Despite macroeconomic challenges, demand for electric cars (EVs) remains high. According to reports, the U.S. EV industry will expand at a 25.4% CAGR from 2021 to 2028. However, supply chain concerns and insufficient charging infrastructure impeded the industry's growth.
On the other hand, rising economic worries are impacting consumer confidence. The Conference Board Consumer Confidence Index fell to 95.7 points in July from 98.4 in June, its lowest level since February 2021. This might eventually result in a decrease in aggregate demand.
Furthermore, given the current economic environment, investors are seeking fundamentally sound, low-risk equities that can help them weather an economic downturn. Therefore, we think it could be wise to avoid fundamentally-weak EV stocks Canoo Inc. (GOEV) and Gogoro Inc. (GGR).
Canoo Inc. (GOEV)
GOEV, a mobility technology firm, designs, engineers, develops and manufactures electric cars in the United States for commercial and consumer markets. The company provides lifestyle delivery cars, multi-purpose delivery vehicles, and pickups.
It also offers a multi-purpose platform architecture, a self-contained, fully functional rolling chassis design that can accommodate a wide range of vehicle weights and ride characteristics.
GOEV's total costs and operating expenses increased 45% year-over-year to $140.79 million in the first quarter ended March 31, 2022. Its loss from operations grew 45% from the prior-year quarter to $140.79 million. The company’s net loss increased 723.3% from the year-ago value to $125.37 million. Its loss per share amounted to $0.54 over this period.
The company's EPS is expected to decline by 6% and 57.1% in the current and next quarters, respectively. The stock has declined 57.3% over the past year and 28.7% over the past three months.
GOEV's POWR Ratings are consistent with this bleak outlook. The stock's overall F rating translates to a Strong Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
GOEV has been graded an F for Quality and a D for Stability and Value. Within the D-rated Auto & Vehicle Manufacturers industry, it is ranked #52 of 65 stocks. Click here to see additional POWR Ratings for Growth, Sentiment, and Momentum for GOEV.
Gogoro Inc. (GGR)
GGR manufactures two-wheeled electric vehicles. The firm delivers a two-wheeled electric scooter with cloud connectivity and an electric motor with swappable battery infrastructure for capturing, evaluating, and sharing riding data via a mobile application on the rider's smartphone.
For the first quarter ended March 31, 2022, GGR's revenue increased 60.9% year-over-year to $94.45 million. However, the company’s operating loss grew 9.2% year-over-year to $19.84 million. Its net loss surged 12.8% from the prior-year quarter to $21.71 million, while its loss per share came in at $0.11.
The stock has declined 39.5% over the past year and 22.1% over the past month.
GGR's weak fundamentals are reflected in its POWR Ratings. The stock has an overall D rating, equating to a Sell in our proprietary rating system. The stock has a D grade for Growth and Value. In the B-rated Auto Parts industry, it is ranked #57 of 68 stocks.
In addition to the POWR Ratings grades I have just highlighted, you can see the GGR rating for Momentum, Stability, and Sentiment here.
GOEV shares were unchanged in premarket trading Friday. Year-to-date, GOEV has declined -53.11%, versus a -13.59% rise in the benchmark S&P 500 index during the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.
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