Stocks to sell

Why These 3 EV Stocks Could Be Headed for Further Losses

The electric vehicle (EV) market is probably headed toward a slump in 2024. During Tesla’s (NASDAQ:TSLA) Q4 earnings call, CEO Elon Musk warned the famed EV maker could experience slower growth in 2024. Musk’s warning probably be heeded by a number of other EV players. Interest rates remain elevated, and the Federal Reserve does not want to be hasty about cutting them either. The economy, although performing better than expected if you look at published economic metrics, is still in the midst of a slowdown. Consumer sentiment has also improved but definitely not where it was before the pandemic. In this kind of market, investors need to know which EV stocks to sell. Below are 3 EV headed for further losses.

Tesla (TSLA)

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Tesla is, without a doubt, one of the largest and most prominent players in the global electric vehicle market. The automaker has been also playing an influential role in creating the basic infrastructure for electric vehicle charging, ultimately tackling the EV market from different angles.

Throughout 2023, Tesla defied skeptics broke records. In particular, Tesla’s quarterly earnings have come in above analysts’ estimates, and the price-cut strategy the automaker began to pursue in the beginning year has increased quarterly deliveries while also placing pressure on gross margins. Tesla’s Q4’2023 financial figures also beat Wall Street’s estimates. Unfortunately, for Tesla and its shareholders, the EV maker’s CEO Elon Musk shared grim guidance, citing interest rates and weak consumer demand.

Tesla’s also facing growing competition from China’s BYD, which overtook Tesla as the largest seller of EVs in China for 2023. Further developments in this market could put pressure on TSLA in future quarters. The EV maker’s stock is also trading at 60.5x forward earnings, which could put the stock at risk of a sell-off in performance does not improve

ChargePoint (CHPT)

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ChargePoint Holdings (NYSE:CHPT) stock represents a company that is one of the largest EV charging networks worldwide. The company had more than 225,000 charging ports across North America and Europe at the start of last year, but the company has not performed up to expectations in recent quarters. Slowing top-line growth, compressing margins, and widening net losses plagued ChargePoint throughout 2023. In their most recent Q3 earnings report, revenue declined by 12% on a year-over-year basis.

Competition could be the main reason ChargePoint has been facing execution issues. Many would rather leverage Tesla’s charging infrastructure. Governments also agree. Late last year, Texas approved a plan to require EV charging companies to include Tesla’s plug if they want to be eligible for federal funds. The Biden Administration as an effort to standardize EV charging stations across the nation devised a $7.5 billion plan that would see Tesla opening up its EV charging stations to competitors.

ChargePoint’s shares are down more than 82% over the past 12 months and could probably even drop further as the company continues to struggle.

EVgo (EVGO)

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EVgo Services (NASDAQ:EVGO) is another major EV charging network. At the end of their Q3 earnings period, the EV charging stock reported with around 3,400 charging stations “in operation or under construction”.

Similar to ChargePoint, EVgo is facing a profitability and cash-burn issue similar. The company’s net loss expanded from Q2 to Q3. Of course, the company expects to incur losses for the foreseeable future as it invests heavily in expanding its network and developing new technologies.

The company, in their Q3 earnings press release, announced the company was selected to add 32 fast charging stations in Colorado and Pennsylvania. Though this may seem like a win, the company is playing in a shrinking market, more and more dominated by Tesla. EVGO shares are down 65% over the past 12 months, and more losses in the future are par for the course as the EV market slows in 2024.

On the date of publication, Tyrik Torres 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.

Tyrik Torres has been studying and participating in financial markets since he was in college, and he has particular passion for helping people understand complex systems. His areas of expertise are semiconductor and enterprise software equities. He has work experience in both investing (public and private markets) and investment banking.

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