Coldicott worries that the company’s vehicles may fail to gain traction amid rising competition from the likes of
Tesla
(TSLA) and traditional auto makers that are aiming to produce more EVs.
Amid the new concern, shares are up 7.7% in late trading Friday. What gives?
The market is up. That is part of the reason. The
S&P 500
and
Nasdaq Composite
are up 1.6% and 2%, respectively. It’s a risk on day for the market.
Starting points matter too. Shares are still down about 22% over the past month, despite the Friday bump.
Investors should probably expect some odd reactions too as the small cap EV sector gets less and less attention. Take
Ideanomics
(IDEX), a small conglomerate that has amassed a bunch of EV technology. It’s stock is down 5% as the rest of the sector rallies. On the surface it seems easy to see why: results.
Friday, the company reported lower second-quarter sales than expected. The company delivered about $34 million in revenue. Wall Street was looking for more than $70 million. It looks like a huge miss, but there is only one estimate, according to FactSet. One isn’t much of a consensus. Wall Street isn’t paying much attention to small cap EV stocks anymore.
There is less attention because there is less market capitalization to invest in. Small capitalization EV start-ups Barron’s tracks have a combined market cap of roughly $16 billion today. That is down more than 75% from the value based on 52-week highs. What’s more, $16 billion is less than the market cap of Polestar.
The only start up EV stocks with significant market caps, outside of China, are
Rivian Automotive
(RIVN),
Lucid
(LCID) and, again, Polestar. Their combined cap today is about $75 billion, down from a peak based on 52-week highs of almost $300 billion.
A lot of EV stocks have been crushed, but EVs are still the future according to investors. These days, stock in major global auto makers is worth roughly $1.8 trillion. That is down from a peak of $2.8 trillion. EV makers share of that total at the peak was 69%, its now 67%.
EVs stocks have kept share of market cap for one reason:
Tesla
.
At the peak based on 52-week highs
Tesla
accounted for about 46% of the total market cap of all auto maker stocks. Now it accounts for about 53%.
Tesla stock has declined about 28% from its 52-week high of more than $414 a share. That decline is far smaller than the decline in small cap EV stocks.
All the changes in the auto maker of the past few months go to show that investors prefer the biggest EV player as interest rates and EV competition rise.
Write to Al Root at [email protected]
Polestar Gets Sell Rating. Its Shares Rise.
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Lucid stock is down 74% from its 52-week high.
Courtesy Lucid Motors
The bubble in small capitalization electric vehicle stocks inflated then popped. Small EV shares still trade strangely, however, in the aftermath of the 2021 EV disruption euphoria.
Take
Polestar Automotive
(ticker: PSNY). Friday, shares caught a new Sell rating on Friday. Redburn analyst Charles Coldicott launched coverage with the bearish view. He doesn’t have an official price target for shares.
Coldicott worries that the company’s vehicles may fail to gain traction amid rising competition from the likes of
Tesla
(TSLA) and traditional auto makers that are aiming to produce more EVs.
Amid the new concern, shares are up 7.7% in late trading Friday. What gives?
The market is up. That is part of the reason. The
S&P 500
and
Nasdaq Composite
are up 1.6% and 2%, respectively. It’s a risk on day for the market.
Starting points matter too. Shares are still down about 22% over the past month, despite the Friday bump.
Investors should probably expect some odd reactions too as the small cap EV sector gets less and less attention. Take
Ideanomics
(IDEX), a small conglomerate that has amassed a bunch of EV technology. It’s stock is down 5% as the rest of the sector rallies. On the surface it seems easy to see why: results.
Friday, the company reported lower second-quarter sales than expected. The company delivered about $34 million in revenue. Wall Street was looking for more than $70 million. It looks like a huge miss, but there is only one estimate, according to FactSet. One isn’t much of a consensus. Wall Street isn’t paying much attention to small cap EV stocks anymore.
There is less attention because there is less market capitalization to invest in. Small capitalization EV start-ups Barron’s tracks have a combined market cap of roughly $16 billion today. That is down more than 75% from the value based on 52-week highs. What’s more, $16 billion is less than the market cap of Polestar.
The only start up EV stocks with significant market caps, outside of China, are
Rivian Automotive
(RIVN),
Lucid
(LCID) and, again, Polestar. Their combined cap today is about $75 billion, down from a peak based on 52-week highs of almost $300 billion.
A lot of EV stocks have been crushed, but EVs are still the future according to investors. These days, stock in major global auto makers is worth roughly $1.8 trillion. That is down from a peak of $2.8 trillion. EV makers share of that total at the peak was 69%, its now 67%.
EVs stocks have kept share of market cap for one reason:
Tesla
.
At the peak based on 52-week highs
Tesla
accounted for about 46% of the total market cap of all auto maker stocks. Now it accounts for about 53%.
Tesla stock has declined about 28% from its 52-week high of more than $414 a share. That decline is far smaller than the decline in small cap EV stocks.
All the changes in the auto maker of the past few months go to show that investors prefer the biggest EV player as interest rates and EV competition rise.
Write to Al Root at [email protected]
Source: https://www.barrons.com/articles/polestar-share-price-51662755276?siteid=yhoof2&yptr=yahoo