What happened
Shares of several electric-vehicle companies were down on Monday afternoon, amid a broad-market sell-off on dimming hopes for a financial-aid deal and a surge in coronavirus cases in the United States and Europe.
Here's where things stood as of 2:30 p.m. EDT for these three companies, relative to their closing prices on Friday:
- Nikola (NKLA 2.58%) was down 6.3%.
- NIO (NIO 2.30%) was down about 4.5%.
- Workhorse Group (WKHS -11.75%) was down about 8.1%.
So what
Simply put, I think some investors were unloading volatile stocks in response to events that raised concerns about the coronavirus and the U.S. economy.
The big news is that coronavirus cases are rising again. The U.S. reported nearly 61,000 new cases on Sunday, down slightly from recent totals but up from a week prior. But it isn't just the U.S.: France reported more than 52,000 new cases on Sunday, a one-day high, while other European countries including Italy and Spain moved to reimpose restaurant curfews and other social-distancing measures.
Separately, negotiations between congressional Democrats and White House officials on a new financial-assistance package for cash-strapped Americans appeared to have stalled on Monday, raising the concern that there would be no agreement before the Nov. 3 elections.
What does that mean to auto investors and for these three stocks specifically, none of which are traditional automakers? Consider that all three of the companies here are money-losing, early-stage businesses with high cash needs, operating in a cyclical space. While their situations are unique, their stocks are all speculative to some extent. In that light, it's not surprising that investors looking to shed risk exposure were selling them off on Monday.
NIO had a great third quarter, and the company doesn't sell its vehicles in the U.S. or Europe yet, but its stock sold off anyway as investors reduced risk exposure. Image source: NIO.
Now what
Nikola will report its third-quarter earnings result after the market closes on Nov. 9. I expect CEO Mark Russell will spend some time resetting investor expectations after a tumultuous quarter that saw the departure of founder Trevor Milton amid allegations that he had misled investors about the state of Nikola's technology.
NIO hasn't yet announced a date for its third-quarter report, but I expect it to happen in mid-November. It should be an upbeat presentation: NIO's sales were up strongly in the quarter; after a successful secondary offering, it bought back some of the equity it gave up in a May bailout deal; and its growth plan appears solidly on track.
Workhorse Group will report its third-quarter results on the morning of Nov. 9 before the market opens. I expect CEO Duane Hughes will give us an update on commercial fleets' interest in the company's new C-Series electric-delivery vans, which began shipping in July. I expect he'll also have something to say about Lordstown Motors (NASDAQ: RIDE), which just went public in a deal that raised over $600 million and in which Workhorse has a 10% stake.
