May 9, 2022, 7:08 pm EDT
Electric Vehicles Hit the Road Bump
Once the red-hot industry of electric vehicles hit a road bump recently. Especially, the leader Tesla Motor (TSLA) dropped -by 9% to the 787 level with the downside market. How about the overall performance of these EV players:
Performance from the recent highs:
- TSLA: -35%
- RIVN -86%
- NIO: -70%
- LCID: -71%
- WKHS: -85%
Obviously, they do not look good after the hypes. Supply-chain interruption, the rising cost of raw material, China COVID-19 lockdown, and a labor shortage are some of the major headaches that even the big name TSLA is struggling with even though the earnings were impressive.
Indeed, skyrocketing crude oil prices pushed the market from traditional engines to electric motors at a faster pace. The high valuation of P/E 106 on TSLA still scares investors away. Other players do not have earnings or barely make money so their chances to survive in the next 1-2 years are questionable.
It is important to recognize the hypes and economic cycles.
During the bull markets, fancy products could bring in piles of investors with the rising stock price. But, in a bear market, the question will be difficult to answer when asking if the companies can make enough profits to match the valuation or not.