Even though a global semiconductor shortage continues to negatively impact electric vehicle (EV) production, the industry is expected to grow significantly in the long run based on supportive government policies and regulations amid rising automobile emission concerns. According to a SpendEdge report, the EV market is expected to grow at a 20.4% CAGR between 2021 - 2025.
However, the industry is crowded, with several fundamentally weak new entrants vying for market share. And shares of many of these companies have advanced based solely on investor optimism about the industry’s growth prospects. Because many of these stocks possess high short interest, the latest social media triggered short squeezes have also driven a rally by some of them.
Shares of fundamentally weak EV companies Arcimoto, Inc. (FUV) and Beam Global (BEEM) have a high percentage of short float, representing bearish investor sentiment. So, we think it is wise to avoid these two stocks now.
Click here to checkout our Electric Vehicle Industry Report for 2021
Arcimoto, Inc. (FUV)
FUV in Eugene, Ore., designs, develops, manufactures, sells, and rents three-wheeled EVs. The company’s flagship product is the Fun Utility, which is purpose-built for everyday driving, transforming ordinary trips into pure-electric joyrides. Its products also include Rapid Responder and Deliverator. Of the company’s floating shares, 38.3% have been sold short.
Several law firms filed a class action lawsuit against FUV last month alleging that the company made materially false and misleading statements regarding its business, operations, and compliance policies. Also, Bonitas Research published a short-seller report on FUV in March, alleging that it fabricated pre-orders to convey fake demand.
FUV’s revenue increased 126% year-over-year to $1.39 million for the first quarter, ended March 31, 2021. However, its net income decreased 30.5% year-over-year to $4.70 million. Also, its loss per share came in at $0.13 compared to a $0.15 loss in the year-ago period.
The company’s revenue is expected to increase 443.7% year-over-year to $11.83 million in its fiscal year 2021. However, analysts expect FUV’s EPS to remain negative in fiscal 2021 and 2022. The stock has lost 18.7% over the past six months to close yesterday’s trading session at $14.62.
FUV’s poor prospects are apparent in its POWR Ratings. The company has an overall F rating, which translates to Strong Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with the weighting of each optimized to improve overall performance.
FUV has an F grade for Growth, Value, Sentiment, Stability, and Quality as well. To see more of FUV’s component grades, click here. It is ranked last of the 57 stocks in the Auto & Vehicle Manufacturers industry.
Click here to check out our Automotive Industry Report for 2021
Beam Global (BEEM)
BEEM designs, develops, manufactures, and sells renewable energy products for the EV charging infrastructure, outdoor media and branding, and energy security sectors. Its product portfolio includes EV ARC, solar tree DCFC and EV ARC DCFC. Of the company’s total floating shares, 41.2% have been sold short. BEEM is based in San Diego, Calif.
The company’s revenue increased 4% year-over-year to $1.37 million for the first quarter ended March 31, 2021. However, its net income decreased 32.7% year-over-year to $1.25 million. Also, its loss per share came in at $0.14 compared to a loss of $0.17 in the year-ago period.
Analysts expect BEEM’s revenue to increase 75.2% year-over-year to $10.88 million in its fiscal year 2021. However, its EPS is expected to remain negative in 2021 and 2022. The stock has lost 56% year-to-date to close yesterday’s trading session at $32.49.
It’s no surprise that BEEM has an overall F rating, which equates to Strong Sell in our POWR Ratings system. The stock has an F grade for Value, Stability, and Quality, and a D grade for Growth and Sentiment.
Click here to see BEEM’s rating for Momentum also. BEEM is ranked #19 of 20 stocks in the F-rated Solar industry.
Click here to checkout our Electric Vehicle Industry Report for 2021
FUV shares were trading at $13.66 per share on Wednesday afternoon, down $0.96 (-6.57%). Year-to-date, FUV has gained 3.25%, versus a 17.55% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.
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