Wall Street’s unbridled love of electric vehicle stocks has waned, and investors have become much more picky lately. However, Monday was risk taker again when it comes to the sector, with a handful of startups for no company-specific reasons.
Shares in Workhorse group (NASDAQ: WKHS) and ChargePoint inventory (NYSE: CHPT) both were up more than 10% at 3:00 p.m. EDT, with shares off Churchill Capital Corp. IV (NYSE: CCIV) by 7% and Nikola (NASDAQ: NKLA) increased by more than 5%.
These companies have different priorities, but all revolve around the electrification of the automotive industry. Workhorse and Nikola develop electric trucks and ChargePoint is building a network of charging stations. Churchill Capital is a special purpose vehicle (SPAC) preparing to merge with electric car maker Lucid Motors.
All of these stocks are relatively new to the market and have all been enthusiastically received. But some of that excitement has evaporated. Workhorse missed a potential $ 6 billion deal earlier this year to build a new fleet of delivery vehicles for the U.S. Postal Service. Nikola fights against allegations of fraud that led the company to part ways with its founder.
The market seems to be taking a fresh look at some of these companies lately. ChargePoint’s strong performance on Monday follows an equally impressive performance over the past week, driven in part by a partnership with Mercedes. Churchill set the date for closing the deal with Lucid last week, which increases investor confidence that the deal will close. And Workhorse is appealing the postal service’s decision, which gives investors at least some hope that the outcome could be reversed.
Even the badly hit Nikola is out and about working towards his goal of developing sources of “clean” hydrogen gas. At least on Monday, excitement about the potential of these companies outweighs the concerns of critics.
On these names, the bulls are in charge today, but investors should remain cautious. We are still at the beginning of electromobility and a lot can go wrong. Neither of these companies secured their place among the winners in any way after the shakeout.
Of the four, Lucid would be my preferred choice, with a clear business plan and funding from the upcoming merger with Churchill. Workhorse’s appeal still seems to be a long way off, with maybe just a small portion of the order getting the best possible result. Nikola is very busy establishing itself as a credible company, and ChargePoint is struggling to be part of what may be a fast-commodity market.
Be it Lucid or one of these others, any investor looking to buy in should limit these names to a small portion of a well-diversified portfolio.
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