Electric vehicle (EV) use is rising worldwide as governments promote sustainable alternatives to gas-powered automobiles to achieve net zero goals. Therefore, it could be worth watching Electrameccanica Vehicles Corp. (SOLO). However, it could be wise to avoid Faraday Future Intelligent Electric Inc. (FFIE) due to its weak fundamentals.
According to Statista, revenue in the Electric Vehicles market is expected to show a CAGR of 10.1%, resulting in a projected market volume of $906.70 billion by 2028. Moreover, fuelled by government initiatives through the Inflation Reduction Act of 2022, domestic EV battery production is picking up.
However, with the Federal Reserve recently raising the target range for its benchmark interest rate by 0.25%, bringing it to a new range of 5.25%-5.50%, high borrowing rates make it difficult for consumers to afford EVs. Moreover, the industry continues to face challenges due to the lack of charging station infrastructure.
Also, amid persistent inflation and concerns of a looming recession, fundamentally weak companies could remain under pressure.
Given these factors, investors could take note of the featured auto stocks. Let’s take a closer look at their fundamentals.
Stock to Hold:
Electrameccanica Vehicles Corp. (SOLO)
Headquartered in Burnaby, Canada, SOLO develops, manufactures, and sells electric vehicles. Its flagship product is the SOLO, a single-seat vehicle. The company is also developing four-wheeled eRoadster, and Tofino. In addition, it provides services, repairs, and support services, as well as the sale of parts.
In terms of the trailing-12-month Return on Common Equity, SOLO’s negative 68.91% compares to the industry average of 9.84%. Its trailing-12-month Return on Total Assets a negative 72.76% compares to the industry average of 3.65%. On the other hand, its trailing-12-month CAPEX/Sales ratio, SOLO’s 47.81%, is significantly higher than the 3.24% industry average.
SOLO’s gross profit for the fiscal quarter ended March 31, 2023, came in at $96.78K, compared to a $1.90 million loss from the year-ago quarter. Its operating loss narrowed 25.2% year-over-year to $13.71 million. Moreover, its loss per share narrowed 33.3% year-over-year to $0.10
Analysts expect SOLO’s revenue estimates to increase 84.5% year-over-year to $2.65 million. Over the past three months, SOLO has gained 30.9% to close the last trading session at $0.68
SOLO’s fundamentals are reflected in its POWR Ratings. The stock has an overall rating of C, equating to a Neutral in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It is ranked #38 of 55 stocks in the C-rated Auto & Vehicle Manufacturers industry. In addition, it has a B grade for Value.
We have also given SOLO grades for Growth, Momentum, Stability, Sentiment, and Quality. Get all SOLO ratings here.
Stock to Sell:
Faraday Future Intelligent Electric Inc. (FFIE)
FFIE engages in the design, development, manufacture, engineering, sale, and distribution of electric vehicles and related products in the United States.
In terms of trailing-12-month Return on Common Equity, FFIE’s negative 119.17% compares to the industry average of 9.84%. Its trailing-12-month Return on Total Assets, a negative 68.22%, compares to the industry average of 3.65%. Likewise, its negative 51.78% trailing-12-month Return on Total Capital compares to the 6.08% industry average.
For the fiscal first quarter that ended March 31, 2023, FFIE’s loss from operations narrowed 44.3% year-over-year to $83.03 million. The company’s net cash used in operating activities narrowed 15.7% year-over-year to $103.21 million.
Street expects FFIE’s EPS for the quarter ended June 30, 2023, to remain negative. Over the past six months, the stock has fallen 70.5% year-over-year to close the last trading session at $0.26.
FFIE has an overall rating of F, which equates to a Strong Sell in our proprietary rating system. It is ranked #47 of 58 in the same industry. It has an F grade for Stability and a D grade for Value, Sentiment, and Quality. Click here to see additional ratings of FFIE for Growth and Momentum.
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SOLO shares were trading at $0.71 per share on Friday morning, up $0.03 (+5.05%). Year-to-date, SOLO has gained 17.61%, versus a 20.52% rise in the benchmark S&P 500 index during the same period.
About the Author: Malaika Alphonsus
Malaika's passion for writing and interest in financial markets led her to pursue a career in investment research. With a degree in Economics and Psychology, she intends to assist investors in making informed investment decisions.
Faraday Future Intelligent Electric (FFIE) and Electrameccanica Vehicles (SOLO): Buy, Hold or Sell? StockNews.com
