Given the continuing supply chain gridlock and robust consumer demand, the global semiconductor chip shortage is expected to last through 2023. Because lithium cobalt and nickel prices continue to surge, the EV battery industry is projected to witness soaring prices in the coming months.
However, optimistic investor sentiment has caused EV stocks to become significantly overvalued over the past two years.
So, given this backdrop, we think it could be wise to avoid fundamentally weak EV battery makers QuantumScape Corporation (QS), Solid Power, Inc. (SLDP), and Romeo Power, Inc. (RMO) for now. These stocks are rated F (Strong Sell) or D (Sell) in our POWR Ratings system.
Click here to checkout our Electric Vehicle Industry Report for 2022
QuantumScape Corporation (QS)
San Jose, Calif.-based QS is a development stage company that develops and commercializes solid-state lithium-metal batteries for electric vehicles and other applications. It aims to revolutionize energy storage to enable a sustainable future.
QS’ total operating expenses were $53.83 million for the third quarter, ended Sept. 30, 2021, up 160.2% year-over-year. Its total current liabilities were $36.28 million for the period ended Sept. 30, 2021, compared to $12.35 million for the period ended Dec. 31, 2020. Also, its other income decreased 99.6% year-over-year to $3,000.
Analysts expect QS’ EPS to remain negative in its fiscal year 2022. Furthermore, its EPS is expected to decline at a 19% rate in 2022. It also missed the EPS estimates in each of the trailing four quarters. The stock has declined 31.1% in price over the past month to close yesterday’s trading session at $15.99. It is currently trading 77.8% below its 52-week high of $71.97, which it hit on Feb. 18, 2021.
QS’ POWR Ratings reflect its poor prospects. The stock has an overall F rating, which equates to a Strong Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
It has an F grade for Value and Sentiment and a D grade for Stability, Momentum, and Quality. Click here to access the additional POWR Ratings for QS (Growth). QS is ranked last in the 64-stock Auto Parts industry.
Solid Power, Inc. (SLDP)
SLDP develops all-solid-state battery cells for electric vehicles and mobile power markets in the United States. The Louisville, Colo., company recently went public and commenced trading on the Nasdaq Global Select Market on Dec. 9, 2021.
Analysts expect SLDP’s EPS to remain negative in fiscal 2022. Over the past month, the stock has declined 33% in price to close yesterday’s trading session at $6.00. It is currently trading 59.6% below its 52-week high of $14.85, which it hit on Dec. 9, 2021.
SLDP’s POWR Ratings are consistent with this bleak outlook. The stock has an overall D rating, which equates to a Sell in our proprietary rating system. In addition, the stock has a D grade for Momentum and Stability.
We also have graded SLDP for Growth, Value, Sentiment, and Quality. Click here to access all SLDP ratings. SLDP is ranked #69 of 94 stocks in the Industrial - Equipment industry.
Romeo Power, Inc. (RMO)
RMO is an energy storage technology company that designs and manufactures lithium-ion battery modules and packs for commercial electric vehicles in North America. The Vernon, Calif.-based concern operates through two segments, Romeo Power North America, and Joint Venture Support.
RMO’s total revenues increased 753.2% year-over-year to $5.76 million for the third quarter ended Sept. 30, 2021. However, its net loss came in at $17.95 million, compared to an $8.92 million loss in the year-ago period. Also, its gross loss was $4.71 million, versus a $1.12 million year-ago loss, and its loss per share came in at $0.13, compared to $0.11 in the previous period.
RMO’s EPS is expected to remain negative in 2022. Its EPS is expected to decrease 900% in fiscal 2022. Over the past month the stock has declined 45.4% in price to close yesterday’s trading session at $2.06. It is currently trading 89.7% below its 52-week high of $20.00, which it hit on Feb. 8, 2021.
RMO’s POWR Ratings reflect its poor prospects. The stock has an overall F rating, which equates to a Strong Sell in our proprietary rating system.
In addition, it has an F rating for Stability and a D grade for Growth, Value, Momentum and Quality. We have also rated it for Sentiment. Click here to access all RMO ratings. RMO is ranked #63 of 64 stocks in the Auto Parts industry.
Click here to checkout our Electric Vehicle Industry Report for 2022
QS shares were trading at $16.03 per share on Friday afternoon, up $0.04 (+0.25%). Year-to-date, QS has declined -27.76%, versus a -5.80% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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