Inflation Reduction Act: Top EV stocks to explore in September

August 24, 2022 05:10 AM PDT | By Rupam Roy
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Highlights:

  • Tesla, Inc. (NASDAQ: TSLA) announced a three-for-one stock split on August 5.
  • XPeng Inc. (NYSE: XPEV) revenue soared over 97 per cent YoY in Q2 FY22.
  • Rivian Automotive, Inc. (NASDAQ: RIVN) delivered 4,467 vehicles in the second quarter of 2022.

The electric vehicle segment has gained momentum in recent years. Given the higher consumer demand for electric cars and the global push toward the sector, the EV industry has recently gained significant traction.

The strong competition among the automakers to make a significant name in the EV sector also reflects the growing popularity of the industries.

Tesla, Inc. (NASDAQ: TSLA) is probably the most popular electric vehicle maker. However, several other companies have created a notable place, among others, in the sector. Nio Inc. (NYSE: NIO), XPeng Inc. (NYSE: XPEV), Rivian Automotive, Inc. (NASDAQ: RIVN), and Ford Motor Company (NYSE: F) are also among the significant players in the EV space.

The recent Inflation Reduction Act 2022 supported the EV sector with its clean energy vehicle tax credits. A significant part of the bill had new rules under which electric vehicles qualify for tax credits. US President Joe Biden signed it into law last Tuesday (August 16).

Let's look at some of the top EV stocks and their recent stock and financial performance with Kalkine Media®.

Tesla, Inc. (NASDAQ: TSLA)

The leading EV maker has a market cap of US$ 924.45 billion and has a price-to-earnings (P/E) ratio of 107.61.  Tesla has been in the news after announcing that its board of directors has approved a three-for-one stock split of the firm on August 5. On August 17, 2022, the stockholders of record would receive a dividend of two additional shares of common stock for each stock holding.

The additional stock would be distributed after trading closes on August 24, and on a stock split-adjusted basis, the trading would begin on August 25.

Looking at its latest quarter financial highlights, Tesla posted a 42 per cent YoY growth in its Q2 FY22 revenue of US$ 16.93 billion. Its net income to common stockholders soared 98% YoY to US$ 2.25 billion.

Nio Inc. (NYSE: NIO)

The Shanghai, China-based automotive firm specializes in electric vehicles. At its current trading price, the US$ 30.63 billion market cap firm traded about 58 per cent above its 52-week low of US$ 11.67 noted on May 12, 2022.

The company's stock has struggled to maintain a steady momentum recently, as evidenced by its stock price. The NIO stock declined over 41 per cent year-to-date (YTD). In the ongoing quarter, it lost nearly 15 per cent through August 23.

NIO delivered 10,052 vehicles in July, noting a surge of 26.7 per cent YoY. On a YTD basis in 2022, it delivered 60,879 vehicles through July, an increase of 22 per cent YoY.

In Q1 2022, Nio's total revenue was RMB 9.91 billion, an increase of 24.2 per cent from the year-ago quarter. However, its net loss deteriorated to RMB 1.78 billion in Q1 FY22, against a loss of RMB 451 million in Q1 FY21.

XPeng Inc. (NYSE: XPEV)

Another Chinese EV maker, based in Guangzhou, also had a rocky journey so far, like Nio. The stock lost over 40 per cent QTD.

The US$ 15.97 billion market cap firm had a Relative Strength Index or RSI of about 25, according to Refinitiv data. According to some analysts, RSI between 0 to 30 indicates that the stock is in an oversold condition.

XPeng's revenue rocketed 97.7 per cent YoY to RMB 7.43 billion or US$ 1.11 billion in Q2 FY22. Its net loss totalled RMB 2.7 billion against a loss of RMB 1.19 billion in Q2 FY21.

The Guangzhou, China-based firm delivered 34,422 vehicles in Q2 FY22, a jump of 98 per cent YoY. For the third quarter of fiscal 2022, the firm now expects its vehicle deliveries to be between 29,000 and 31,000, a YoY increase of about 13 per cent and 20.8 per cent, respectively.

It expects its Q3 FY22 revenue to be between RMB 6.8 billion and RMB 7.2 billion, reflecting an increase of 18.9 per cent and 25.9 per cent YoY, respectively.

Rivian Automotive, Inc. (NASDAQ: RIVN)

Rivian was one of the biggest US IPOs in 2021. It raised about US$ 12 billion and touched a market cap of about US$ 150 billion soon after its public debut. It had also gained significant traction due to its Amazon backing. The company manufactures electric delivery vehicles for the e-commerce giant.

The RIVN stock decreased by over 68 per cent YTD. However, on a QTD basis, it showed gains of nearly 26 per cent.

The firm produced 4,401 vehicles in Q2 FY22 while delivering 4,467 vehicles in the same period. The figures aligned with Rivian's expectations, and it now believes it is on track to fulfil its prior guidance of 25,000 annual vehicle production.

In the second quarter of fiscal 2022, the US$ 29.18 billion market cap firm posted a revenue of US$ 364 million, while no revenue was reported in the year-ago quarter. Its net loss was US$ 1.71 billion in Q2 FY22, against a loss of US$ 580 million in Q2 FY21.

Ford Motor Company (NYSE: F)

The stock of the automaker fell about 26 per cent YTD. However, on a QTD basis, it soared over 37 per cent while adding about 20 per cent YoY.

The US$ 61.54 billion market cap firm had a dividend yield of 3.78 per cent. The Dearborn, Michigan-based firm posted total revenue of US$ 40.19 billion in Q2 FY22, against revenue of US$ 26.75 billion in Q2 FY21. Its attributable net income improved to US$ 667 million, or US$ 0.16 per diluted share in Q2 FY22, from an income of US$ 561 million, or US$ 0.14 per diluted share in Q2 FY21.

Ford Motor Company (NYSE: F) Q2 FY22 VS Q2 FY21 earnings highlightsSource: ©Kalkine Media®; © Canva Creative Studio via Canva.com

Bottom line:

Although the consumer demand for EVs remained up despite several uncertainties in the market, the companies' stock seemed to have struggled in recent months. The EV sector was no exception amid the highly volatile condition in the broader market.

Hence, the investors should closely focus on the recent performance of the companies and the recent market scenario before spending in the market.


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