Given all the electric vehicle (EV) stocks and related stocks in the market these days, I'm steering away from the names with clouds over their heads.
Lordstown Motors ( RIDE) joins that list, alongside Nikola ( NKLA) and XL Fleet ( XL) at this point. Of the three, XL is the only one I might consider, as I found the short report targeting that stock the weakest of the bunch; however, with so many names, it's not a choice I have to make.
The short hit on RIDE was one of the more compelling reports. The CEO's appearance Thursday morning did nothing to douse the flames. Honestly, the entire scenario should make investors pause on the EV names taking "pre-orders" for delivery years down the road. Given how the pre-orders are non-binding, indications of interest is probably a better term. Soft indications at that, but companies are pointing to these numbers and analysts are pulling all kinds of financial projections. But how accurate and reliable are those numbers when there is no penalty walking away from a pre-order?
Fisker ( FSR) also comes to mind. I see constant references to the number of pre-orders for the car. I see plenty of tweets from the company regarding pre-order milestones. Heck, I have a Fisker Ocean reservation. My cost if I opt to walk away and not buy the car is a 10% administrative fee. That amounts to $25. Am I planning to buy? Honestly, I'm not sure. By the time the Fisker Ocean becomes available for an actual purchase, I imagine I'll have lots of choices in the EV work. At this point, I'm far more excited about the new Ford ( F) Bronco that will be in my driveway around Thanksgiving. I might even opt for Canoo's ( GOEV) EV truck before a Fisker sees the road.
This isn't a knock on Fisker, though, but it is a word of caution around EV companies with aggressive valuations that won't see any sales until 2022 or beyond.
Seeing the hit on RIDE after NKLA, though, calls into question who is making the partnership decisions over at General Motors ( GM) ? Seriously. One may be bad luck. But two names now linked to huge question marks about product and order should raise a bit of a flag. Someone at GM needs to revisit their due diligence process or the people leading it. Fortunately, it hasn't hurt the stock, but it has me allocating some GM gains into Magna International ( MGA) who appears to be one of the biggest winners in the EV move.
I would much rather own a name like Tortoise Acquisition Corp II ( SNPR) bringing Volta public or MGA or GOEV or Northern Genesis ( NGA) until we get a slightly clearer picture on the realistic conversation rate of these pre-orders.
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