Xpeng Inc. (NYSE: XPEV), is a China-based company, which operates in the manufacturing of smart electric vehicles.

• Solid growth in top-line in the last five quarters, aided by strong growth in the deliveries of vehicles.
• Operating loss lowered on q-o-q basis to USD 903.9 million in Q1FY21, from a loss of USD 1,121.2 million in Q4FY20.
• During the last three quarters, the company successfully reduced its total debt, which is a key positive.
• All the positives seem to be factored in at the current trading levels as the stock is trading at stretched valuation.

Conclusion:

The group reported constant sales growth in the recent quarters but failed to retain the momentum in the bottom line, due to constant surge in the input costs. Moreover, on the valuation front, the stock is trading at forward EV to Sales multiple of 9.8x, which is significantly higher than the industry (Automobiles & Auto Parts) average of 1.8x. Hence, we recommend an ‘Expensive’ rating on the stock at the closing price USD 39.92 on July 09, 2021.

Source: REFINITIV, Analysis by Kalkine Group 

QuantumScape Corporation (NYSE: QS) is a leader in the development of next-generation solid-state lithium-metal batteries for use in electric vehicles. The group is focusing to modernize energy storage to enable a improve customer satisfaction.

• QS is yet to report income and the future performance of QS depends upon the research and development activities carried out by the company.
• Constant operating loss would dampen the company’s overall financial flexibility.
• Share price closed below the 50-days and 100-days simple moving average, indicating a technical weakness.

Conclusion:

The business model of the company looks impressive; however proper implementation of the project is uncertain due to several factors and the company is focusing to resolve it. The stock of QS tumbled ~45% and ~55% in the last three months and six months, respectively. Moreover, the stock is trading at a higher valuation of price to BV of 8.1x on NTM basis, v/s the industry (Automobiles & Auto parts) average of 4.6x. Hence, considering the above factor, we recommend a ‘Watch’ rating on the stock at the closing price of USD 25.08 on July 09, 2021.

Source: REFINITIV, Analysis by Kalkine Group

Nikola Corporation (NASDAQ: NKLA) designs and manufactures of zero-emission battery for electric and hydrogen-electric vehicles, electric vehicle drivetrains, vehicle components etc.

• The company is yet to report income from its operations, while constant increase in net losses remains as a key concern as it would lead to higher accumulated deficit.
• Moreover, the group do not expect any revenue for the second quarter of FY21 and whole financial year. Capital expenditure is expected in between USD 210 million to USD 230 million.
• Research and development expenses surged to USD 55.163 million in Q1FY21, from USD 24.077 million in Q1FY20.
• The technical strength in the stock remained weak as it closed below the 50-days simple moving average (SMA), indicting a bearish trend.

Conclusion:

The company is making loss consistently and higher accumulated deficit would take a toll on the overall financial health. This might create liquidity crisis for the company. On the valuation front, the NKLA stock trades at an EV to Sales multiple of 55.7x on NTM basis, which is significantly higher than the industry (Automobiles & Auto parts) average of 1x. Hence, considering the aforesaid facts, we recommend an ‘Avoid’ rating on the stock at the closing price of USD 15.20 on July 09, 2021.

Source: REFINITIV, Analysis by Kalkine Group

Lordstown Motors Corp. (NASDAQ: RIDE) operates in the electric light duty trucks focused on the commercial fleet market.

• RIDE is yet to report an income from its operation and the exact timing is unknown.
• Operating loss widened to USD 106.21 million in Q1FY21, from a loss of USD 40.90 million in Q4FY20.
• The stock of RIDE closed below the 50-days and 200-days SMA, indicting a bearish price trend.
• Higher input costs remain as a key concern for the company as it would lead to net losses. Notably, accumulated deficit increased to USD 259.652 million in Q1FY21, from USD 134.441 million in Q4FY20.

Conclusion:

The company’s business model its capital intensive in nature and expects its capital expenditures for FY21 in between USD 250 million to USD 275 million. Due to the absence of income and heavy losses, the group might face liquidity issues, which would further dampen the company’s overall performance. On the valuation front, the stock is available at forward EV to Sales multiples of 3x compared to industry (Automobiles & Autoparts) median of 1.0x. Considering the aforesaid facts, we recommend an ‘Avoid’ rating on the stock at the closing price of USD 8.94 on July 09, 2021.

Source: REFINITIV, Analysis by Kalkine Group

Gevo Inc. (NASDAQ: GEVO) is engaged in renewable chemicals and advanced biofuels. It transforms carbon and renewable energy into energy-dense liquid hydrocarbons.

• The company is yet report a stable revenue and is making constant losses since inception.
• The company’s future operations depend upon the external funding programs through issuance of equity or debt financing.
• The company has started construction of the Gevo RNG project in April 2021 and is expected to generate income in FY22.
• The stock of GEVO closed below the 50-days and 21-days simple moving average, indicting a bearish price trend.

Conclusion:

The company is yet to report stable revenue, and any delay in the project development activities would dampen the overall prospects. Moreover, the stock is trading at an exponentially higher valuation with EV to Sales multiples of 394.2x on NTM basis, v/s the industry (Renewable Energy) median of 25.6x. Hence, we recommend an ‘Avoid’ rating on the stock at the closing price of USD 6.77 on July 09, 2021.

Source: REFINITIV, Analysis by Kalkine Group

*The reference data in this report has been partly sourced from REFINITIV.

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