Investors looking for cheap EV stocks may consider popular names like Mullen Automotive (MULN) and VinFast (VFS), which are trading at $2.53 and $0.02, respectively. These stocks are significantly cheaper than other popular names like Tesla (TSLA) and BYD.
This article will explain why investors should avoid Mullen Automotive and VinFast, and buy XPeng (XPEV) instead.
Mullen Automotive is under pressure
Mullen Automotive has been a fallen angel in the electric vehicle industry and is likely in its final days.
Its stock has crashed by 99.8% this year, bringing its market cap to over $9.9 million. This is a tiny amount for a company that was once valued at over $700 million. It is also a small amount considering that it spent over $400 million a few years ago acquiring Bollinger Motors and Electric Last Mile Solutions (ELMS).
Mullen’s collapse has benefited many people who shorted the company. Data by SeekingAlpha shows that it has a short interest of 32%.
Mullen Automotive stock has reacted to several important news events in the past few weeks. On Monday, the company announced that its Bollinger subsidiary had received $10 million in debt financing from Robert Bollinger, its founder.
Mullen also announced the creation of Mullen Credit Corporation, a firm that will provide financing to dealerships carrying its brand.
The company also estimated that its six-month revenue will be $75 million. It also announced plans to reduce $5.5 million in spending through job cuts and eliminating its passenger vehicle program, which stood no chance because of the rising competition in the sector.
The challenge, however, is that Mullen Automotive has little cash in its balance sheet. It ended the last quarter with just $3.5 million in cash and short-term investments. This means that the company will need to either continue raising cash or even file for bankruptcy.
VinFast is facing headwinds
VinFast stock price has also crashed by over 50% and by 26% in the last 12 months, bringing its market cap to $9.2 billion.
It is a Vietnamese company that manufactures electric vehicles and scooters. At its peak after going public, the company’s valuation surged to over $100 billion.
It offers a highly comprehensive suite of products across all segments. VF-3, its cheapest vehicle costs about $9,900, while VF-5 GOES FOR $19,000. Its most expensive vehicle starts at $66,200.
It does most of its manufacturing in Vietnam, where it runs a 335-hectare plant capable of manufacturing over 300k vehicles.
The challenge for VinFast is that its business is not doing well. Its revenue rose to $340 million in the second quarter from $336 million in the same period. Also, the company’s net loss jumped to $736 million from $578 million in Q2 of 2023.
The company also lowered its guidance of the number of vehicles it expects to deliver. It now expects to deliver about 80,000 vehicles. It also announced a plan to adjust its North Carolina plant to 2028 and seek government financing.
Therefore, there is a likelihood that VinFast stock price will continue falling in the coming months as challenges remain.
XPeng stock has more upside
I believe that XPeng, a Chinese company backed by Volkswagen, is one of the best electric vehicle stocks to buy today.
It has staged a strong recovery in the past few months as it jumped by over 85% from its lowest point this year.
This performance is because of its strong growth, and the fact that China’s price wars have abated recently. The most recent financial results showed that its revenue rose from $697 million in Q2’23 to $1.11 billion last quarter.
This revenue growth happened as the number of vehicle deliveries rose from 23,205 to 30,207, and the number of stores jumped to 611.
XPeng is also growing its margins, with the gross figure rising to 14%. Additionally, it has ambitions to become a leading player in the eVTOL industry, with its Chinese plant having a capacity for making 10,000 cars a year.
XPeng stock price analysis
XPEV chart by TradingView
The XPeng share price has done well in the past few months. It has rallied from the year-to-date low of $6.57 to $12. Along the way, the stock has formed a golden cross chart pattern as the 200-day and 50-day moving averages have crossed each other. In most periods, this is one of the most popular bullish signs in the market.
XPeng stock has also moved above the 23.6% Fibonacci Retracement point, which is a popular bullish sign.
Therefore, the stock will likely continue doing well, with the next point to watch being at $13.73, its highest point on September 30th. A move above that level will point to more gains, with the next point to watch being at $20, which is about 64% above the current level.
Read more: XPeng stock price analysis: technicals point to a 40% jump
The post Avoid Mullen Automotive and VinFast; buy this EV stock instead appeared first on Invezz
