The electric vehicle (EV) industry is expanding quickly. The growing demand for low emission cars and favorable government policies should allow the EV industry to grow at a CAGR of 22.6%, reaching about $803 billion by 2027, Allied Market Research reports.
This forecast has pushed EV stocks higher in 2021. This is reflected by the Global X Autonomous & Electric Vehicles ETF (DRIV), which is up 28% year-to-date (YTD).
Today I am going to analyze and compare two EV manufacturers: Nikola Corporation (NKLA) and Hyzon Motors Inc. (HYZN). NKLA develops electric semi-trucks. It also owns the energy business. And HYZN manufactures hydrogen-powered commercial vehicles and fuel cell systems. The company produces medium and heavy-duty trucks as well as buses.
YTD, Hyzon Motors stock has plunged more than 30%, performing almost in line with rival Nikola, which fell about 29% over the same period.
Recent Developments
On December 23rd, Nikola’s share price skyrocketed over 20% to as high as $11.35 after announcing its first truck delivery. The company delivered Tre battery-electric vehicle (BEV) pilot truck to its first customer, Total Transportation Services Inc. One day earlier, it also signed a deal with Total Transportation Services for the delivery of up to 100 zero-emission trucks. All these catalysts supported NKLA’s stock rally.
On December 23rd, Canaccord Genuity initiated coverage of Hyzon Motors with a Buy rating. Analyst Jed Dorsheimer noted that the company’s fuel cells had demonstrated industry-leading power density. The firm established a price target of $12, implying over 60% upside opportunity from Monday’s closing price.
Recent Financial Performance & Analysts Estimates
Nikola Corporation last issued its earnings results on Thursday, November 4th. The company hasn’t generated any revenues in Q3 as it is still in the development stage. Its Q3 Non-GAAP EPS has been reported at ($0.22), beating analysts’ consensus by $0.16.
On the expenses side, the company’s selling, general, and administrative costs totaled $192.93 million in Q3, up 193.3% year-over-year. Nikola's research and development expenses stood at $78.9 million versus $51.5 million as of 3Q2020. As a result, its net loss grew to $267.57 million, representing an enormous year-over-year increase of 235.7%.
It is also important to note the company plans to deliver up to 25 Tre BEV trucks by the end of the year.
For the fourth quarter, analysts expect NKLA's EPS to stand at ($0.42), representing a 10.08% year-over-year decrease. Its revenue for the next quarter is estimated to be $2.57 million.
On November 12th, Hyzon Motors released its third-quarter earnings report. For its fiscal third quarter, Hyzon Motors' total revenue has been reported at $0.96 million, driven by sales of hydrogen fuel cell electric vehicles. However, the company missed the Wall Street consensus by $5.14 million.
Its loss from operations was $49.61 million in Q3. However, loss from operations was offset by a total other income of $80.87 million mainly due to 73.62 million received from a change in fair value of earnout liability, leading to a net income of $31.25 million. As a result, HYZN's GAAP EPS stood at $0.13, topping analysts’ estimates by $0.19. As of September 30th, 2021, the company had total cash of $498.0 million.
Also, the company reaffirmed its forecast for 85 vehicles delivered by the year-end, aiming to expand its presence in Asia, Australia, Europe, and North America.
Currently, Wall Street expects Hyzon's EPS to be ($0.09) in the fourth quarter of 2021. Moreover, analysts project HYZN to generate its first meaningful revenue of $28.30 million in Q4.
Bearish options trades placed on NKLA stock
During the December 27th trading session, the $13.00 calls, which expire on January 21st, 2022, have seen increased open interest levels by about 4,665 to a total of 4,899. However, what’s most interesting is that the calls were traded near a bid side, which suggests that the contracts were sold. Consequently, it’s a bearish bet. For the seller of those calls to earn a premium, the stock would need to stay below $13.00 by the expiration date.
Conclusion
In my opinion, HYZN, at these levels, is a better long-term buy. The company is already in the commercial stage and should deliver its first substantial revenue in Q4. In addition, HYZN's overall financials look more attractive than NKLA. Finally, options market trades suggest negative market sentiment for NKLA stock.
NKLA shares were trading at $10.76 per share on Tuesday afternoon, down $0.02 (-0.19%). Year-to-date, NKLA has declined -29.49%, versus a 29.11% rise in the benchmark S&P 500 index during the same period.
About the Author: Oleksandr Pylypenko
Oleksandr Pylypenko has more than 5 years of experience as an investment analyst and financial journalist. He has previously been a contributing writer for Seeking Alpha, Talks Market, and Market Realist.
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