Nio, Tesla, and VinFast stock forecast after Rivian, Lucid earnings

Electric vehicle (EV) stocks will be in the spotlight on Thursday as investors reflect on more bad news in the industry. Most of these companies have already crashed by double-digits this year and analysts caution that the situation may worsen soon. 

There have been several bad news in the EV industry lately. Earlier this week, Ford announced that it was slashing prices of its Mach E vehicle again in a sign that demand was waning. It was also reported by WSJ that EV demand in China was starting to wane.

The weakness of the Chinese market is important because companies in the country are building millions of EVs every year. The risk is that this overproduction will flood the market with vehicles, leading to lower prices, thinner margins, and a lack of clarity on when companies will become profitable.

The performance of EV companies is a big contrast to that of Internal Combustion Engine (ICE) vehicles like Toyota, Honda, and Ferrari. These stocks have all jumped to their record highs in a sign that there is strong demand.

The other notable news came on Wednesday when Lucid Group and Rivian Motors published weak financial results. 

Lucid, the Saudi Arabia-backed company, said that its losses widened in Q4 as its sales plunged by over 39%, This explains why the company has been cutting prices in the past two months as it seeks to boost demand.

Lucid made 8,428 vehicles in 2023 and 2,390 in the fourth quarter. Its revenue jumped by just 14% to $154 million as the cost of revenue came in at $410 million. This means that the company is losing over $300k for every vehicle it sells.

Worse, it is unclear how long Saudi Arabia will continue throwing money at the company since its budget is being strained. The government now plans to raise funds by selling shares in Saudi Aramco, its oil company.

Rivian is also not doing all that well even as its revenue jumped by 98% to $1.32 billion. Its gross profit was minus $606 million, meaning that the company is losing $43,000 for every vehicle it sells. It now expects to build and deliver 57k vehicles this year.

TSLA vs LCID vs RIVN vs NIO vs VFS

These results are bad news for all EV companies since they show that the industry is doing worse than expected. This explains why most stocks, including Tesla, have plunged in the pre-market session.

Nio, the Chinese EV company, was trading at $5.97, much lower than its all-time high of $67. This means that it has crashed by over 91%. Nio’s challenge, as I wrote recently, is that its Chinese market is slowing and its vehicles are not doing well in European countries.

Worse, the stock has formed a head and shoulders pattern, pointing to more downside in the coming months. If this happens, the shares could crash from the current $5.97 to about $4.

VinFast stock price, on the other hand, has plummeted by over 99% from its all-time high. But despite this crash, the company is still overvalued considering that it has over $12 billion in market cap. 

The company is expected to raise additional capital for its American business. Besides, its balance sheet shows that it has just $139 million in cash and equivalents. Building and running an EV plant is quite expensive.  

Tesla is also not doing well, which explains why the company has intensified its price cuts. Lucid’s and Rivian’s results show that demand is not doing well. Worse, BYD plans to launch a plant in Mexico, in a move that will put more pressure on Tesla. BYD has already overtaken Tesla in China and this trend could happen in the US. 

Therefore, my view is where the TSLA stock plunges to last year’s low of $102.94, which is about 47% below the current level.

The post Nio, Tesla, and VinFast stock forecast after Rivian, Lucid earnings appeared first on Invezz