What happened
Tuesday started out as a strong day for start-up stocks in the electric vehicle (EV) sector. Shares of QuantumScape (QS +2.42%), Canoo Holdings (GOEV 90.00%), and Blink Charging (BLNK +1.46%) were up between 5% and 7% this morning. While each pared those gains as the day progressed, they all were still outpacing the tech-heavy Nasdaq Composite index as of 3:20 p.m. ET. With the Nasdaq negative at that time, QuantumScape remained up 2.6%, and Canoo and Blink were 4.7% and 1.9% higher, respectively.
NASDAQ: QS
Key Data Points
So what
These stocks have all been crushed this year, with each down at least 50%. Canoo shares have plunged 84% year to date, and that includes a nearly 15% rise over the last three trading sessions. The recent jump follows Canoo CEO Tony Aquila purchasing $10 million of his company's stock last week.
OTC: GOEV
Key Data Points
Today's outperformance may be somewhat of a bounce against those large declines. It also may be related to the rebound in oil prices after a sharp drop to nearly one-year lows yesterday. Higher fossil fuel prices tend to push investors toward the renewable energy sector.
Now what
None of these three companies is profitable, and that is much of the reason investors have shunned them this year. Rising interest rates and inflation affecting costs are headwinds for start-up companies. QuantumScape has even pushed the likely earliest time for commercializing its solid-state battery technology into 2025. That's a long time for investors to believe in its future with so much volatility in the near term. But the potential for that technology to disrupt EV battery supply in the future keeps investors interested in following QuantumScape's progress.
As recently as this spring, Canoo told investors it had "substantial doubt" that it would have enough cash to continue operations. But it has since announced several agreements with customers to purchase its upcoming electric commercial vans. While the agreement for Walmart to buy 4,500 Canoo vans was nonbinding, Canoo has already made advanced deliveries for the retailer to conform the products to meet its last-mile delivery needs.
Canoo has also subsequently announced deals for more than 12,000 binding orders for its vehicles from other customers. The large share purchase by its CEO and the entities he manages injected more confidence for investors after the stock's massive plunge this year.
NASDAQ: BLNK
Key Data Points
Blink Charging is the only one of these businesses to be generating revenue. The company said sales grew 169% year over year in the third quarter to $17.2 million. It expects that growth to continue as it invests to boost production capacity in existing and potential new factories it has announced. Blink offers both commercial and home EV charging systems.
Today, investor sentiment has moved back to these growth names. That doesn't mean gains will continue, though. That will eventually come down to the progress -- and eventual profitability -- of the underlying businesses.
