Although the experts continue to tell us that electric vehicles are the future, shifting sentiment in the space now necessitates a discussion about EV stocks to sell. Essentially, EV inventory concerns weigh heavily on the industry. Even worse, the headwind affects sector players big, small, and somewhere in the middle.
As Axios pointed out earlier this year, unsold electric-powered cars have been piling up on dealer lots. In July, the nationwide supply of available EVs swelled to nearly 350% or more than 92,000 units nominally. What makes the matter particularly troublesome is that companies have been slashing prices to stay ahead of the game.
However, such actions also impugn profitability. And with a consumer economy still fragile from pressures such as stubbornly high inflation, it’s time to at least consider EV stocks to sell.
Granted, I know this is a controversial topic so I invite you to continue the discussion. I’m available on X, where I do my best to respond to reader inquiries.
Tesla (TSLA)
At the risk of turning this piece into a clown show, I’ve got to express hesitation with Tesla (NASDAQ:TSLA). While CEO Elon Musk may be a genius, his intellect doesn’t exempt his company from economic pressures. While TSLA may be up nearly 92% on the year, Tesla’s efforts to dominate the EV sector with aggressive price cuts may come back to haunt it.
Just in the trailing one-month period, shares slipped almost 16%. And what’s particularly worrying here is not just the red print itself. According to TipRanks, hedge fund sentiment for TSLA has turned “very negative.” Specifically, between the end of the second quarter to the end of Q3, hedge funds conspicuously dumped the EV pioneer.
So, when I say that Tesla is one of the EV stocks to sell, it’s not just my opinion; the smart money has decided to jettison exposure as well.
While analysts remain overall bullish on TSLA, Bernstein’s Toni Sacconaghi rates TSLA shares as a “sell.” Also, the expert forecasts a downside target of $150, implying about 28% risk.
Rivian Automotive (RIVN)
When Rivian Automotive (NASDAQ:RIVN) first came out, I had high hopes for the company, at least in terms of the underlying product. Rather than go with some oddball avant garde chassis, Rivian kept its electric-powered trucks and SUVs clean. In my opinion, they beautifully integrated classic design language with attractive modern accoutrements. Unfortunately, the market just hasn’t responded well to RIVN.
On a year-to-date basis, the share performance isn’t that bad – down less than 8%. However, in the trailing one-year period, RIVN lost almost 54% of equity value. Since making its public market debut, shares lost nearly 88%, per weekly average pricing data by Google Finance.
Interestingly, TipRanks at the moment rates hedge fund sentiment for RIVN as “positive.” That’s because from Q1 to Q2 of this year, hedge funds increased their exposure to Rivian. However, since the end of 2021, these major investors have been quick to jettison shares. Therefore, I believe RIVN is one of the EV stocks to sell.
Mullen Automotive (MULN)
A crowd favorite, I suppose that under the right conditions, Mullen Automotive (NASDAQ:MULN) could skyrocket. Based on data from Fintel, MULN presently features a short interest of 15.92% of its float. As one of the most heavily shorted securities in the market, it’s possible that contrarian activity – the short squeeze – could lead to a dramatic resurgence.
But here’s my problem with that narrative. We’ve seen MULN pop higher, sometimes coincidentally right on the day that I issue a skeptical article. However, it consistently falls back to lower and lower levels, leading novice investors to catastrophic losses. Just consider that since the January opener, MULN lost more than 99% of equity value.
If that’s not a sign that Mullen is one of the EV stocks to sell, I don’t know what is. Further, the company suffers more than just mere EV inventory concerns.
As investment data aggregator Gurufocus notes, MULN suffers from six red flags. Aside from rising inventory, Mullen keeps issuing new debt. As well, its negative Altman Z-Score indicates deep distress. You’re probably better off speculating on something else.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.