A rising stock market makes speculation look more enticing. During bullish markets, traders look for speculative companies that can deliver large gains. Some sectors, like electric vehicles (EVs) attract more speculators than others. But not all gambles are worth taking, especially any investments in unstable EV stocks.
It can be hard to choose among investments in an emerging industry such as electric vehicles. There are dozens of companies offering different strategies, business models, marketing techniques, and resources.
While investors can choose from many EV stocks, a few rules generally hold true for the worst EV stocks. They tend to overpromise and underdeliver. And with poor-performing EV stocks, the sales figures rarely live up to the initial hype. These three EV stocks to avoid have not lived up to expectations and find themselves on shaky ground.
LiveWire Group (LVWR)
LiveWire Group (NYSE:LVWR) is a relatively new entrant to the publicly-traded EV stock space. The company beame public via a special purpose acquisition company (SPAC) last year and is a subsidiary of Harley-Davidson (NYSE:HOG).
The company’s appeal is easy to identify. Harley-Davidson is a dominant player in motorcycles, and thus its electric bike unit should have a reasonable shot at success. But the numbers thus far don’t give us much reason for optimism.
Last quarter, LiveWire’s electric motorcycle sales dropped from an already low 97 to just 63 units. Consolidated company revenues slumped from $10.4 million in Q1 2022 to $7.8 million for Q1 of this year.
LiveWire is planning to launch another electric motorcycle model later this year. While a new model may reverse the sales slump, LiveWire seems more like a pilot project than a proven business at this point.
Despite that, LVWR stock has soared from a low of $4.20 to almost $12 per share in recent months. This pushed the company’s market capitalization up to $2.4 billion. The market cap doesn’t seem to add up for a very unprofitable company that has not yet reached $15 million in annual revenue.
Aeva Technologies (AEVA)
Aeva Technologies (NYSE:AEVA) is a semiconductor company attempting to commercialize a light detection and ranging (LIDAR) chip for electric vehicles. A low-cost, high-performing LIDAR chip would be transformative in helping electric vehicles obtain self-driving capabilities.
Aeva came public via SPAC and has struggled since then. The reason, as often happens with failed SPACs, is that commercial demand simply failed to materialize.
Specifically, in its 2021 SPAC presentation, Aeva projected that it would grow revenues to $35 million in 2022 and $75 million this year. Instead, revenues fell from $9 million in 2021 to just $4 million in 2022 and are expected to be a mere $5 million this year. That’s more than 90% short of the company’s initial projections.
What’s gone wrong? Simply put, there are a bunch of LIDAR companies out there and there’s little evidence that Aeva has the best solution to the problem. If big electric vehicle makers start ordering Aeva products in significant quantities, that will change the picture. But until then, AEVA stock seems set to slump further into penny stock land as losses mount and demand stagnates.
Mullen Automotive (MULN)
Mullen Automotive (NASDAQ:MULN) is a small company attempting to commercialize cargo vans and trucks.
MULN stock has gained great interest in trading communities and on social media. However, it’s hard to explain this buzz. The company has produced little of note other than press releases. Meanwhile, the company’s shares are down 99% over the past year amid a brutal series of stock dilutions.
Shares surged earlier in July on hopes around a small delivery of orders. This is somewhat promising, given that Mullen has historically failed to generate commercial revenues. For Mullen, selling even a few vans is an improvement over no sales. The company is also investigating alleged misdeeds by short sellers, which sparked further trading interest.
Despite the company’s short seller drama, there’s no conspiracy here. Mullen’s problems have been caused by its large operating losses and lack of meaningful revenues. If it can fix these issues, Mullen might become a reasonable EV stock investment. But there’s little to indicate the EV stock will stage a turnaround. Meanwhile, with a gargantuan reverse stock split potentially coming up, it’s reasonable to expect MULN stock to hit new all-time lows soon.
On the date of publication, Ian Bezek did not have (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.
