© Reuters. 3 Electric Vehicles Stocks Wall Street Thinks are OvervaluedThe electric vehicle (EV) industry is forecasted to shrink this year due to a global semiconductor shortage that is limiting the production capacity of major manufacturers. Given this backdrop, we think overvalued EV stocks Nikola (NKLA), Blink (BLNK) and Lordstown Motors (RIDE) are best avoided now. Let’s look closer.Government support of electric vehicle (EV) production and plans to phase out fossil-fuel-powered vehicles over the next decade have made the EV industry a highly coveted one among investors. Investor optimism about the sector is evident in the KraneShares Electric Vehicles and Future Mobility Index ETF’s (KARS) 48.6% returns over the past nine months compared to the SPDR S&P 500 ETF Trust’s (SPY) 25.7% gains.
However, the industry’s rising popularity has allowed the entry of several start-ups with paltry product portfolios and inadequate technological prowess to gain substantially through aggressive advertising. Moreover, a global semiconductor chip shortage has delayed product launches and/or deliveries for most companies over the past couple of months, rendering their current stock price levels unsustainable.
Against this backdrop, we think it’s wise to now avoid fundamentally weak EV stocks Nikola Corporation (NKLA), Blink Charging Co. (NASDAQ:), and Lordstown Motors Corp. (RIDE). These stocks are currently trading at high valuations and could retreat in the near-term.
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