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Why Lithium Americas, QuantumScape, and Blink Charging Stocks Got Destroyed Today

By Rich Smith – Dec 3, 2021 at 2:26PM

Key Points

  • November's jobs report disappointed Wall Street.
  • Omicron is ... everywhere.
  • The news is bad -- and Lithium Americas, QuantumScape, and Blink weren't even able to earn a profit when the news was good.

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The economic news is lousy today, and EV stocks are taking it on the chin.

What happened

Friday is looking like a lousy day to own unprofitable electric vehicle (EV) stocks. Up and down the supply chain -- from the companies that mine lithium to those that turn lithium into battery packs to those building networks of charging stations -- all EV stocks are tumbling.

And as of 12:30 p.m. ET today, shares of Lithium Americas (LAC 2.46%), QuantumScape (QS -0.40%), and Blink Charging (BLNK -2.11%) are all down -- 10%, 10%, and 10.5%, respectively.

Three arrows trending down over a background of a map and dollar signs.

Image source: Getty Images.

So what

So what's going wrong with the electric car industry today? Actually, there doesn't seem to be anything specific to this industry behind the sell-off. Rather, a sense of malaise has descended upon the entire tech sector in response to bad news of the macroeconomic sort.

Earlier today, for example, the U.S. Department of Labor reported that nonfarm payrolls increased just 210,000 in November -- nearly two-thirds below the 573,000 jobs that Wall Street was looking for. At the same time, The New York Times is reporting cases of the omicron variant of COVID-19 popping up "across the United States ... from New York to Hawaii" (and all around the world, besides) and health experts are warning that "community spread of the virus is inevitable."    

Simply put: This is not great news for the stock market.

Now what

Of course, even in the face of all this bad news, the Nasdaq Composite is only down a couple of percent today -- not great, but not disastrous -- and not a patch on the 10%-plus declines we're seeing in the EV space. So why are Lithium Americas, QuantumScape, and Blink Charging stocks taking it particularly on the chin today?

Well, not to put too fine a point on it, but "the Nasdaq" as a whole includes a whole host of profitable companies. Apple, Google parent Alphabet, and are all on the Nasdaq. And if you'll take a look at those tickers, I think you'll find they're holding up better than most -- because investors realize that these companies are cash machines that will perform well in any economic environment.

And Lithium Americas? QuantumScape? Blink Charging? In contrast to the profitable tech giants, these three speculative stocks have yet to prove their worth to investors, or their ability to earn a profit. Of the three, Lithium Americas stock is the only one that analysts foresee turning profitable within a reasonable time frame. (2022 is analysts' best guess.) QuantumScape and Blink, in contrast, are expected to continue losing money through 2025 -- and beyond.

And this, in a nutshell, is why they're faring worse than most in the midst of today's sell-off.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, and Apple. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon, long March 2023 $120 calls on Apple, short January 2022 $1,940 calls on Amazon, and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.

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