The 2021 meme stock frenzy may be in the rearview mirror, but the electric vehicle (EV) sector continues to offer captivating opportunities. While VinFast’s (NASDAQ:VFS) meteoric rise and subsequent fall grabbed headlines, there are other promising EV stocks worth considering as alternatives to the rollercoaster ride. Here’s a closer look at two such options:
- Rivian: A Strong Contender in the EV Arena
Amidst the challenging landscape for startup EV companies, Rivian (NASDAQ:RIVN) stands out with its promising prospects. The company is on track to manufacture 52,000 vehicles in 2023, a figure that surpasses many competitors. Rivian’s solid financial foundation, boasting $10.2 billion in cash reserves, ensures it can navigate the EV industry’s hurdles without struggle.
Rivian has also distinguished itself with its product offerings. Its R1T pickup truck clinched the prestigious MotorTrend Truck of the Year award in 2022. From a valuation standpoint, Rivian’s next-12-months (NTM) price-to-sales multiple is a reasonable 4x, in stark contrast to some other startup EV companies with loftier valuations.
- Xpeng Motors: A Compelling Choice with Profitability on the Horizon
Xpeng Motors (NYSE:XPEV) has drawn considerable attention from both investors and key industry players. Volkswagen recently acquired a stake in the company, solidifying their collaboration on two EV models. This partnership not only enhances Xpeng Motors’ brand recognition but also promises improved margins in the upcoming quarters.
In addition, Xpeng Motors entered into a strategic partnership with the Chinese ride-hailing giant, Didi. Under this arrangement, Xpeng took over Didi’s autonomous driving unit and is gearing up to launch a new EV brand called “MONA.” With advanced autonomous driving capabilities already in its arsenal, this collaboration opens doors to Didi’s extensive ecosystem in China.
Xpeng Motors has ambitious expansion plans, including new budget-friendly models and penetration into tier 2 and tier 3 cities in China. Furthermore, the company is actively increasing its overseas shipments, bolstered by these strategic alliances.
August witnessed Xpeng Motors deliver 13,690 vehicles, marking consistent month-over-month growth since February. Expectations are high, with forecasts of 39,000 to 41,000 deliveries in Q3 and aspirations for peak monthly deliveries of 20,000 in Q4. Notably, the company anticipates achieving positive gross margins and operating cash flows in Q4. Analysts believe that Xpeng Motors is poised to become profitable and generate positive free cash flows by 2024.
In terms of valuation, Xpeng Motors presents an attractive proposition with an NTM price-to-sales multiple of 2.71x and a market capitalization slightly exceeding $16 billion.
In conclusion, while VinFast’s stock performance has been turbulent, the EV sector still offers compelling investment opportunities. Companies like Rivian and Xpeng Motors demonstrate strong fundamentals, promising product lines, and strategic partnerships that position them as noteworthy contenders in the ever-evolving world of electric vehicles. Investors looking for stability and potential growth in the EV market may find these alternatives more appealing than the erratic ride of VinFast.
Featured Image: Megapixl
Author Faith Yakubu