Last quarter. nearly 300,000 all-electric vehicles were sold in the U.S., setting a new all-time record. Moreover, a multitude of businesses and governments are buying high numbers of EVs. And, consumers are purchasing electric SUVs for the first time. Simultaneously, many EV makers are being targeted by short sellers. Most continue to cling to their belief that historically normal interest rates will plunge the U.S. into a recession. The combination of the rapidly growing EV market and the fact that many shares of EV companies are being sold short has created many EV short squeeze candidates.
Rivian (RIVN)
Over 13% of Rivian’s (NASDAQ:RIVN) shares were held by short sellers as of the end of last month. The demand for the automaker’s Performance Dual-Motor R1S SUV remains strong. The automaker has said it that this year it will only get around to those ordered before March 2022.
Meanwhile, in another very positive sign for Rivian. Amazon (NASDAQ:AMZN) has deployed 5,000 of its delivery vehicles in the U.S. and is starting to utilize them in Europe. And, with Rivian greatly accelerating production, InsideEVs believes that AMZN and RIVN may meet their goal “of putting 100,000 electric vans into service” worldwide by 2030.
Finally, investment bank Needham expects Rivian’s profit margins to climb going forward. Further, the company expects to reduce the cost of producing its R1 SUV by about 35% next year. And finally, Rivian anticipates that it will lower the amount it pays for supplies while also cutting its expenses by making its EVs less complex.
The popularity of the EV maker’s vehicles and its progression towards profitability make it one of the top EV short squeeze candidates.
ChargePoint (CHPT)
Nearly 25% of ChargePoint’s (NYSE:CHPT) shares were being held short as of July 31. Yet the company, which sells EV chargers and then provides their owners with services, continues to grow rapidly.
In June, CHPT reported that its Q1 2024 revenue had jumped 59% year-over-year to $130 million. Moreover, its gross margin rose to 23%, and it predicts that its EBITDA loss of $52.8 million, excluding certain items, will sink by about two-thirds by Q4.
Analysts expect the company’s loss per share to fall to just 15 cents next year from 70 cents last year.
This makes the rapidly growing CHPT a top contender among EV short squeeze candidates.
EVgo (EVGO)
EVgo (NASDAQ:EVGO) owns and operates more than 850 charging stations across 60 metropolitan areas. And, short sellers are betting against 18% of its shares.
In the second quarter the company’s top line soared an incredible 456% versus Q2 of 2022, coming in at $50.6 million, $21 million above analysts’ average estimate. And it reported a loss per share of 8 cents, 10 cents above the mean estimate.
Also encouraging is that EVGO’s user base climbed by over 82,000 last quarter to 688.000. while its gross profit came in at $5.5 million, versus a gross loss of $744,000 in Q2 of 2022. Further, its cash used in operating activities fell to just $3.18 million last quarter, versus $18.54 million during the same period a year earlier. So clearly EVGO is moving in the right direction.
EVgo’s partnerships with General Motors (NYSE:GM), Uber (NYSE:UBER), Lyft (NASDAQ:LYFT) and Pilot Flying J, leave the EV charger operator very well-positioned to succeed going forward. Additionally, EVgo has already been awarded funding by Ohio and California and is poised to obtain grants from many other states in the coming years.
On the date of publication, Larry Ramer was long EVGO, and RIVN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
