EV Stocks are Still Falling
The electric vehicle sector’s short-term performance likely hinges on the results of Tesla’s (NASDAQ:TSLA) earnings call. Even if the company tops expectations, as many analysts believe they will, it hasn’t seemed to matter in this current market environment. As the Federal Reserve continues to ignore the carnage in the stock markets to reign in the current inflation rates, growth sectors continue to get pummeled beyond logical sense.
In times like this, investors simply need to keep their head straight and follow their investment theses. Buy great companies and hold them for the long-term. Are electric vehicles going away? Absolutely not. Ignore the short-term volatility in a stock’s price and stay focussed on the future.
Which EV Stocks Are on Sale?
Well, if we ignore multiples, nearly all of them are on sale. I’ve written before about my indifference towards Lucid Group (NASDAQ:LCID) and Rivian (NASDAQ:RIVN), the latter of which is proving true my current feelings. That’s not to say I don’t think Rivian or Lucid will succeed. Far from it. But I believe they are currently trying to compete with Tesla which is unrealistic at this stage in the game. Tesla struggled for years before becoming the company it is now, Lucid and Rivian barely have any vehicles on the road.
So what about Tesla? I exercise caution when buying, selling, or trading options during earnings season. Any good earnings report can be met with pessimism and any bad earnings report can be met with hope. Oftentimes stocks do not behave logically around earnings, so it is usually best to stay on the sidelines. With that being said, I do have my eyes on one stock at these current prices.
Nio (NYSE:NIO)
Time and time again I mention Nio as an outstanding electric vehicle company, and the stock still continues to fall. We know about the uncertainty of Chinese ADRs that trade on the US exchanges. We know about the reduction of subsidies from the Chinese government with each passing year. Despite all of this, Nio has a lower market cap than both Lucid and Rivian, and has delivered hundreds of thousands of vehicles to markets in China and Norway. Nio is set to double its production capacity this year and is introducing three new vehicle models as well as several new technologies. At less than $24 per share, Nio is trading at a discount right now in what is setting up to be one of its biggest years to date.
EV Sector Outlook for 2022
If you loved the prices of these EV stocks last year, you have to love them today. Understand that market corrections and pullbacks happen, and with an environment of rising interest rates, it is always high growth companies that get hit first. Tesla’s earnings call will likely dictate the near-term direction of EV stocks, but do not be surprised if this is just a weak quarter for the sector all around. At these prices, I like Nio and Tesla to bounce back at some point this year.
Rate this article