Demand for automobiles recovered significantly with the easing of pandemic restrictions. However, this year, high inflation, supply chain disruptions, and a lingering chip shortage have kept the industry under pressure.
Moreover, due to soaring gasoline prices since the start of the year, the operating costs of gasoline-powered vehicles rose substantially, keeping away potential buyers. However, this boosted the appeal of electric vehicles. Despite the strong product pipeline, EV makers have yet to be able to ramp up production due to chip shortages, high raw material prices, and supply chain disruptions.
Although EV demand is picking up due to government incentives, consumers face high borrowing rates, making cars difficult to afford. Given the bleak macroeconomic outlook, with interest rates expected to spike further, the auto industry could remain under pressure.
Amid this backdrop, it could be wise to avoid fundamentally weak auto stocks Rivian Automotive, Inc. (RIVN), Canoo Inc. (GOEV), Faraday Future Intelligent Electric Inc. (FFIE), and Mullen Automotive, Inc. (MULN).
Rivian Automotive, Inc. (RIVN)
RIVN designs, develops, manufactures, and sells electric vehicles and accessories. It offers five-passenger pickup trucks and sports utility vehicles and sells its products directly to customers in the consumer and commercial markets.
RIVN’s total liabilities increased 18.8% to $3.30 billion for the second quarter, June 30, 2022, compared to $2.78 billion for the fiscal year ended December 31, 2021. Its total operating expenses widened 73.1% year-over-year to $1 billion. In addition, its non-GAAP net loss widened 153.2% from the prior-year quarter to $1.47 billion.
RIVN’s EPS for the quarter ended September 30, 2022, is expected to remain negative. The stock has fallen 68.9% year-to-date to close the last trading session at $32.24.
RIVN’s POWR Ratings reflect its weak fundamentals. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Within the D-rated Auto & Vehicle Manufacturers industry, it is ranked #60 out of 63 stocks. The company has an F grade for Value, Stability, and Quality and a D for Sentiment.
Click here to see the additional POWR Ratings of RIVN for Growth and Momentum.
Canoo Inc. (GOEV)
GOEV is a mobility technology company that designs, engineers, develops, and manufactures electric vehicles for commercial and consumer markets. The company offers lifestyle delivery vehicles, lifestyle vehicles, multi-purpose delivery vehicles, and pickups, catering to small businesses, independent contractors, tradespeople, utilities, and service technicians.
GOEV’s total liabilities widened 16.8% to $209.17 million for the fiscal second quarter ended June 30, 2022, compared to $179.07 million for the fiscal year ended December 31, 2021. The company’s loss from operations widened 66.3% year-over-year to $173.50 million, while its net loss and comprehensive loss widened 46.1% from the prior-year quarter to $164.39 million.
Additionally, its net loss per share widened 36% year-over-year to $0.68, and adjusted EBITDA loss widened 95.2% year-over-year to $149.84 million.
GOEV’s EPS for the quarter ended September 30, 2022, is expected to remain negative. Over the past year, the stock has fallen 84.3% to close the last trading session at $1.33.
GOEV’s grim outlook is reflected in its POWR Ratings. The stock has an overall rating of F, which translates to a Strong Sell in our proprietary rating system. It is ranked #62 in the same industry. It has an F grade for Value, Stability, and Quality and a D for Growth and Sentiment.
We have also given GOEV a grade for Momentum. Get all GOEV ratings here.
Faraday Future Intelligent Electric Inc. (FFIE)
FFIE engages in the design, development, manufacture, engineering, sale, and distribution of electric vehicles and related products in the United States and internationally. It aims to break the boundaries between the Internet, IT, creative, and auto industries with product and service offerings that integrate new energy, AI, Internet, and sharing models.
In August, several employees of FFIE called on the board and shareholders of the company to remove Executive Chairperson Susan Swenson. In a letter dated August 23, the employees alleged that Swenson had attempted to push the company into bankruptcy and restructuring.
For the fiscal second quarter ended June 30, 2022, FFIE’s total assets declined 35.2% to $588.24 million, compared to $907.43 million for the fiscal year ended December 31, 2021. The company’s total operating expenses increased 396.5% from the year-ago period to $137.47 million. Its net loss widened 168.5% year-over-year to $141.69 million. In addition, its net loss per common stock widened 37.5% year-over-year to $0.44.
FFIE’s EPS for the quarter ended September 30, 2022, is expected to remain negative. Over the past year, the stock has fallen 93.5% to close the last trading session at $0.56.
FFIE’s weak fundamentals are reflected in its POWR Ratings. The company has an overall F rating, equating to a Strong Sell in our proprietary rating system. Again, it is ranked #58 in the same industry. In addition, it has an F grade for Value, Stability, and Quality and a D for Sentiment.
Click here to see the ratings of FFIE for Growth and Momentum.
Mullen Automotive, Inc. (MULN)
MULN is an electric vehicle company that manufactures and distributes electric vehicles. It also operates CarHub, a digital platform that leverages AI to offer an interactive solution for buying, selling, and owning a car. It also provides battery technology and emergency point-of-care solutions.
For the fiscal quarter ended June 30, 2022, MULN’s losses from operations widened 184.5% year-over-year to $18.22 million. The company’s net loss widened 289.9% year-over-year to $59.47 million. Moreover, its net loss per share came in at $0.16.
Over the past year, the stock has fallen 97.5% to close the last trading session at $0.30.
MULN’s gloomy prospects are reflected in its POWR Ratings. The company's overall F rating translates to a Strong Sell in our proprietary rating system.
In the Auto & Vehicle Manufacturers industry, it is ranked #57. In addition, it has an F grade for Value and Stability and a D for Sentiment and Quality.
To see the other ratings of MULN for Growth and Momentum, click here.
RIVN shares were trading at $31.64 per share on Friday afternoon, down $0.60 (-1.86%). Year-to-date, RIVN has declined -69.49%, versus a -20.37% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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