Thursday was not the ideal day to be a shareholder in many companies in, and adjacent to, the electric vehicle (EV) segment of the auto industry.
Fisker (FSRN -12.70%) investors would readily agree, as the stock tumbled by nearly 4%. Lithium-ion battery maker Microvast Holdings (MVST 5.90%) felt even more pain, vaulting 9% lower. Even Chinese EV flying-machines specialist EHang Holdings (EH 0.28%) wasn't spared, with its shares losing just shy of 4% of their value on the day. The culprit? The financial results of a certain big-time U.S. manufacturer.
Tesla's third-quarter results caused an EV traffic jam
That company, it probably goes without saying by now, was EV king Tesla (TSLA -1.11%). After market hours on Wednesday, the pace-setting carmaker posted its latest set of quarterly results, which displeased a great many market players.
There were quite a few developments to be concerned about, including the company's vertigo-inducing 44% drop in net income, its double miss on both the top and bottom lines, and management's admission that the hyped-up Cybertruck won't be a significant contributor to results before at least 12 months.
Accurately or not, Tesla's performance is seen by many as a bellwether for the wider EV segment. Yes, the segment covers a variety of manufacturers and component specialists, but it's still young enough for people to lump all into one entity. So if there's important news with the big guy, positive or negative, sentiment on a host of the smaller players is often affected accordingly. That dynamic was strongly apparent Thursday.
Time to be selective with EV stocks
While it's never prudent or well-considered to mash every stock in a segment or sector together, the reaction of the EV-investing public was understandable. Tesla is far and away the most successful -- and thus, influential -- of the pure-play EV manufacturers. So its trajectory and the demand that powers it are something of a compass needle for EV battery makers, SUV specialists, flying taxi developers, etc., etc., etc.
In market routs like this, however, wise investors would be best served picking out the better segment stocks for buy-at-a-discount opportunities (albeit with the standard caveat that many of these youthful companies are relatively high-risk plays).
Arguments can be made for buying any of the three aforementioned companies.
Fisker recently rolled out its first product, the Ocean SUV, hitting an important milestone in its corporate journey. Another plus is that the vehicle has received numerous positive reviews in the automotive press. EHang's business is a moonshot, but the company just earned an important regulatory nod, and Microvast stands to do well if it can hawk its next-generation battery solutions effectively.
