Failing EV stocks: three companies to avoid
Electromobility has huge potential for long-term growth and sustainability, making it an attractive investment. While this year has been very profitable for many global sectors, including electro-mobility, not all stocks in this sector are bargains. In this article, we take a look at three companies whose shares are not currently worth holding.
ChargePoint $CHPT-1.4%
ChargePoint is an electric vehicle infrastructure company based in Campbell, California. It operates the world's largest online network of charging stations and develops technology to better integrate electric vehicles. The rapid growth of the industry has led to strong competition, with ChargePoint now lagging behind.
ChargePoint shares have seen a huge correction and are the least attractive they have been in years. The company is struggling with high cash burn and declining revenue, which fell 18% to $107 million in the most recent quarter. Operating losses have also widened, making recovery unlikely in the short term.
Polestar $PSNY-1.2%
Polestar Automotive…
PSNYPolestar is a Swedish electric car manufacturer based in Torslanda, near Gothenburg. It is a subsidiary of Volvo Cars and Geely and produces electric vehicles in several countries including China, South Korea and the US. Although the electric car sector has seen success this year, Polestar has not benefited. Its shares are down 65% and could fall even further.
The company is suffering from severe cash burn and a 36% drop in revenue. While Polestar has some positive aspects, such as a cash reserve of $784 million at the end of the first quarter, the overall picture is not favorable. Polestar is unlikely to reach its cash flow targets by 2025, making it an unsuitable long-term investment.
Mullen $MULN-4.2%
Mullen is an electric vehicle manufacturer based in Brea, California. It specializes in the production of passenger and commercial electric vehicles and its products have been touted as the next generation of electric vehicles. However, Mullen is one of the worst performing companies in the industry. Its stock is down 91% YTD and its ability to sustain its operations without external financing is uncertain.
The company's financials are very poor, as confirmed by its latest quarterly report. The company's capital has fallen from $272.8 million to $117.4 million in six months, and Mullen has spent $120.9 million on operations, far more than the $16.3 million it earned from EV sales. With results like that, Mullen is unlikely to reach profitability anytime soon.
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