The sale of Tesla shares continues, and EV values ​​are meaningless

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The wave of growing stock sales accelerated on Tuesday, dragging Tesla and other electric vehicle stocks down with it. The shares ricocheted at the bottom, but one consequence of the sale is that EV ratings are now spread all over the place.

It is difficult to decipher what the market is trying to say to investors.

THE

Nasdaq Compound

it fell about 3% at the beginning of Tuesday’s trading session after falling 2.5% on Monday.

Tesla

the stock (ticker: TSLA) fell by almost 11%, but then dropped by only about 2% as of 10:50 am Eastern time. Nasdaq and

S&P 500

now they fell by about 1.9% and 0.4%, respectively.

Inflation is a new concern for investors, and high-growth stocks tend to be more affected when inflation expectations rise. Higher inflation means higher interest rates. Dividends and bond yields become a little more attractive in this scenario, rather than cash flows from high-growth companies that can take years to come. High interest rates also make financing for growth more expensive.

Inflation is not the only thing happening with EV stocks on Tuesday. Lucid Motors agreed to merge with the special purpose acquisition company Churchill Capital Corp IV (CCIV). The merger is a triumph for the EV industry – more or less. Investors offered shares in the SPAC merger with Lucid a little too high, as they bet the deal was coming. This made Lucid worth about $ 96 billion based on Monday’s price, even before the merger was announced. Then, on Tuesday, Churchill’s stock plunged more than 30%. But even with such a huge drop, Tuesday’s prices still value Lucid at more than $ 60 billion, making it the eighth most valuable automaker on the planet. Lucid has not yet sold a vehicle.

Lucid is now trading for about 4 times the company’s projected sales for 2025, of about $ 14 billion. The projections, in this case, are not estimates – they are the numbers generated internally by Lucid. Tesla, for comparison, negotiates about 7 times the sales estimated in 2025 at about $ 120 billion. This estimate is an average of several Wall Street analysts.

Exploring EV assessments a little more makes things even more confusing.

Fisker

(FSR), which projects $ 13 billion in sales through 2025, is valued at a fraction of that amount. The reason for the assessment gap is difficult to determine.

Lucid lists impressive specs and battery technology, including an estimated range of 500 miles per charge for its Lucid Air luxury sedan to launch later this year. Lucid is also headed by former Tesla engineer Peter Rawlinson. But Ocean, Fisker’s first model, promises to be an affordable SUV, and Fisker is driven by legendary car designer Henrik Fisker. In addition, Fisker has partnered with an experienced car manufacturer,

Magna International

(MGA), to build the Ocean.

The difference between Fisker and Lucid is not the only strange comparison. There is a relatively wide range of ratings for the three Chinese EV manufacturers with significant sales:

NIO

(NIO),

XPeng

(XPEV), and

Li Auto

(LI). These three are also traded at a huge discount for Tesla, based on the 2,025 figures.

With a valuation range of approximately 0.5 to 7.5 times the estimated sales in 2025, the correct valuation level for EV inventories is probably there somewhere. It is difficult to know exactly where. And there will be EV winners and losers in 2025, too – it’s hard to know who.

Write to Al Root at [email protected]