TSLA – Senator Joe Manchin has said he will vote ‘no’ for President Biden’s Build Back Better act. The plan, which had allocated billions for incentivizing electric vehicle (EV) production and sales, could have significantly boosted the industry. With the spending plan dropped and the persisting supply chain disruptions, it might be best to avoid EV stocks Tesla (TSLA), Rivian (RIVN), Lucid Group (LCID), and Fisker (FSR).
Dec 20, 2021
Democratic Senator Joe Manchin from West Virginia has decided to vote ‘no’ on the Build Back Better act, pulling the plug on the negotiations on the present version of the legislation expanding the country’s social safety net. Senator Manchin has shared his concerns over certain provisions of the $1.9 trillion spending plan and that it may exaggerate inflation.
The negative vote on the bill puts the Biden administration’s ambitious climate goals on hold. The package allocated more than $300 billion tax incentives for electric vehicles (EVs) and other clean energy measures. In addition, the bill also included a $12,500 refundable tax credit for EV purchases. However, in the present situation, for the bill to pass, every Democrat needs to vote ‘yes’ on it, as there is no Republican support for it.
On the other hand, the semiconductor shortage and the supply chain woes are expected to put pressure on company profits. Thus, EV stocks Tesla, Inc. (TSLA), Rivian Automotive, Inc. (RIVN), Lucid Group, Inc. (LCID), and Fisker Inc. (FSR) might be best avoided now.
Tesla, Inc. (TSLA)
This EV manufacturing behemoth does not need any introduction. TSLA sells EVs, electric generation systems, and storage systems globally. The company operates through the segments Automotive; and Energy Generation and Storage.
In September, Rosen Law Firm, a global investor rights law firm, encouraged shareholders of TSLA to join a class-action lawsuit regarding the formal investigation underway about the company’s Advanced Driver Assistance System (ADAS). The investigation was formally announced on August 16 by the National Highway Traffic Safety Administration (NHTSA), following collisions with parked emergency vehicles. The company is also under investigation by several other law firms like Pomerantz LLP, the Schall Law Firm, and Glancy Prongay, and Murray LLP.
For the fiscal third quarter ended September 30, TSLA’s total cost of revenues increased 50.5% year-over-year to $10.10 billion. Total operating expenses rose 32.1% from the prior-year quarter to $1.66 billion. For the nine months ended September 30, the company’s net cash provided by financing activities decreased 154.2% from the same period last year to a negative $3.95 billion.
Street EPS estimate of $8.20 for the next year (fiscal 2022) indicates an increase of 35.3% from the current year.
The stock has declined 18% over the past month and 3.6% over the past five days to close Friday’s trading session at $932.57.
This bleak outlook is reflected in TSLA’s POWR Ratings. The stock has a Value grade of F and a Stability grade of D. In the 67-stock Auto & Vehicle Manufacturers industry, it is ranked #29. The industry is rated F. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
Click here to see the additional POWR Ratings for TSLA (Growth, Momentum, Sentiment, and Quality).
Rivian Automotive, Inc. (RIVN)
RIVN is an electric adventure vehicles developer and manufacturer. The company offers electric sports utility vehicles and pickup vehicles for its customers. The company went public on the Nasdaq Global Select Market on November 10, 2021, through a traditional IPO process.
On December 2, Amazon.com, Inc. (AMZN) company, Amazon Web Services, Inc. (AWS), announced that RIVN chose it as its cloud provider. RIVN aims to accelerate commercial and consumer shift to electric vehicles through this development. However, it might take a while for the company to leverage AMZN’s services and enhance its software-defined vehicle architecture.
RIVN’s loss from operations increased 169.4% year-over-year to $776 million in the fiscal third quarter ended September 30. Net loss per share attributable to common stockholders came in at $12.21, up 324% from the prior-year quarter. The adjusted net loss went up 168.5% from the same period last year to $776 million.
Analysts expect RIVN’s EPS to remain negative at least until next year (fiscal 2022).
RIVN’s shares declined 3% since it went public on November 10 to close Friday’s trading session at $97.70. The stock has declined 17.9% over the past five days.
RIVN’s poor prospects are reflected in its POWR Ratings. The stock has an overall rating of D, equating to Sell in our proprietary rating system.
RIVN has a Value, Stability, Sentiment, and Quality grade of D. It is ranked #46 in the Auto & Vehicle Manufacturers industry. To see the additional POWR Ratings for Growth and Momentum for RIVN, click here.
Lucid Group, Inc. (LCID)
LCID is an EV designing, and building company focused on building EV powertrains and battery systems. The company went public via a merger with Churchill Capital Corp IV on July 26, 2021.
On December 17, stockholder rights law firm Bragar Eagel & Squire, P.C. announced that it is investigating potential claims against LCID for supposed violation of federal securities laws and engagement in unlawful business practices. Earlier, the company had declared that it had received a subpoena from the United States Securities and Exchange Commission concerning certain projections and statements related to its business combination with Atieva, Inc. Several other law firms are also investigating the company.
For the fiscal third quarter ended September 30, LCID’s revenue decreased 30.5% year-over-year to $0.23 million. Loss from operations increased 206.6% from the same period last year to $497.05 million, while net loss attributable to common stockholders stood at $524.40 million, up 225.2% from the prior-year quarter.
The consensus EPS estimate for the current quarter (ending December 2021) stands at a negative $0.35.
Over the past month, LCID’s stock has declined 27.5% to close Friday’s trading session at $40.01.
It’s no surprise that LCID has an overall F rating, which translates to Strong Sell in our POWR Rating system.
LCID has an F grade for Value, Stability, Sentiment, and Quality. It is ranked #59 in the same industry. Click here to see the additional POWR Ratings for Growth and Momentum for LCID.
Fisker Inc. (FSR)
FSR engages in the design, development, manufacturing, and sale of electric vehicles. The car-manufacturing company designs and markets zero-emission vehicles and electrification technologies.
On November 17, the first day of the Los Angeles Auto Show, FSR unveiled its Fisker Ocean SUV. However, as production is expected to start on November 17, 2022, the company is not expected to realize immediate gains from this venture.
FSR’s total operating costs and expenses increased 1,004.1% year-over-year to $109.56 million in the fiscal third quarter ended September 30. Net loss was up 176.9% from the prior-year quarter to $109.84 million. Non-GAAP adjusted loss from operations came in at $108.52 million, up 1,023.5% from the same period last year.
The consensus EPS estimate of a negative $0.47 for the current quarter (ending December 2021) indicates a decrease of 840% from the prior-year quarter.
The stock has declined 19.9% over the past month and 1.2% over the past five days to close Friday’s trading session at $17.04.
FSR has an overall F rating, which translates to Strong Sell in our POWR Rating system. The stock has a Stability grade of F and a Value, Sentiment, and Quality grade of D. It is ranked #56 in the same industry.
In addition to the POWR Rating grades we’ve stated above, one can see FSR ratings for Growth and Momentum here.
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TSLA shares were trading at $900.58 per share on Monday afternoon, down $31.99 (-3.43%). Year-to-date, TSLA has gained 27.62%, versus a 22.14% rise in the benchmark S&P 500 index during the same period.
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More…
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