Growing climate change concerns and governments’ favorable policies are expected to help drive the electric vehicle (EV) industry’s growth in the coming months. President Biden’s infrastructure bill, which passed into law on November 15, 2021, includes $7.5 billion in funding for EV charging. And according to a Research and Markets report, EVs are expected to represent 48% of all new cars sold in 2030.

Several EV stocks are quite famous in the Reddit community or WallStreetBets (WSBs). WSBs usually takes bets on heavily shorted companies to squeeze out short-selling institutional investors. Several popular EV stocks are widely discussed on the Reddit platform, but that does not necessarily reflect insight into the companies’ fundamentals. Many WSB stocks have often declined massively in price intraday, spelling big losses for retail investors.

Given this backdrop, we think it could be wise to avoid popular WSBs EV stocks Tesla, Inc. (TSLA), Rivian Automotive, Inc. (RIVN), and Lucid Group, Inc. (LCID). Their valuations look stretched at their current price levels.

Click here to checkout our Electric Vehicle Industry Report for 2021

Tesla, Inc. (TSLA)

Famous EV maker TSLA in Palo Alto, Calif.,  designs, develops, manufactures, sells, and leases EVs and energy generation and storage systems and offers services related to its sustainable energy products. Its automotive products include its Model 3, Model Y, Model S, and Model X, while its energy storage products include Powerwall, Powerpack, and Megapack. It has received 355 mentions in the WSBs over the past 24 hours.

TSLA recently revealed to its customers that it was not accepting new orders for its Model S and Model X for markets outside North America. This is because it is still processing a massive backlog of orders in Europe and other international markets.

TSLA’s operating expenses for its  fiscal third quarter, ended September 30, 2021, increased 32% year-over-year to $1.65 billion. The company’s selling, general and administrative expenses increased 11.9% year-over-year to $994 million, while its research and development expenses increased 66.9% year-over-year to $611 million. Its total liabilities came in at $29.34 billion, up 4.2% year-over-year.

In terms of forward EV/S and P/S, TSLA’s respective 19.90x and 19x are higher than the 1.46x and 1.20x industry averages. Furthermore, its 33.6x forward P/B  is 851.8% higher than the 3.53x industry average. The stock has declined 6.4% in price over the past month to close yesterday’s trading session at $966.41.

TSLA’s bleak prospects are reflected in its POWR Ratings. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

It has an F grade for Value and a D grade for Stability. It is ranked #28 out of 67 stocks in the Auto & Vehicle Manufacturers industry. Click here to see the other rankings of TSLA for Growth, Momentum, Sentiment, and Quality.

Rivian Automotive, Inc. (RIVN)

Recently listed RIVN designs and manufactures EVs, accessories, and services. The Irvine, Calif.-based company has begun delivering its first-generation consumer vehicle, the R1T. It also provides advanced technologies such as advanced driver assistance systems (ADAS) and Driver+ to enhance the driving experience of its customers. It has received 46 mentions in the WSBs over the past 24 hours.

On November 19, 2021, RIVN announced that it would not co-develop an EV in collaboration with its major shareholder Ford Motor Company (F). This is a significant setback for RIVN because  it largely relies on F and Amazon.com, Inc. (AMZN) as its customers. The company is expected to announce its third-quarter earnings on December 16, 2021.

In terms of forward EV/S and P/S, RIVN’s respective 1,484.39x and 1,475.38x are higher than the 1.46x and 1.20x industry averages. Furthermore, its 6.36x forward P/B is 80.1% higher than the 3.53x industry average. Analysts expect RIVN’s EPS to remain negative for this year and next year. Over the past month, the stock has lost 8.5% in price to close yesterday’s trading session at $118.90.

RIVN’s POWR Ratings reflect these weak prospects. According to our proprietary rating system, it has an overall D rating, which equates to a Sell. It has a D grade for Value, Stability, and Quality. It is ranked #46 in the Auto & Vehicle Manufacturers industry. To see the other ratings of RIVN for Growth, Momentum, and Sentiment, click here.

Lucid Group, Inc. (LCID)

Newark, Calif.-based LCID designs, engineers, and builds EVs, electric powertrains, and battery systems. As of June 30, 2021, the company had eight retail studios in the U.S. Its offerings include Air Dream Edition, Air Grand Touring, Air Touring, and Air Pure. It has received 61 mentions in the WSBs over the past 24 hours.

For its fiscal third quarter, ended September 30, 2021, LCID’s revenue decreased 30.5% year-over-year to $0.23 million. The company’s adjusted EBITDA fell 55.1% year-over-year to $224.96 million, while its operating expenses came in at $493.96 million, up 205.2% year-over-year.

In terms of forward EV/S and P/S, LCID’s respective 677.62x and 729.47x are higher than the 1.46x and 1.20x industry averages. Furthermore, its 14.39x forward P/B is 307.7% higher than the 3.53x industry average. Analysts expect LCID’s EPS to remain negative this year and next year. Over the past month, the stock has declined 10.9% in price to close yesterday’s trading session at $39.15.

LCID’s weak fundamentals are reflected in its POWR Ratings. According to our rating system, it has an overall F rating, which translates to Strong Sell. It has an F grade for Value, Stability, and Quality and a D grade for Sentiment. In the Auto & Vehicle Manufacturers industry, it is ranked #58. Click here to see the other ratings of LCID (Growth and Momentum).

Click here to checkout our Electric Vehicle Industry Report for 2021

TSLA shares were trading at $943.00 per share on Tuesday morning, down $23.41 (-2.42%). Year-to-date, TSLA has gained 33.63%, versus a 24.63% rise in the benchmark S&P 500 index during the same period.

About the Author: Dipanjan Banchur

Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets. More...

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