Shares of an electric-vehicle maker are soaring for a second day after better-than-expected delivery numbers were reported Thursday. It raises the question for investors. Are EV stocksapproaching bubble territory?
No the shares being referenced aren’tTesla ‘s (ticker: TSLA). Although Tesla stock is doing just fine, closing up 13.5% to more than $1,371 Monday.
American depositary receipts of Chinese EV maker NIO (NIO) are the shares enjoying the two-day rally. NIO’s American depository receipts rose more than 22% after rising almost 15% Thursday—the final trading session before the holiday weekend.
NIO management said it delivered 10,331 vehicles in the quarter ended in June, exceeding the company’s quarterly guidance. What’s more, NIO delivered 3,740 vehicles in the month of June, a new record.
It’s good news and, as a result, investors have bid up the ADRs. But the gains are eye popping. NIO ADRs are on fire, up 106% over the past month. The Dow Jones Industrial Average, by comparison, is down 3% over the same span. The S&P 500 is down 0.4%. Even Tesla stock hasn’t kept pace, rising about 55%.
Tesla, which is much larger than NIO, delivered more than 90,000 vehicles in the June quarter. The move in NIO ADRs has created almost $8 billion in market value, but Tesla stock’s 55% gain has lifted the company’s market value by about $80 billion.
Investors have had a lot of EV news to digest recently. And they are liking what they are hearing.
In the past few weeks, EV truck maker Nikola (NKLA) became publicly traded as a result of a merger with a special purpose acquisition corporation, or SPAC. Nikola also started taking orders on June 29 for its light-duty pickup called Badger. Another SPAC,Tortoise Acquisition (SHLL), announced plans to buy EV heavy-duty trucking company Hyliion.
There’s even more recent EV-trucking news. Lordstown Motor, unveiled its Endurance light-duty pickup.Workhorse (WKHS) also met safety milestones regarding their electric delivery vans. (Workhorse has a 10% stake in Lordstown.)
That quintet—Workhorse, NIO, Tesla, Nikola, and Tortoise—have gained almost 181% over the past month. Incredible. Now their shares are trading, on average, 143% above Wall Street price targets.
There’s a footnote, though: Tortoise hasn’t completed the Hyliion acquisition yet. No analysts covering its stock. There are, in Tortoise’s instance, no price targets for investors to reference.
A lack of analyst coverage isn’t dissuading anyone yet. EV associations are good enough for now.
Investors are betting big on an all—or predominantly—electric transportation future. They might be right. Lyft (LYFT), after all, recently announced plans to go all electric by 2030. That’s another factor that may have catalyzed the recent run. It’s hard to know. And when stocks go up like this they become hard to value.