Electric Vehicle Penny Stocks See Significant Declines Amid Tesla's Setback

 

Electric Vehicle Penny Stocks See Significant Declines Amid Tesla's Setback

A wave of Electric Vehicle (EV) penny stocks that emerged at the beginning of this decade in the quest for the next Tesla (TSLA) are now facing significant challenges. Companies like Nikola (NKLA), Fisker (FSR), and Lucid (LCID) serve as a cautionary tale, underscoring the execution risks associated with young companies, particularly in the capital-intensive realm of electric vehicle production.

Tesla's stock has exhibited a rollercoaster ride in 2023, with a recent decline of over 9% following a Q3 earnings and revenue miss. This setback led to TSLA's removal from the IBD 50 list of top growth stocks and the Leaderboard line-up. As investors assess Tesla's performance, many startup EV stocks have also suffered.

Nikola:

Nikola's shares plummeted by more than 8% to $1.03 in Wednesday's stock market trading and fell by an additional 1.5% to $1.02 on Thursday. The stock has seen a 38% decline in October and lost over half of its value year-to-date. Nikola initially went public in June 2020 through a special purpose acquisition company (SPAC) deal, valuing the company at more than $3 billion. Despite high expectations, it failed to live up to its "Tesla of trucking" moniker and faced numerous challenges, including a recall of over 200 electric semi-trucks due to a battery issue.

Lucid:

Lucid's shares dipped by more than 9% to $4.53 on Wednesday and continued to drop by 3.3% to $4.38 on Thursday. The stock has witnessed a 22% decline this month and lost more than a third of its value year-to-date. Lucid went public in July 2021 through a $24 billion mega-SPAC deal but struggled to maintain its initial high valuation. The company recently revealed a nearly 30% drop in EV production during the third quarter and underwhelming Q3 EV deliveries, despite offering discounts and cheaper models.

Fisker:

Fisker's shares declined by 3.5% to $5.92 on Wednesday and further slipped by 3.6% to $5.71 on Thursday. While Fisker technically qualifies as a penny stock, it briefly traded below $5 a share over the summer, and its value has fluctuated since. The company went public in October 2020 through a SPAC deal valued at $2.9 billion. Fisker shares once reached a high near $32 but have since experienced a steady decline, with an 8% loss this month and nearly a fifth of its value lost year-to-date. Fisker's venture into the competitive Chinese market, coupled with delays, presents additional challenges for the company.

These EV penny stocks are grappling with multiple hurdles, including market volatility, production issues, and increased competition, exacerbated by Tesla's recent performance. Investors and industry observers are closely monitoring these developments as they shape the future of the electric vehicle market.