Rivian, Nio, and ChargePoint could be great contrarian plays for patient investors.
Many electric vehicle (EV) stocks crumbled over the past year as the market cooled off and rising interest rates compressed their valuations. But according to Precedence Research, the global EV market could still expand at a compound annual growth rate (CAGR) of 23.4% from 2024 to 2032 as EVs gradually replace gas-powered vehicles.
Therefore, the recent sell-off in EV stocks might represent a golden buying opportunity for value-minded investors who can look past the near-term headwinds. Today, I’ll dig deeper into three beaten-down EV stocks — Rivian Automotive (RIVN 2.42%), Nio (NIO -0.22%), and ChargePoint Holdings (CHPT 5.12%) — and explain why they might generate multi-bagger gains from a modest $1,000 investment over the next few years.
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1. Rivian Automotive
Rivian produces electric pickups, SUVs, and a custom electric delivery van (EDV) for its top investor, Amazon. It produced 24,337 vehicles in 2022 even as it grappled with supply chain constraints. It then more than doubled its production to 57,232 vehicles in 2023, and revenue rose 167% to $4.43 billion last year.
Despite that accelerating growth, Rivian’s stock trades nearly 90% below its initial public offering (IPO) price, and many investors remain bearish on Rivian for two reasons. First, the company expects to only produce 57,000 vehicles this year as it faces tougher macro headwinds and temporarily shuts down its main plant in Illinois for a few weeks to streamline its production and integrate new technologies. Second, it racked up a staggering net loss of $5.43 billion in 2023.
However, Rivian’s stock looks cheap right now at less than 2 times this year’s sales. It still had $10.5 billion in total liquidity at the end of 2023, and its low debt-to-equity ratio of 0.8 still gives it a bit of breathing room to raise fresh cash. It’s also obligated to deliver 100,000 EDVs to Amazon by 2030. So if you believe Rivian can ramp up its production and fulfill all of those orders over the next few years, it might be a great time to buy its beaten-down shares.
2. Nio
Nio is a Chinese EV maker that sells a wide range of sedans and SUVs. It differentiates itself from the competition with its swappable batteries, which can be quickly replaced with fully charged ones across its network of swapping stations.
Nio shipped 122,486 vehicles in 2022, and its deliveries rose 31% to 160,038 vehicles in 2023. But in 2023, its revenue only grew 13% to 55.6 billion yuan ($7.8 billion) as the EV price war in China forced it to slash its prices.
As a result, Nio’s vehicle margin shrank from 13.7% in 2022 to 9.5% in 2023, and its net loss widened from 14.4 billion yuan to 20.7 billion yuan ($2.92 billion). It also continued to ramp up its spending on the expansion of its battery swapping network. That slowing revenue growth and red ink caused Nio’s stock to dip more than 30% below its IPO price.
But for 2024, analysts expect Nio’s revenue to rise 18% to 65.8 billion yuan ($9.1 billion) as it narrows its net loss to 16.2 billion yuan ($2.2 billion). Its high debt-to-equity ratio of 3.4 might limit its ability to raise more capital, but it was sitting on 57.3 billion yuan ($8.1 billion) in cash and equivalents at the end of 2023.
Nio is still a speculative play, but it trades at less than 1 times this year’s sales — so any positive news regarding China or the EV market might drive its stock higher.
3. ChargePoint
ChargePoint is the largest builder of EV charging stations in North America and Europe. Its revenue surged 65% in fiscal 2022 (which ended in January 2022) and jumped another 94% in fiscal 2023. But in fiscal 2024, its revenue only rose 8% to $507 million as its net loss widened from $345 million to $458 million.
That deceleration was caused by a slowdown of the EV market, competition from other EV infrastructure companies, and macro headwinds which forced many companies to rein in their spending on new EV charging stations. As a result, ChargePoint now trades at about $1 — nearly 97% below its opening price of $30.11 after it went public by merging with a special purpose acquisition company (SPAC) three years ago.
That might seem like a grim situation for a company that ended fiscal 2024 with just $358 million in liquidity and an elevated debt-to-equity ratio of 2.4. But it still hasn’t drawn any cash from its $150 million revolving credit facility, and it doesn’t face any debt maturities until 2028. Therefore, ChargePoint could still turn things around if the EV market warms up again.
For fiscal 2025, analysts expect its revenue to rise 9% to $553 million as it narrows its net loss to $264 million. Based on those estimates, ChargePoint looks like a deep value play at less than 1 times this year’s sales.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Leo Sun has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Nio. The Motley Fool has a disclosure policy.