After experiencing a slump on concerns over overvaluation and a semiconductor chip shortage, electric vehicle (EV) stocks are gradually regaining investors’ attention in-part because President Biden’s $174 billion spending pitch for EVs--as part of his $2.3 trillion infrastructure spending proposal--is expected to boost the industry’s growth.
Furthermore, the demand for EVs is expected to continue increasing in the United States because Biden's proposed legislation would boost tax credits to as much as $12,500 for EVs that are assembled in the United States. These factors, together with increasing investments to address the semiconductor chip shortage, should boost the industry’s growth in the United States. As a matter of fact, the global EV market is expected to grow at a 33.6% CAGR between 2020 - 2027, to hit an aggregate $2.5 trillion, according to Meticulous Research.
Given this backdrop, Wall Street analysts expect Fisker Inc. (FSR) and Electrameccanica Vehicles Corp. (SOLO) to gain more than 80% over the next 12 months.
Click here to checkout our Electric Vehicle Industry Report for 2021
Fisker Inc. (FSR)
Founded in 2016, FSR focuses on the design, development, manufacture, and sale of electric vehicles. The company seeks to weave emotions and sustainability into its products in pursuit of delivering the world’s most emotionally charged vehicles with advanced mobility solutions.
In March 2021, FSR announced that it had agreed with Crédit Agricole Consumer Finance--which is part of the Crédit Agricole Group, the leading financial partner to the French economy and one of the largest banking groups in Europe--on the potential supply of Fisker Ocean SUVs. The agreement would give employees and the private banking market access to Fisker Ocean, with its latest generation technology and performance, while reinforcing Crédit Agricole’s commitment to a low-carbon fleet.
For the first quarter, ended March 31, 2021, FSR reported $22,000 in revenue. Also, the company’s net cash provided by financing activities came in at $88.74 million, compared to $145,000 in the prior-year quarter.
Analysts expect FSR’s revenue for 2022 to be $416.58 million, representing 3.16% year-over-year growth. The company’s EPS is expected to increase 253.13% year-over-year for its fiscal year ending December 31, 2021.
Of the eight analysts that rated the stock, four have rated it Buy. A $24.71 consensus price target represents a potential 81.6% gain from its last closing price of $13.61.
Electrameccanica Vehicles Corp. (SOLO)
SOLO is a Canadian designer and manufacturer of environmentally efficient electric vehicles (EVs). The company operates in two segments: Electric Vehicles and Custom Build Vehicles. Its flagship product is the SOLO, a single seat vehicle. In addition, the company is developing its Tofino, an all-electric two-seater roadster, along with developing custom built vehicles.
In March, SOLO revealed that it had selected Mesa, Ariz., in the greater Phoenix area, for its U.S.-based assembly facility and engineering technical center. The proposed facility will support SOLO’s strategic plan to meet anticipated demand for its flagship SOLO EV. Over the long term, the facility is expected to increase the company's production and revenue.
Over the last year, SOLO’s cash and cash equivalents and short-term deposits have increased 101.1% sequentially to $260.4 million. The company’s general and administrative expenses decreased 100% sequentially to $2.8 million, while its research and development expenses declined 47.4% sequentially to $2.0 million. The stock has gained 237.2% over the past year.
A $2.43 million consensus revenue estimate for the next quarter, ending September 30, represents an 854.3% improvement year-over-year. The consensus EPS estimate for the current year represents a 79% increase year-over-year. The stock has gained 237.2% over the past year.
Three Wall Street analysts have provided ratings for the stock and all have rated it Buy. Closing yesterday’s trading session at $3.81, the $8.92 consensus price target represents a potential 134.1% upside.
Click here to checkout our Electric Vehicle Industry Report for 2021
FSR shares fell $13.61 (-100.00%) in premarket trading Friday. Year-to-date, FSR has declined -4.78%, versus a 12.93% rise in the benchmark S&P 500 index during the same period.
About the Author: Samiksha Agarwal
Samiksha Agarwal has always had a keen interest in financial markets. This has led her to a career as a financial journalist. Through her extensive knowledge of fundamental analysis, her goal is to help investors identify untapped investment opportunities in the stock market.
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