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Why XL Fleet Stock Sank 24.3% Last Month

By Keith Noonan - May 10, 2021 at 1:57PM

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The vehicle electrification specialist's share price is now down roughly 75% year to date.

What happened

Shares of XL Fleet (XL -2.14%) dipped 24.3% in April, according to data from S&P Global Market Intelligence. The vehicle electrification company had some good news to announce in the month, but volatility in the overall electric vehicle (EV) space weighed on its stock.

XL Chart

XL data by YCharts

While EV leaders including Tesla and NIO posted strong vehicle delivery data in April, stock performance in the space was mixed last month, and some players saw significant sell-offs. There wasn't much in the way of negative, business-specific news to push XL Fleet stock lower last month, but there also wasn't any groundbreaking positive news, and investors appear to be taking a more cautious approach to the EV space in recent months. 

An XL Fleet modified Chevrolet electric truck on a dirt surface.

Image source: XL Fleet.Home | XLFleet.

So what

Growth-dependent technology stocks have also recently been under pressure as many investors have rotated into pandemic recovery plays and value stocks. The tech sector has pulled back amid concerns that the U.S. Federal Reserve Bank may raise lending rates earlier than previously anticipated, making it more difficult for companies to fund growth initiatives and dampening a bullish catalyst in the stock market. 

While pressures on EV stocks dragged XL Fleet's share price lower last month, the company also announced that it had signed a new contract. XL published a press release on April 7, revealing that it would be converting 19 Ford F-Series pickup trucks this quarter for Apex -- a clean energy company that constructs and operates wind and solar power facilities. The vehicle electrification company's stock got a boost following the announcement, but it wasn't enough to stop the stock from closing out the month with a double-digit stock slide. 

Now what

XL Fleet's stock has continued to slide in May's trading. The company's share price is down roughly 11.6% in the month so far. 

XL Chart

XL data by YCharts

The electric vehicle market has huge room for growth over the long term, but it's inevitable that the space will become increasingly competitive. Thus far, there are fewer entrants in the vehicle electrification space, but XL Fleet could still feel the pressure as more companies begin producing EVs. The company may still be able to carve out a niche, but increased competition and options in the EV space will likely drive vehicle prices down and make vehicle electrification services less appealing. 

XL Fleet has a market capitalization of roughly $823.5 million and is valued at approximately 19 times this year's expected sales. 

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends NIO Inc. and Tesla. The Motley Fool has a disclosure policy.

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Stocks Mentioned

XL Fleet Corp. Stock Quote
XL Fleet Corp.
$1.37 (-2.14%) $0.03
Ford Motor Company Stock Quote
Ford Motor Company
$15.50 (3.06%) $0.46
Tesla, Inc. Stock Quote
Tesla, Inc.
$883.07 (3.89%) $33.07
Nio Inc. Stock Quote
Nio Inc.
$20.05 (4.59%) $0.88

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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