ended March 31, 2021. Its total liabilities increased 23.5% year-over-year to $3.22 million, while its net loss increased 213.8% year-over-year to $5.63 million. The company’s loss per share came in at $0.18 compared to $0.45 in the prior-year period.
In terms of forward P/S, AYRO’s 6.64x is 396.9% higher than the 1.34x industry average. The stock’s 53.89x forward EV/EBITDA is 374.3% higher than the 11.36x industry average.
For fiscal 2021, AYRO’s annual revenue is expected to increase 1,620.7% year-over-year to $27.60 million. However, analysts expect its EPS to decrease 12.5% and remain negative in 2021. The stock has lost 17.2% over the past three months to close yesterday’s trading session at $5.20.
AYRO’s weak fundamentals are reflected in its POWR Ratings. The stock has an overall F rating, which translates to Strong Sell in our proprietary rating system. It has an F grade for Stability and Quality, and a D grade for Growth and Value.
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IDEX shares were trading at $2.86 per share on Wednesday morning, down $0.05 (-1.72%). Year-to-date, IDEX has gained 43.72%, versus a 15.21% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...
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