The slowdown in electric vehicle (EV) demand around the world hasn't been isolated to electric vehicle manufacturers. Suppliers across the industry are also seeing demand slow and that's exacerbating losses.
This week was one of the worst EV suppliers have seen. According to data provided by S&P Global Market Intelligence, shares of Blink Charging (BLNK +4.35%) have fallen as much as 25.8% this week, Luminar (LAZR +0.00%) dropped 34%, and Solid Power (SLDP +3.37%) was down 16.4% at its low. At 10 a.m. ET on Friday shares were down 25.4%, 29.9%, and 13.9% on the week.
NASDAQ: BLNK
Key Data Points
Earnings hit EV stocks
There wasn't much good news from earnings reports for Blink, Luminar, or Solid Power. They all have different business models and products, but they're all impacted by the same trends.
Blink Charging said product revenue was up only 1.3% in the second quarter to $33.3 million and the company lost a whopping $20.1 million, or $0.20 per share.
Solid Power's revenue was only up slightly to $5.1 million and net loss was $22.3 million, or $0.13 per share. Management also lowered the revenue outlook to between $16 million and $20 million.
Luminar's revenue was up just 2% in the second quarter to $16.5 million, but that was down 22% sequentially. Net loss was $13.7 million. Like Solid Power, management said revenue will be in the mid $30 million range in 2025 rather than the second half of this year.
Financing gets desperate
On top of the losses, Luminar announced debtholders have agreed to restructure $422 million of convertible senior notes due 2026 in exchange for $274 million of convertible senior notes due 2030. Investors will also invest another $100 million into new non-convertible senior secured notes due 2028.
This will extend Luminar's runway, but it also shows just how desperate the company was for cash and debt relief. It's not clear when the company will get to profitability given the long lead time to get auto projects off the ground, so this is runway, but doesn't guarantee success.
BLNK Free Cash Flow data by YCharts
The problem for each of these companies is their cash burn and lack of visibility to positive cash flow with their current balance sheets.
If EV demand and new technology launches are going to be slower than previously expected, a downward spiral may continue. Balance sheets are getting stretched and as stock prices fall it becomes harder to raise capital through debt or equity. It's an untenable situation without a sustainable business.
Stocks to avoid
I don't think there's any reason to jump into these stocks now. The market is only getting more competitive in EVs and autonomy and suppliers are getting squeezed as a result. I don't see that changing anytime soon and a downward spiral for these stocks and businesses may have already begun.
These companies provide promising technologies, but that doesn't mean they have good businesses. Investors are seeing that difference in the market's reactions to them this week.
