Electric vehicles (EVs) are all across the globe and EV adoption is on the rise. With government incentives and price cuts, we will see mass EV adoption in the next five years. EV makers are making the most of this opportunity and ramping up production to meet the rising demand. However, not all EV makers can thrive in this competitive industry. Besides the right technology, it is equally important to stick to a production plan and deliver on time. While there are some EV stocks you that should consider, there are EV stocks to sell before they damange your portfolio.
Several EV makers started with ambitious goals and burned a lot of cash to reach their production targets, but were unsuccessful. When choosing the right EV stocks to invest in, you must not only look at the financials but also the company’s potential to withstand the competition and survive in the market volatility. I have warned investors about the future of Lordstown Motors (NASDAQ:RIDE), and those who didn’t pay heed to my advice have ended up losing money. Leaving Lordstown aside, here are the three EV stocks to sell this month before they hit all-time lows.
Lucid Group (NASDAQ:LCID) was once a hot electric vehicle stock that gave high hopes to investors with its luxury cars. However, the company recently reported quarterly results and missed analysts’ estimates. While its revenue hit $150.9 million and was up 55% year over year, its deliveries remained flat at 1,404, and the loss from operations increased to $838 million, which is a 50% increase year over year.
Lucid has very low deliveries and its losses are mounting. The sooner you get rid of the stock, the better it is for your portfolio. One thing positive about the company is its liquidity, but it cannot save Lucid from the losses. It has been burning cash excessively throughout the past few quarters, and the numbers are proof that the company is losing more money than it is making.
Despite the low deliveries, the company maintained the production target of 10,000 for the year, and it says it is on track to begin production of two trims later this year. The company has been surviving until now due to its commitment to Saudi Arabia for the delivery of 50,000 cars and up to 100,000 cars spread across the coming decade. Besides this, the company doesn’t have much working in its favor.
LCID stock is trading at $7 today and is much lower than the 52-week high of $19. However, the stock is up 14% year to date, and there is a positive sentiment around the company after the management maintained its goal of 10,000 vehicles for the year. However, I think the company doesn’t have enough buyers and it is clearly losing money with each car it manufactures. The problems are many and investors should sell LCID stock before it hits a new low.
Considering the competition in the EV industry, it has become difficult for startups and new EV makers to survive. One such company is Fisker (NYSE:FSR). The company has finally started manufacturing and delivering its EVs, but this is only the beginning and it has a long way to go. Fisker is a part of a highly competitive market, and several EV makers already have made their mark here.
The company kicked off the deliveries of its Ocean SUV and reported record revenue for the first time. However, it also slashed its production target to 20,000-23,000 vehicles from the previous guideline of 32,000-36,000. In the second quarter, the company delivered only 11 EVs and it reported a revenue of $825,000. Additionally, it spent $128 million of cash on operating expenses and $91.3 million on capital expenses. It is too soon to believe that the company is on the growth path and will continue reporting strong revenue numbers.
Earlier this month, the company also terminated a stock offering under the ATM program. While the company may have enough cash to keep going for another year, the long-term outlook is bleak. FSR stock is trading at $5.86 right now and it is down 14% year to date. The stock has gone from $10 in August 2022 to $5 today. Exit while you still have the time, otherwise you will only be left with losses. The only positive thing about the company is that it has begun production and deliveries, but wait for the EV maker to prove itself before you bet on the stock. FSR is one of the top EV stocks to sell before it drops lower.
Nikola Corporation (NKLA)
EV-maker Nikola (NASDAQ:NKLA) has been struggling for a long time now, but the stock plunged after it reported the second quarter earnings. The company generated $15.4 million in revenue, and managed to beat analyst expectations. It saw a wider net loss of $218 million from the earlier loss of $173 million. In the quarter, the company managed to produce 33 battery-powered EVs and shipped 45 BEVs.
While the company aims to deliver 250-330 BEVs this year, its year-to-date production is 96 BEVs, much lower than the target. I doubt if it will be able to meet this year’s production targets. If the company wants, it will have to ramp up production at the earliest. Nikola is one of the top EV stocks to sell and there are several red flags you shouldn’t miss out on with this company.
The EV maker ended the second quarter with high liquidity and this is because the company liquidated Romeo Power, sold $100 million of the shares at a discount price, and laid off a significant workforce. After all this, the CEO Michael Lohscheller resigned from the company.
NKLA stock is trading at $1.94 today and is much lower than the 52-week high of $7. It is down 12% year to date and more than 75% in the past five years. There are minimal chances of you making money by investing in NKLA stock. If you hold the stock, get rid of it before it turns into a complete loss. The stock may not be able to rebound anytime soon.
On the date of publication, Vandita Jadeja did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.