The electric vehicles (EVs) market is evolving rapidly, fueled by a regulatory push for lower-emission vehicles and government subsidies. Because countries worldwide are gearing up to achieve zero-emission targets, analysts expect global EV market share to be in the 7%-10% range in 2021.
However, insufficient EV charging infrastructure could limit the industry’s growth. A National Renewable Energy Laboratory study revealed that 380 EV charging ports must be installed each day over the next nine years to keep pace with growing EV penetration. For context, approximately 30 ports were installed per day on an average in the U.S. between 2010 – 2020. Furthermore, supply chain disruptions are expected to weigh on the industry’s production capabilities, owing mainly to the semiconductor shortage, which could extend into 2022 and beyond.
The industry headwinds could also restrain the production capabilities of ultra-popular EV stocks Tesla, Inc. (TSLA) and Lucid Group, Inc. (LCID) in the near term. Given this backdrop, Wall Street analysts predict these stocks will decline by more than 25% in price soon.
Tesla, Inc. (TSLA)
TSLA is a well-known electric vehicle manufacturer. It designs, develops, and sells electric vehicles and energy generation and storage systems in the United States, China, and internationally. The Palo Alto, Calif.-based company operates in two segments, Automotive and Energy Generation and Storage.
In September, Rosen Law Firm commenced investigating potential securities claims on behalf of shareholders of TSLA, alleging that the company may have issued materially misleading business information to the investing public. Several other law firms are also investigating this issue.
TSLA’s total revenues increased 57% year-over-year to $13.76 billion in its fiscal third quarter, ended September 30. Its adjusted EBITDA grew 77% from its year-ago value to $3.20 billion. Also, non-GAAP net income attributable to common stockholders improved 139% year-over-year to $2.09 billion. However, its free cash flow declined 5% year-over-year to $1.33 billion.
The Street expects TSLA’s revenues to increase 40.2% year-over-year to $15.07 billion in the current quarter, ending December 31, 2021. The company’s EPS is expected to grow 140% year-over-year to $1.92 in the current quarter.
Over the past six months, TSLA has gained 65.2% in price to close yesterday’s trading session at $1,172. However, the stock has slumped 3% in price intraday.
A $835.53 median price target indicates a 28.7% potential downside from its last closing price. The 12-month price targets range from a low of $215.00 to a high of $1,300.
TSLA has an F grade for Value, and a D for Stability in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 distinct factors, with each factor weighted to an optimal degree.
Lucid Group, Inc. (LCID)
LCID in Newark, Calif., manufactures electric vehicles (EV) and related technologies. The company designs, engineers, and builds electric vehicles, EV powertrains, and battery systems.
In August, several law firms reminded investors of class-action lawsuits that have been filed on behalf of shareholders against LCID on account of alleged materially misleading statements and failure to disclose material adverse facts about the company’s business, operations, and prospects.
For the second quarter, ended June 30, LCID’s loss from operations increased substantially year-over-year to $562,194. The company reported a net loss and net loss per share of $588.82 million and $11.38, respectively.
Analysts expect LCID’s revenues to increase 2,179% year-over-year to $ 1.74 billion in the next year. However, its EPS is expected to remain negative at least until the next year. Also, the Street expects its EPS to decline 38.1% per annum over the next five years.
The stock slumped 3.8% in price intraday to close yesterday’s trading session at $35.13. However, LCID has gained 251% year-to-date.
The $23.33 median price target indicates a 33.6% potential downside from its last closing price. The 12-month price targets range from a low of $12.00 to a high of $30.00.
LCID has an overall F rating, which equates to Strong Sell in our proprietary POWR Ratings system. LCID has an F grade for Growth and Value, and D for Sentiment and Stability. It is ranked #53 in the Auto & Vehicle Manufacturers industry. Click here to view additional LCID ratings for Momentum and Quality.
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TSLA shares were trading at $1,167.09 per share on Wednesday afternoon, down $4.91 (-0.42%). Year-to-date, TSLA has gained 65.39%, versus a 24.56% 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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